{"id":2175,"date":"2024-11-02T15:40:17","date_gmt":"2024-11-02T07:40:17","guid":{"rendered":"http:\/\/ehluar.com\/main\/?p=2175"},"modified":"2025-08-11T15:45:51","modified_gmt":"2025-08-11T07:45:51","slug":"ruling-on-tax-treatment-of-subordinated-perpetual-securities","status":"publish","type":"post","link":"http:\/\/ehluar.com\/main\/2024\/11\/02\/ruling-on-tax-treatment-of-subordinated-perpetual-securities\/","title":{"rendered":"Ruling on Tax Treatment of Subordinated Perpetual Securities"},"content":{"rendered":"\n

The Inland Revenue Authority of Singapore (IRAS) has published an Advance Ruling Summary No. 7\/2024, provides critical clarification on the income tax characterization of fixed-rate subordinated perpetual securities.<\/p>\n\n\n\n

This ruling addresses significant questions for issuers and investors regarding the application of Singapore’s tax concessions for qualifying debt securities (QDS) and the deductibility of distributions:<\/p>\n\n\n\n

    \n
  1. Debt Security Status:<\/strong> The ruling determines whether fixed-rate subordinated perpetual securities<\/em> qualify as “debt securities” under Section 43H(4) of the Income Tax Act 1947 (ITA) and Regulation 2 of the Income Tax (Qualifying Debt Securities) Regulations.<\/li>\n\n\n\n
  2. Tax Concessions Eligibility:<\/strong> It clarifies if the distributions payable to holders<\/em> of these securities (including any accumulated Arrears of Distribution) are eligible for the tax exemptions and concessions typically available for QDS.<\/li>\n\n\n\n
  3. Issuer Deductibility:<\/strong> The ruling confirms whether issuers of such securities can claim tax deductions under Section 14(1)(a) of the ITA, treating the distributions as “sums payable by way of interest.”<\/em><\/li>\n<\/ol>\n\n\n\n

    This advance ruling provides much-needed certainty for financial institutions and corporations issuing or considering issuing subordinated perpetual securities, a complex hybrid capital instrument. The outcome directly impacts the after-tax cost of capital for issuers and the after-tax yield for investors.<\/p>\n\n\n\n

    Issuers and investors involved in structured finance or hybrid capital instruments<\/em> should review the specific findings within the ruling to understand the precise tax treatment confirmed by IRAS for the securities described in the ruling.<\/p>\n\n\n\n

    Source:<\/strong> IRAS, 1 November 2024.<\/p>\n","protected":false},"excerpt":{"rendered":"

    The Inland Revenue Authority of Singapore (IRAS) has published an Advance Ruling Summary No. 7\/2024, provides critical clarification on the income tax characterization of fixed-rate subordinated perpetual securities. This ruling addresses significant questions for issuers and investors regarding the application of Singapore’s tax concessions for qualifying debt securities (QDS) and the deductibility of distributions: This […]<\/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":[7,8,6],"tags":[],"class_list":["post-2175","post","type-post","status-publish","format-standard","hentry","category-accounting","category-incometax","category-techupdates"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"http:\/\/ehluar.com\/main\/wp-json\/wp\/v2\/posts\/2175","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=2175"}],"version-history":[{"count":1,"href":"http:\/\/ehluar.com\/main\/wp-json\/wp\/v2\/posts\/2175\/revisions"}],"predecessor-version":[{"id":2176,"href":"http:\/\/ehluar.com\/main\/wp-json\/wp\/v2\/posts\/2175\/revisions\/2176"}],"wp:attachment":[{"href":"http:\/\/ehluar.com\/main\/wp-json\/wp\/v2\/media?parent=2175"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/ehluar.com\/main\/wp-json\/wp\/v2\/categories?post=2175"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/ehluar.com\/main\/wp-json\/wp\/v2\/tags?post=2175"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}