SINGAPORE
Jamie Burgmann joins Aura Group as the Director of Private Wealth
Jamie brings over 15 years of experience advising private clients across both Australia and Singapore
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Singapore Resident Fund Scheme, 13O
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Enhanced-Tier Fund Scheme, 13U
Singapore Resident Fund Scheme, 13O
The Singapore Resident Fund Scheme is a tax incentive designed to encourage fund managers to base their investment vehicles in Singapore. It offers similar benefits to funds located in for instance, the Cayman Islands, providing tax exemption for specified investment income from designated investments.
Aura Group currently has multiple investment products that would be suitable for achieving investment objectives under this structure. The key requirements for the Singapore Resident Fund Scheme 13O for licensed funds management companies, or companies exempt from holding a CMS license are:
- Funds must be managed by a Singapore based fund manager, licensed by MAS
- The fund must be tax resident in Singapore
- Annual expenses must be SGD$200,000 or more
- The fund must be administered by a Singapore based administrator
- MAS must approve the application for the tax exemption
Aura’s umbrella VCC fund already has tax exempt status.
Single Family Offices wanting to make use of the 13O tax exemption, must comply with the following requirements:
- Minimum SGD20m in “Designated Investments” at the point of application and throughout the incentive period
- Employs at least two people, one of whom is not a family member
- Qualified investment professionals must be Singapore tax residents and have relevant work experience and qualifications
- Investing lower of $10 million or 10% of AUM in MAS approved investments
- The Fund must have a private banking account with an MAS licensed bank
- The tax exemption application must be approved by MAS
- Family office/fund must be incorporated and be a tax resident in Singapore
- Requirement to contribute a percentage of AUM to charity, depending on size of Family Office
These requirements negate the need for a Family Office to hold a CMS licence to manage their assets and provide qualification for the tax incentives. For some Family Offices these requirements can be difficult to meet, and it may be easier for the Family Office to utilise a VCC structure through an existing licensed fund manager. Aura Group can provide this service.
INDICATIVE 13O STRUCTURE FOR FAMILY OFFICES
Enhanced-Tier Fund Scheme, 13U
The Enhanced-Tier Fund Scheme is similar to the Singapore Resident Fund Scheme: however, it doesn’t require the family office or fund to be a tax resident of Singapore and it has a higher assets under management requirement. It offers the same tax exemption benefits for specified investment income from designated investments. Setting up a 13U fund as a sub-fund under the VCC structure (similar to the Cayman SPC system) can offer segregation of portfolios and offshore benefits while still enjoying the Singapore tax treaty system. These are the key requirements:
- Minimum assets under management of SGD50m at the point of application
- At least SGD500k local expenses incurred by the fund per year
- Has at least three investment professionals and uses a Singapore-based fund administrator (Aura's VCC already fulfils this requirement)
- Must be approved by MAS
- Family office/fund does not need to be incorporated or be a tax resident in Singapore
- If it is a family office wanting to make use of the 13U tax exemption, the family office must have approval from the MAS
- If the family office chooses to use a licensed fund manager to manage the funds, they can avoid applying to MAS for approval to be considered as a Single Family Office and also for the tax exemption.
Effective July 2023, there are additional rules for Single Family Offices to qualify for SFO status as well as to qualify for the tax exemptions. These relate to the type of investments that must be in the portfolio as well as to requiring donations to local charities.
INDICATIVE 13U STRUCTURE WITH TRUST
