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notes tothe
financial statements
110
STARHILL global reit ANNUAL REPORT FY 2016/17
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for
reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
·
temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor taxable profit or loss; and
·
temporary differences related to investments in subsidiaries to the extent that the Group is able to control the timing
of the reversal of the temporary difference and it is probable that they will not reverse in the foreseeable future.
The measurement of deferred taxes reflects the tax consequences that would follow the manner in which the Group
expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax is
measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the
laws that have been enacted or substantively enacted by the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets,
and they relate to taxes levied by the same authority on the same taxable entity, or on different tax entities, but they intend
to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
The Inland Revenue Authority of Singapore (“IRAS”) has issued a tax ruling dated 20 May 2005 (“Tax Ruling”) on the
taxation of the Trust for income earned and expenditure incurred after its listing on the SGX-ST. Subject to meeting the
terms and conditions of the Tax Ruling, the Trustee will not be assessed to tax on the taxable income of the Trust. Instead,
the Trustee and the Manager will deduct income tax at the prevailing corporate tax rate from the distributions made to
unitholders that are made out of the taxable income of the Trust. However, where the beneficial owners are individuals
or qualifying unitholders, the Trustee and the Manager will make the distributions to such unitholders without deducting
any income tax. Also, where the beneficial owners are foreign non-individual unitholders, the Trustee and the Manager will
deduct Singapore income tax at the reduced rate of 10% for such distributions.
A qualifying unitholder is a unitholder who is:
(i)
a Singapore-incorporated company which is a tax resident in Singapore;
(ii)
a body of persons, other than a company or a partnership, registered or constituted in Singapore (for example, a
town council, a statutory board, a registered charity, a registered co-operative society, a registered trade union, a
management corporation, a club and a trade and industry association);
(iii)
a Singapore branch of a foreign company; or
(iv) an international organisation that is exempt from tax on such distributions by reason of an order made under the
International Organisations (Immunities and Privileges) Act (Cap. 145).
A foreign non-individual unitholder is one who is not a resident of Singapore for income tax purposes and
(i)
which does not have a permanent establishment in Singapore; or
(ii)
which carries on any operation in Singapore through a permanent establishment in Singapore where the funds used
to acquire the units are not obtained from that operation in Singapore.
The Trust is exempt from Singapore income tax under Section 13(12) of the Income Tax Act on the following income:
(i)
dividends;
(ii)
interest on shareholder’s loans; and
(iii)
foreign-sourced trust distribution
payable by its subsidiaries out of underlying rental income derived from the overseas investment properties. This
exemption is granted subject to certain conditions, including the condition that the Trustee is a tax resident of Singapore.
The Trust’s distribution policy is to distribute at least 90% of its taxable income for the year ended 30 June 2017 (2016: 90%).
For any remaining amount of taxable income not distributed, tax will be assessed on, and collected from, the Trustee on
such remaining amount (referred to as retained taxable income). In the event where a distribution is subsequently made
out of such retained taxable income, the Trustee and the Manager will not have to make a further deduction of income
tax from the distribution.