Income Tax (Adjustment for Change of Basis of Computing Profit, Loss or Expense of Financial Instruments resulting from FRS 109 or SFRS(I) 9) Regulations 2020
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Income Tax (Adjustment for Change of Basis of Computing Profit, Loss or Expense of Financial Instruments resulting from FRS 109 or SFRS(I) 9) Regulations 2020
Status:
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Income Tax (Adjustment for Change of Basis of Computing Profit, Loss or Expense of Financial Instruments resulting from FRS 109 or SFRS(I) 9) Regulations 2020
Status:
Not current version (version history — see timeline)
Profit or loss in respect of financial instrument of qualifying person recognised on date of initial application
1. The specified amount mentioned in regulation 4(2) in respect of a financial instrument of a qualifying person is computed in accordance with the following table:
First column
Second column
Change in classification of financial instrument on date of initial application as required by FRS 109 or SFRS(I) 9
Formula for computing specified amount
1.
In respect of an equity instrument —
(a)
that is required by FRS 39 to be classified as any of the following financial assets as at the last day of the basis period for the year of assessment immediately before the initial year of assessment:
(i)
a financial asset at fair value through profit or loss;
(ii)
an available‑for‑sale financial asset;
(iii)
a financial asset carried at cost; and
(b)
that is required by FRS 109 or SFRS(I) 9 to be classified as a financial asset at fair value through profit or loss as at the date of initial application.
A – B + C
where —
(a)
A is the value of the equity instrument recognised (in accordance with FRS 109 or SFRS(I) 9) on the date of initial application in the qualifying person’s balance sheet for the basis period for the initial year of assessment;
(b)
B is the cost incurred by the qualifying person in acquiring the equity instrument; and
(c)
C is the total amount of losses allowed under the Act to the qualifying person in respect of the equity instrument for all years of assessment before the initial year of assessment, excluding the amount of the losses that had been reversed and treated as income for any year of assessment before the initial year of assessment.
2.
In respect of an equity instrument —
(a)
that is required by FRS 39 to be classified as any of the following financial assets as at the last day of the basis period for the year of assessment immediately before the initial year of assessment:
(i)
a financial asset at fair value through profit or loss;
(ii)
an available‑for‑sale financial asset;
(iii)
a financial asset carried at cost; and
(b)
that is required by FRS 109 or SFRS(I) 9 to be classified as a financial asset at fair value through other comprehensive income as at the date of initial application.
A – B + C + D
where —
(a)
A is the value of the equity instrument recognised (in accordance with FRS 109 or SFRS(I) 9) on the date of initial application in the qualifying person’s balance sheet for the basis period for the initial year of assessment;
(b)
B is the cost incurred by the qualifying person in acquiring the equity instrument;
(c)
C is the total amount of losses allowed under the Act to the qualifying person in respect of the equity instrument for all years of assessment before the initial year of assessment, excluding the amount of the losses that had been reversed and treated as income for any year of assessment before the initial year of assessment; and
(d)
D is —
(i)
where the net amount of the gains or losses (before any deduction for tax is made in accordance with FRS 12 or SFRS(I) 1‑12) in respect of the equity instrument recognised (in accordance with FRS 109 or SFRS(I) 9) on the date of initial application in a reserve account of the statement of changes in equity in the qualifying person’s financial statements for the basis period for the initial year of assessment is a loss — the amount of the loss expressed as a positive value; or
(ii)
where the net amount of the gains or losses (before any deduction for tax is made in accordance with FRS 12 or SFRS(I) 1‑12) in respect of the equity instrument recognised (in accordance with FRS 109 or SFRS(I) 9) on the date of initial application in a reserve account of the statement of changes in equity in the qualifying person’s statements for the basis period for the initial year of assessment is a gain — the amount of the gain expressed as a negative value.
3.
In respect of a debt instrument —
(a)
that is required by FRS 39 to be classified as any of the following financial assets as at the last day of the basis period for the year of assessment immediately before the initial year of assessment:
(i)
a financial asset at fair value through profit or loss;
(ii)
an available‑for‑sale financial asset;
(iii)
a financial asset carried at amortised cost; and
(b)
that is required by FRS 109 or SFRS(I) 9 to be classified as a financial asset at fair value through profit or loss as at the date of initial application.
(A – B + C) + (X – Y)
where —
(a)
A is the value of the debt instrument recognised (in accordance with FRS 109 or SFRS(I) 9) on the date of initial application in the qualifying person’s balance sheet for the basis period for the initial year of assessment;
(b)
B is the cost incurred by the qualifying person in acquiring the debt instrument;
(c)
C is the total amount of losses allowed under the Act to the qualifying person in respect of the debt instrument for all years of assessment before the initial year of assessment, excluding the amount of the losses that had been reversed and treated as income for any year of assessment before the initial year of assessment;
(d)
X is the total amount of interest income from the debt instrument, determined using the contractual interest rate, for all years of assessment between the first year of assessment relating to the basis period in which the qualifying person acquired the debt instrument and the year of assessment immediately before the initial year of assessment (both years of assessment inclusive); and
(e)
Y is the total amount of interest income from the debt instrument that was chargeable with tax, for all years of assessment between the first year of assessment relating to the basis period in which the qualifying person acquired the debt instrument and the year of assessment immediately before the initial year of assessment (both years of assessment inclusive).
4.
In respect of a debt instrument —
(a)
that is required by FRS 39 to be classified as any of the following financial assets as at the last day of the basis period for the year of assessment immediately before the initial year of assessment:
(i)
a financial asset at fair value through profit or loss;
(ii)
an available‑for‑sale financial asset;
(iii)
a financial asset carried at amortised cost; and
(b)
that is required by FRS 109 or SFRS(I) 9 to be classified as a financial asset carried at amortised cost as at the date of initial application.
(A – B + C – E) + (X – Y)
where —
(a)
A is the gross value (before any deduction is made for expected credit loss) of the debt instrument recognised (in accordance with FRS 109 or SFRS(I) 9) on the date of initial application in the qualifying person’s balance sheet for the basis period for the initial year of assessment;
(b)
B is the cost incurred by the qualifying person in acquiring the debt instrument;
(c)
C is the total amount of losses allowed under the Act to the qualifying person in respect of the debt instrument for all years of assessment before the initial year of assessment, excluding the amount of the losses that had been reversed and treated as income for any year of assessment before the initial year of assessment;
(d)
E is the amount of expected credit losses of the debt instrument recognised (in accordance with FRS 109 or SFRS(I) 9) on the date of initial application in the opening balance of the qualifying person’s retained earnings account for the basis period for the initial year of assessment, to the extent that the debt instrument is credit‑impaired in accordance with FRS 109 or SFRS(I) 9, as the case may be;
(e)
X is the total amount of interest income from the debt instrument, determined using the contractual interest rate, for all years of assessment between the first year of assessment relating to the basis period in which the qualifying person acquired the debt instrument and the year of assessment immediately before the initial year of assessment (both years of assessment inclusive); and
(f)
Y is the total amount of interest income from the debt instrument that was chargeable with tax, for all years of assessment between the first year of assessment relating to the basis period in which the qualifying person acquired the debt instrument and the year of assessment immediately before the initial year of assessment (both years of assessment inclusive).
5.
In respect of a debt instrument —
(a)
that is required by FRS 39 to be classified as any of the following financial assets as at the last day of the basis period for the year of assessment immediately before the initial year of assessment:
(i)
a financial asset at fair value through profit or loss;
(ii)
an available‑for‑sale financial asset;
(iii)
a financial asset carried at amortised cost; and
(b)
that is required by FRS 109 or SFRS(I) 9 to be classified as a financial asset at fair value through other comprehensive income as at the date of initial application.
(A – B + C + D – E) + (X – Y)
where —
(a)
A is the gross value (before any deduction is made for expected credit loss) of the debt instrument recognised (in accordance with FRS 109 or SFRS(I) 9) on the date of initial application in the qualifying person’s balance sheet for the basis period for the initial year of assessment;
(b)
B is the cost incurred by the qualifying person in acquiring the debt instrument;
(c)
C is the total amount of losses allowed under the Act to the qualifying person in respect of the debt instrument for all years of assessment before the initial year of assessment, excluding the amount of the losses that had been reversed and treated as income for any year of assessment before the initial year of assessment;
(d)
D is —
(i)
where the net amount of the gains or losses (before any deduction for tax is made in accordance with FRS 12 or SFRS(I) 1‑12) in respect of the debt instrument recognised (in accordance with FRS 109 or SFRS(I) 9) on the date of initial application in a reserve account of the statement of changes in equity in the qualifying person’s financial statements for the basis period for the initial year of assessment is a loss — the amount of the loss expressed as a positive value; or
(ii)
where the net amount of the gains or losses (before any deduction for tax is made in accordance with FRS 12 or SFRS(I) 1‑12) in respect of the debt instrument recognised (in accordance with FRS 109 or SFRS(I) 9) on the date of initial application in a reserve account of the statement of changes in equity in the qualifying person’s financial statements for the basis period for the initial year of assessment is a gain — the amount of the gain expressed as a negative value;
(e)
E is the amount of expected credit losses of the debt instrument recognised (in accordance with FRS 109 or SFRS(I) 9) on the date of initial application in the opening balance of the qualifying person’s retained earnings account for the basis period for the initial year of assessment, to the extent that the debt instrument is credit‑impaired in accordance with FRS 109 or SFRS(I) 9, as the case may be;
(f)
X is the total amount of interest income from the debt instrument, determined using the contractual interest rate, for all years of assessment between the first year of assessment relating to the basis period in which the qualifying person acquired the debt instrument and the year of assessment immediately before the initial year of assessment (both years of assessment inclusive); and
(g)
Y is the total amount of interest income from the debt instrument that was chargeable with tax, for all years of assessment between the first year of assessment relating to the basis period in which the qualifying person acquired the debt instrument and the year of assessment immediately before the initial year of assessment (both years of assessment inclusive).
2. In this Schedule —
“contractual interest rate” has the meaning given by section 34AA(15) of the Act;
“FRS 12” and “SFRS(I) 1‑12” mean the financial reporting standards known as Financial Reporting Standard 12 (Income Taxes) and Singapore Financial Reporting Standard (International) 1‑12 (Income Taxes) that are made, and amended from time to time, under Part III of the Accounting Standards Act.