Distributions made by Real Estate Investment Trusts (“REITs”) listed on Singapore Exchange Securities Trading Limited to individuals, whether foreign or local, is tax exempt, except where such distributions are derived by the individual through a partnership in Singapore or from the carrying on of a trade, business or profession.
In view of this, the Inland Revenue Authority of Singapore (“IRAS”) has allowed OUE Hospitality REIT (“OUE H-REIT”) to make taxable income distributions to all individuals (excluding partnerships) at gross (i.e. without tax being deducted at source). Individuals who derive the distributions through a partnership or from the carrying on of a trade, business or profession are not eligible for such tax exemption and are required to declare the gross distributions made to them in their income tax returns.
In addition, REIT’s distributions to qualifying foreign non-individual investors are entitled to a reduced rate of tax of 10% for distributions made during the period from 18 February 2005 to 31 March 2020.
Given the above, there might be instances where excess tax was previously deducted from distributions made by OUE Hospitality Trust (“OUE H-Trust”), a stapled group comprising OUE H-REIT and OUE Hospitality Business Trust (“OUE H-BT”), out of the taxable income of OUE H-REIT that is not taxed at the trustee level.
An arrangement has been established to allow eligible stapled securityholders of OUE H-Trust (“Stapled Securityholders”) to claim for a back-end refund of any excess tax deducted from income distributions made to them from the IRAS.
BACK-END REFUND FOR INCOME DISTRIBUTION
The back-end refund process is meant for the refund of tax which had been previously withheld at the prevailing corporate tax rate from the distributions to the following beneficial Stapled Securityholders:
Individuals holding OUE H-Trust stapled securities (“Stapled Securities”) through a Depository Agent and have received distributions after tax deduction at prevailing corporate tax rate instead of at gross;
Foreign non-individuals whose Stapled Securities are held through a Depository Agent or in their own name and have received distributions after tax deduction at prevailing corporate tax rate instead of 10%. The 10% tax rate is applicable only in respect of distributions made during the period from 25 July 2013 to 31 March 2020; or
Charities registered under the Charities Act (Cap. 37) or established by any written law, town councils, statutory boards, co-operative societies registered under the Co-operative Societies Act (Cap. 62) or trade unions registered under the Trade Unions Act (Cap. 333) (collectively referred to as “Exempt Non-Corporate Stapled Securityholders”) holding Stapled Securities in their own name or through Depository Agents.
For other categories of beneficial Stapled Securityholders, they will need to claim a refund of the tax over-deducted, if any, when filing their tax return.
Foreign non-individuals refer to persons (other than individuals) who are not residents of Singapore for income tax purposes and:
Who do not have a permanent establishment in Singapore; or
Who carry on any operation in Singapore through a permanent establishment in Singapore, but the funds used to acquire the units in OUE H-REIT are not obtained from that operation.
If you are a foreign non-individual holding the Stapled Securities in your own name:
Download and complete Form R1. Please use a separate Form R1 for each income distribution period.
Submit the duly completed Form R1, accompanied by the original Subsidiary Income Tax Certificate ("SITC") or Annual Distribution Statements ("ADS") issued by The Central Depository (Pte) Ltd for the distribution in respect of which the claim for refund is made to the Unit Registrar, Boardroom Corporate & Advisory Services Pte. Ltd. at 50 Raffles Place #32-01 Singapore Land Tower Singapore 048623.
If you are an individual or a foreign non-individual and you hold the Stapled Securities through Depository Agents, please liaise with your Depository Agent on your claim for refund. The claim will be made on your behalf by your Depository Agent.
If you are a Depository Agent and wish to claim for refund on behalf of beneficial unit owners who are individuals or foreign non-individuals:
Download and complete Form R2, including Annexes 1 and 2. Please use a separate Form R2 for each income distribution period.
Submit the duly completed Form R2, accompanied by the original SITC for the distribution in respect of which the claim for refund is made to the Unit Registrar, Boardroom Corporate & Advisory Services Pte. Ltd. at 50 Raffles Place #32-01 Singapore Land Tower Singapore 048623.
The back-end refund tax declaration form can be downloaded as follows:
If you are a Foreign Non-Individual holding the Stapled Securities in your own name, click here for Form R1.
If you are an Individual or a Foreign Non-Individual holding the Stapled Securities through Depository Agents, please liaise with your respective Depository Agent on your claim for the tax refund. The claim will be made on your behalf by your Depository Agent.
If you are a Depository Agent and wish to claim for the tax refund on behalf of beneficial owners who are Individuals or Foreign Non-Individuals, click here for Form R2.
You may submit Form R1 and R2 with the accompanying SITCs or ADS at any time. The Manager of OUE H-REIT will process the claim for refund from IRAS on a half -yearly basis. Please use a separate form for each income distribution period.
Identification number such as Singapore NRIC number, passport number or foreign identification number is required for individuals who hold their units through Depository Agents.
The refund will not be processed if the SITC or ADS is not submitted.
The back-end refund will be processed by the Manager twice a year on 30 June and 31 December but the Manager reserves the right to end the half-yearly back-end process, with advance notice, if it is deemed to be no longer necessary.
The completed declaration form has to be returned to the Unit Registrar, Boardroom Corporate & Advisory Services Pte. Ltd., 15 days before the time limit stipulated above for each back-end refund process. If the stipulated dates happen to fall on a weekend or public holiday, the deadline will be the next working day.
The Manager will issue a letter together with the cheque for the refund amount to the Depository Agents and the Stapled Securityholders who hold the units directly. This letter will serve as evidence that the tax refunds have been made.
The tax refund will be paid to the Depository Agents or the Stapled Securityholders as soon as practicable after the receipt of the tax refund from the IRAS by the OUE H-REIT.
Every claim for refund must be made to the IRAS within 4 years from the end of the year of assessment to which the claim relates. For example, for claiming of refund in respect of taxable income distribution made by OUE H-REIT for the period 1 January 2014 to 31 March 2014 (which relates to the year of assessment 2015), the claim for refund must be submitted to the IRAS on or before 31 December 2019. Stapled Securityholders and Depository Agents must ensure that the relevant Forms are submitted on a timely basis to allow OUE H-REIT to make the refund claims within the prescribed time limit. The IRAS will not process any claim that is out of time.
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