Singapore legislation
Regulation 3
Regulation 3
Transition from tax treatment under section 34A of Act to tax treatment under section 34AA of Act
Subregulation 1
This regulation applies to a qualifying person that is a qualifying person under section 34A of the Act for the year of assessment immediately before the initial year of assessment.
Subregulation 2
Where —
the qualifying person recognises (in accordance with FRS 109 or SFRS(I) 9) on the date of initial application, a profit in respect of any financial instrument; and
the profit is credited to the opening balance of the qualifying person’s retained earnings account for the basis period for the initial year of assessment,then the amount of the profit that is revenue in nature is treated as income of the qualifying person for the initial year of assessment.
Subregulation 3
Where —
the qualifying person recognises (in accordance with FRS 109 or SFRS(I) 9) on the date of initial application, a loss (other than an impairment loss or expected credit loss) in respect of any financial instrument; and (b)the loss is debited from the opening balance of the qualifying person’s retained earnings account for the basis period for the initial year of assessment,then the amount of the loss that is revenue in nature is to be allowed as a deduction against the qualifying person’s income for the initial year of assessment.
Subregulation 4
Where —
the qualifying person recognises (in accordance with FRS 109 or SFRS(I) 9) on the date of initial application, a profit that is a reversal of an impairment loss in respect of any financial instrument;
the profit is credited to the opening balance of the qualifying person’s retained earnings account for the basis period for the initial year of assessment; and
an amount of the impairment loss in respect of the financial instrument was previously allowed as a deduction against the qualifying person’s income under section 14 or 14G of the Act read with section 34A of the Act for any year of assessment before the initial year of assessment,then the amount of the profit equal to the amount of the impairment loss that was so allowed as a deduction is treated as income of the qualifying person for the initial year of assessment.
Subregulation 5
Where —
the qualifying person recognises (in accordance with FRS 109 or SFRS(I) 9) on the date of initial application, a loss that is an impairment loss or expected credit loss in respect of any financial instrument;
the impairment loss or expected credit loss is debited from the opening balance of the qualifying person’s retained earnings account for the basis period for the initial year of assessment; and
the financial instrument is credit-impaired in accordance with FRS 109 or SFRS(I) 9,then the amount of the loss that is revenue in nature is allowed as a deduction against the qualifying person’s income for the initial year of assessment.
Subregulation 6
Subject to paragraph (7), where a qualifying person is a bank or qualifying finance company, an amount computed using the formula A + B + C is to be allowed as a deduction against the qualifying person’s income for the initial year of assessment, where —
A is the amount of any expected credit loss in respect of its loans that are not credit‑impaired and that is recognised (in accordance with FRS 109 or SFRS(I) 9) on the date of initial application, and debited from the opening balance of the qualifying person’s retained earnings account for the basis period for the initial year of assessment;
B is the amount of any expected credit loss in respect of its investments in securities (where such securities are not credit-impaired) and that is recognised (in accordance with FRS 109 or SFRS(I) 9) on the date of initial application, and debited from the opening balance of the qualifying person’s retained earnings account for the basis period for the initial year of assessment; and
C is the amount of any allowance made by the qualifying person in respect of its loans that are not credit‑impaired and investments in securities (where such securities are not credit‑impaired) on the date of initial application, as required by an MAS notice, and debited from the opening balance of the qualifying person’s retained earnings account for the basis period for the initial year of assessment.
Subregulation 7
The amount of deduction allowed under paragraph (6) must not exceed 3% of the prescribed value of loans and investments in securities of the qualifying person in the basis period for the year of assessment immediately before the initial year of assessment, less the total amount of all deductions previously allowed to the qualifying person under section 14G of the Act and that have not been treated as trading receipts under that section.
Subregulation 8
In this regulation, “bank”, “loan”, “MAS notice”, “prescribed value of loans and investments in securities”, “qualifying finance company” and “securities” have the meanings given by section 14G(7) of the Act.