{"id":1677,"date":"2020-12-03T11:41:38","date_gmt":"2020-12-03T03:41:38","guid":{"rendered":"http:\/\/ehluar.com\/main\/?p=1677"},"modified":"2021-04-07T12:12:57","modified_gmt":"2021-04-07T04:12:57","slug":"advance-ruling-summary-on-characterisation-of-hybrid-instrument-and-related-issues","status":"publish","type":"post","link":"http:\/\/ehluar.com\/main\/2020\/12\/03\/advance-ruling-summary-on-characterisation-of-hybrid-instrument-and-related-issues\/","title":{"rendered":"Advance Ruling Summary on &#8220;Qualifying Debt Securities&#8221;"},"content":{"rendered":"\n<p>On or about 1 Dec 2020, the Inland Revenue Authority of Singapore (IRAS)  has published an Income Tax Advance Ruling Summary No. 14\/2020 with  regards to &#8220;Qualifying Debt Securities&#8221;. <\/p>\n\n\n\n<p>The Subject was whether:<\/p>\n\n\n\n<ol class=\"wp-block-list\"><li>the perpetual  capital  securities  (\u201cSecurities\u201d)  will  be  regarded  as  \u201cdebt securities\u201d for the purpose of section 43N(4) of the Income Tax Act and Regulation 2 of the Income Tax (Qualifying Debt Securities)   Regulations; <\/li><li>the  Distributions (including Arrears of Distributions and any Additional Distribution Amounts) payable  on  the  Securities  will  be  regarded  as  interest payable on indebtedness and will enjoy the tax concessions and exemptions  available for &#8220;qualifying  debt  securities&#8221;  (&#8220;QDS&#8221;)  assuming  that  the  other  requisite  conditions  for the Securities to be QDS are  satisfied.<\/li><li><\/li><\/ol>\n\n\n\n<p> <strong>The key features of the Qualifying Debt Securities (ODS)<\/strong><\/p>\n\n\n\n<p>The key features of the Qualifying Debt Securities (ODS) under section 43N(4) of the SITA and Regulation 2 of  the Income Tax (Qualifying Debt Securities) Regulations, include: <\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>The Securities confer the right to the Security holders to receive fixed rate   Distributions,   payable   semi-annually   in   arrears   (each   a   \u201cDistribution  Payment  Date\u201d).  The  Rate  of  Distribution  does  not  depend on the profit performance of the Issuer. Distributions may be made  even  if  the  Issuer  does  not  have  profits  for  the  payment  of  dividends. There is a step-up feature.<\/li><li>The Issuer may in its sole discretion elect not to pay a Distribution which would otherwise be payable on a Distribution Payment Date (\u201cArrears of Distribution\u201d), except in certain specified situations.<\/li><li>Distributions will accrue on each Arrears of Distribution for so long as such Arrears of Distribution remains outstanding at the same Rate of  Distribution  as  the  Principal  Amount  of  the  Securities  bears  at  <br>such time (&#8220;Additional Distribution Amounts&#8221;) and will be added to  such  Arrears  of  Distribution  (and  thereafter  bear  Distributions  accordingly) on each Distribution Payment Date.<\/li><li>The  Issuer  is  not  subject  to  any  limit  as  to  the  number  of  times  Distributions and Arrears of Distribution may be deferred.<\/li><li>If  on  any  Distribution  Payment  Date,  payment  of  all  Distributions  scheduled  to  be  made  is  not  made  in  full  by  reason  of  the  Issuer  deferring  such  Distributions  in  accordance  with  the  terms  of  the  Securities, the Issuer is not allowed to pay discretionary dividends, distributions or make any other discretionary payment on any class of the Issuer\u2019s Junior Securities (other than a dividend, distribution or other payment in respect of an employee benefit plan or similar arrangement), or to redeem, reduce, cancel, buy-back or acquire for any consideration any of the Issuer\u2019s Junior Securities (other than a redemption,   reduction,   cancellation, buy-back   or   acquisition   in   respect of an employee benefit plan or similar arrangement) until the Issuer has satisfied in full all outstanding Arrears of Distribution; or is  permitted  to  do  so  with  the  consent  of  the  Security holders  of  at  least a majority in aggregate principal amount of the Securities then outstanding.<\/li><li>The  Securities  have  no  fixed  redemption  date.  The Issuer has  the  option to redeem the Securities in certain instances.<\/li><li>The Securities   constitute   direct,   unconditional,   unsecured   and   unsubordinated obligations of the Issuer and will at all times rank pari passu with each other and with all other outstanding, unsecured and unsubordinated obligations of the Issuer, past and future, but, in the event of insolvency, only to the extent permitted by applicable laws relating to creditors\u2019 rights.  <\/li><li>The Securities do not confer any voting rights on Security holders.<\/li><li>The Securities are treated as equity for tax purposes in Country X in accordance with Country X\u2019s accounting rules. <\/li><\/ul>\n\n\n\n<p>It was ruled that:<\/p>\n\n\n\n<ol class=\"wp-block-list\"><li>Following the characterisation of the  Securities as  \u201cdebt securities\u201d  for tax purposes under s 43N(4) of the SITA and Regulation 2 of the QDS Regulations, the  Distributions  (including  Arrears  of  Distributions  and  any  Additional  Distribution Amounts) due and payable on the Securities will be regarded as interest payable on indebtedness. <\/li><li>The Securities will be regarded as QDS under the ITA and the  Distributions  (including  Arrears  of  Distributions  and  any  Additional  Distribution  Amounts)  will  enjoy  the  tax  concessions  and  exemptions  available  for  QDS,  provided  that  the  other  requisite  conditions  for  the  Securities to be QDS are satisfied <\/li><li>Subject  to  satisfying  the  governing  conditions  for  the  Securities  to  be  regarded  as QDS, the Security holders will be entitled to the tax   concessions and exemptions available for QDS <\/li><\/ol>\n\n\n\n<p>For more information about the ruling, please go to the IRAS website.<\/p>\n\n\n\n<p>Source, <em>IRAS<\/em>, 3 Dec 2020<\/p>\n\n\n<p><!--EndFragment--><\/p>\n<p><\/p>","protected":false},"excerpt":{"rendered":"<p>On or about 1 Dec 2020, the Inland Revenue Authority of Singapore (IRAS) has published an Income Tax Advance Ruling Summary No. 14\/2020 with regards to &#8220;Qualifying Debt Securities&#8221;. The Subject was whether: the perpetual capital securities (\u201cSecurities\u201d) will be regarded as \u201cdebt securities\u201d for the purpose of section 43N(4) of the Income Tax Act [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","_et_pb_use_builder":"off","_et_pb_old_content":"","_et_gb_content_width":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,6],"tags":[],"class_list":["post-1677","post","type-post","status-publish","format-standard","hentry","category-incometax","category-techupdates"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"http:\/\/ehluar.com\/main\/wp-json\/wp\/v2\/posts\/1677","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/ehluar.com\/main\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/ehluar.com\/main\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/ehluar.com\/main\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/ehluar.com\/main\/wp-json\/wp\/v2\/comments?post=1677"}],"version-history":[{"count":3,"href":"http:\/\/ehluar.com\/main\/wp-json\/wp\/v2\/posts\/1677\/revisions"}],"predecessor-version":[{"id":1682,"href":"http:\/\/ehluar.com\/main\/wp-json\/wp\/v2\/posts\/1677\/revisions\/1682"}],"wp:attachment":[{"href":"http:\/\/ehluar.com\/main\/wp-json\/wp\/v2\/media?parent=1677"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/ehluar.com\/main\/wp-json\/wp\/v2\/categories?post=1677"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/ehluar.com\/main\/wp-json\/wp\/v2\/tags?post=1677"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}