3 SIGNIFICANT ACCOUNTING POLICIES
(continued)
3.12 Income tax
(continued)
In determining the amount of current and deferred tax, the Group takes into account the
impact of uncertain tax positions and whether additional taxes and interest may be due.
The Group believes that its accruals for tax liabilities are adequate for all open tax years
based on its assessment of many factors, including interpretations of tax law and prior
experience. This assessment relies on estimates and assumptions and may involve a
series of judgements about future events. New information may become available that
causes the Group to change its judgement regarding the adequacy of existing tax
liabilities; such changes to tax liabilities will impact tax expense in the period that such a
determination is made.
The Inland Revenue Authority of Singapore (the “IRAS”) has issued a tax ruling on the tax
treatment of the Trust. Subject to meeting the terms and conditions of the tax ruling which
includes a distribution of at least 90.0% of the taxable income of the Trust, the Trustee is
not subject to tax on the taxable income of the Trust to the extent of the amount distributed.
Instead, the distributions made by the Trust out of such taxable income are subject to tax
in the hands of Unitholders, unless they are exempt from tax on the Trust’s distributions.
This treatment is known as the tax transparency treatment.
Individuals and qualifying Unitholders, i.e. companies incorporated and tax resident in
Singapore, Singapore branches of foreign companies that have obtained waiver from the
IRAS from tax deducted at source in respect of the distributions from the Trust, and bodies
of persons registered or constituted in Singapore, are entitled to gross distributions from
the Trust. For distributions made to foreign non-individual Unitholders, the Trustee is
required to withhold tax at the reduced rate of 10.0%. For other types of Unitholders, the
Trustee is required to withhold tax at the prevailing corporate tax rate on the distributions
made by the Trust. Such other types of Unitholders are subject to tax on the regrossed
amounts of the distributions received but may claim a credit for the tax deducted at source
at the prevailing corporate tax rate by the Trustee.
The Trust has a distribution policy to distribute at least 90.0% of its taxable income, other
than gains from the sale of real estate properties that are determined by the IRAS to be
trading gains. For the taxable income that is not distributed, referred to as retained taxable
income, tax will be assessed on the Trustee. Where such retained taxable income is
subsequently distributed, the Trustee need not deduct tax at source.
3.13 Segment reporting
An operating segment is a component of the Group that engages in business activities
from which it may earn revenues and incur expenses, including revenues and expenses
that relate to transactions with any of the Group’s other components. All operating
segments’ operating results are reviewed and used by the management for strategic
decision making and resources allocation.
3.14 New standards, interpretations and revised recommended accounting practice not
yet adopted
A number of new standards, amendments to standards and interpretations are effective
for annual periods beginning after 1 January 2014, and have not been applied in
preparing these financial statements. The Group is presently assessing impact of the
adoption of these standards (including their consequential amendments). The Group does
not plan to adopt these standards early.
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