3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.11 Tax (continued)
The measurement of deferred taxes reflects the tax consequences that would follow the manner in which
the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets
and liabilities. For investment property that is measured at fair value, the presumption that the carrying
amount of the investment property will be recovered through sale has not been rebutted. Deferred tax is
measured at the tax rates that are expected to be applied to temporary differences when they reverse,
based on the laws that have been enacted or substantively enacted by the reporting 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, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis
or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences,
to the extent that it is probable that future taxable profits will be available against which they can be
utilised. Deferred tax assets are reviewed at each reporting date and are 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 the Trust for
income earned and expenditure incurred after its listing on the SGX-ST. Subject to meeting the terms and
conditions of the tax ruling issued by IRAS, the Trustee is not subject to tax on the taxable income of the
Trust, which includes profit distributions from liquid Islamic debt securities such as Sukuk that the Trust
may invest in, provided that at least 90% of the taxable income of the Trust is distributed within the year
in which the income is derived (the “tax transparency treatment”). Instead, the Trustee and the Manager
will deduct income tax at the prevailing corporate tax rate (currently 17%) from the distributions made to
Unitholders that are made out of the taxable income of the Trust, except:
(i) where the beneficial owners are individuals (whether resident or non-resident) who receive such
distributions as investment income (excluding income received through a partnership) or Qualifying
Unitholders, the Trustee and the Manager will make the distributions to such Unitholders without
deducting any income tax; or
(ii) where the beneficial owners are Qualifying Foreign Non-Individual Unitholders, the Trustee and the
Manager will deduct Singapore income tax at the reduced rate of 10% for distributions made up to
31 March 2020, unless concession is extended.
A Qualifying Unitholder is a Unitholder who is:
• A Singapore-incorporated company which is a tax resident in Singapore;
• A body of persons, other than a company or a partnership, registered or constituted in Singapore
(for example, a town council, a statutory board, a registered charity, a registered co-operative
society, a registered trade union, a management corporation, a club and a trade and industry
association); and
• A Singapore branch of a foreign company which has presented a letter of approval from the IRAS
granting a waiver from tax deduction at source in respect of distributions from the Trust.
Year ended 31 December 2014
NOTES TO THE FINANCIAL STATEMENTS
SABANA REIT
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ANNUAL REPORT 2014
111
