IRAS issues e-Tax Guide, “Income Tax Treatment of Real Estate Investment Trusts (4th Edition)”

On By taxsgIn Latest Tax News

11 November 2015

On 3 November 2015, the Inland Revenue Authority of Singapore (IRAS) published the fourth edition of the e-Tax Guide, “Income Tax Treatment of Real Estate Investment Trusts (REIT)”.

The e-Tax Guide provides details on the tax transparency treatment on certain types of income derived and distributed by the trustee of a REIT as well as the administrative procedures relating to the tax treatment.

Under section 43(2) of the ITA, the Comptroller of Income Tax (CIT) may agree not to charge the trustee of a trust with any tax, and to subject the beneficiary to tax on the distribution received from the trustee.

The trustee / manager of a proposed/newly constituted REIT or its sponsor needs only to submit an application form to the CIT to apply for the tax transparency treatment.

The tax transparency treatment is subject to the following conditions:

  • The trustee distributes at least 90% of its taxable income to the unit holders in the same year in which the income is derived by the trustee. For the avoidance of doubt, the income in this condition refers to the specified income that could be accorded the transparency treatment under section 43(2A) of the ITA; and
  • The trustee and manager jointly undertake to comply with section 45G of the ITA and the conditions set out in Annex 2 of the e-Tax Guide.

In this edition, the following was updated:

  • Removed the condition that the trustee is not allowed to distribute any gain from disposal of immovable properties or shares until the CIT agrees on the nature and taxability of the gain (paragraph 6.2).
  • Deleted the words “to be” since distributions were already made at the point of submitting the tax return (paragraph 6.4).
  • Replaced “non-taxable income” with “non-taxable income/receipts” (paragraphs 8.2, 8.5 and 8.6).
  • Removed the condition that for the purpose of applying for tax transparency treatment, the trustee and manager are required to jointly undertake not to distribute any gain arising from the disposal of any immovable properties or shares until the CIT agrees on the nature of the gain (Annex 2).

For further details, please see the IRAS’s e-Tax Guide. The previous edition was published on 19 June 2015.

Source: This article was extracted from the Inland Revenue Authority of Singapore (IRAS) website. Visit http://www.iras.gov.sg for more information.