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Notes to the financial statements
(f)
Taxation
Taxation on the returns for the year comprises current and deferred tax. Income tax is recognised in the
Statement of Total Return, except to the extent that it relates to items directly related to Unitholders’
funds, in which case it is recognised in Unitholders’ funds.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the balance sheet date.
Deferred tax is provided using the balance sheet method, providing for temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used
for taxation purposes. The temporary differences on initial recognition of assets or liabilities that affect
neither accounting nor taxable profit are not provided for. The amount of deferred tax provided is based
on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using
tax rates enacted or substantively enacted at the balance sheet 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 income taxes levied by the same tax authority on the same taxable entity.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will
be available against which the unused tax losses and credits can be utilised. Deferred tax assets are
reviewed at each balance sheet date and reduced to the extent that it is no longer probable that the
related tax benefit will be realised.
The Inland Revenue Authority of Singapore (“IRAS”) has issued a tax ruling on the taxation of A-REIT
for income earned and expenditure incurred after its public listing on 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
A-REIT distributed in the same financial year. Instead, the Trustee and the Manager will deduct income
tax (if required) at the prevailing corporate tax rate of 17% (2009: 17%) from the distributions made to
Unitholders that are made out of the taxable income of A-REIT in that financial year.
However, the Trustee and the Manager will not deduct tax from distributions made out of A-REIT’s taxable
income that is not taxed at A-REIT’s level to the extent that the beneficial Unitholders are:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Individuals (whether resident or non-resident) who receive such distributions as investment
income (excluding income received through a Singapore partnership);
Companies incorporated and tax resident in Singapore;
Singapore branches of foreign companies which have presented a letter of approval from the
IRAS granting waiver from tax deducted at source in respect of distributions from A-REIT;
Non-corporate Singapore constituted or registered entities (e.g. town councils, statutory boards,
charitable organisations, management corporations, clubs and trade and industry associations
constituted, incorporated, registered or organised in Singapore);
Central Provident Fund (“CPF”) members who use their CPF funds under the CPF Investment
Scheme and where the distributions received are returned to the CPF accounts; and
Individuals who use their Supplementary Retirement Scheme (“SRS”) funds and where the
distributions received are returned to the SRS accounts.
8th Annual Report FY09/10
129