28 October 2015
On 27 October 2015, the Inland Revenue Authority of Singapore (IRAS) issued the e-Tax Guide, “Income tax: Tax treatment of gains derived from the disposal of investments of insurers”
The e-Tax Guide sets out how the Comptroller of Income Tax (CIT) applies the principles enunciated in the case of CIT v BBO  SGCA 10 (“BBO”) to determine the tax treatment of gains derived from the disposal of investments of insurers.
As the investment activities are an integral part of the insurance business of an insurer, the CIT has taken the view that all investments of an insurer are revenue assets. Hence, all investment returns of the insurance business, including dividends, interest, rental and gains from disposal of investments of an insurer are revenue in nature and thus taxable.
In the BBO case, the Singapore Court of Appeal (“the Courts”) ruled that insurers, in addition to holding investments as revenue assets, can also hold investments as capital assets under exceptional circumstances.
Arising from the decision in the BBO case, this Guide provides the CIT’s approach to determine the tax treatment of gains derived from the insurers’ disposal of investments.
Administrative procedures stated in the e-Tax Guide takes immediate effect from 27 October 2015.
Source: This article was extracted from the Inland Revenue Authority of Singapore (IRAS) website. Visit www.iras.gov.sg for more information.