Qualifying for Group Relief

To qualify, the transferor and claimant must be incorporated in Singapore, belong to the same group and have the same financial year end.

Qualifying Conditions

The transferor and claimant of the loss items have to:

  • be Singapore incorporated companies;
  • belong to the same group of companies and maintain 75% shareholding threshold; and
  • have the same financial year end.

Incorporated in Singapore

The transferor and claimant must be Singapore incorporated companies. In determining ownership under GR, any holdings by or through non-Singapore incorporated companies will be disregarded.

In other words, where there is a foreign-incorporated company in the ownership chain, shareholdings by the foreign-incorporated company will not be considered for the purpose of determining direct or indirect shareholdings.

Similarly, any direct or indirect shareholdings by an entity which is not a Singapore-incorporated company (e.g. a trade association, an individual, etc.) will be disregarded.

Same Group with 75% Shareholding

Two Singapore-incorporated companies are members of the same group when:

  • at least 75% of the ordinary share capital in one company is beneficially held, directly or indirectly, by the other; or

    A Singapore-incorporated company (parent company) holds 90% of the ordinary share capital of its Singapore-incorporated subsidiary (Subsidiary A). Subsidiary A holds 90% of the ordinary share capital of its Singapore-incorporated subsidiary (Subsidiary B).

    Same Group with 75% Shareholding

    Company Percentage of ordinary shareholding 75% met and therefore regarded as members of same group 
    Parent and Subsidiary AParent holds 90% (direct shareholding) of Subsidiary A Yes 
    Parent and Subsidiary BParent holds 81% (indirect shareholding) of Subsidiary BYes 
    Subsidiary A and Subsidiary BSubsidiary A holds 90% (direct shareholding) of Subsidiary B Yes 

    Parent, Subsidiary A and Subsidiary B are therefore all members of the same group.

  • at least 75% of the ordinary share capital in each of the two companies is beneficially held, directly or indirectly, by a third Singapore incorporated company

    A Singapore-incorporated company (parent company) holds 75% of the ordinary share capital of each of its Singapore-incorporated subsidiaries (Subsidiary A and Subsidiary B).

    Same Group with 75% Shareholding

    Subsidiary A and Subsidiary B are members of the same group as at least 75% of the ordinary share capital in each of the subsidiary is held directly by a third Singapore-incorporated company (parent company). Parent, Subsidiary A and Subsidiary B are therefore all members of the same group.

The ordinary shareholding must be maintained at or above 75% during the continuous period that ends on the last day of the basis period. (The basis period for any YA is the period for which the profits of the company are taxed). There are two tests to apply in determining ordinary shareholding.

First-Level Test: Ordinary shareholding requirement

To pass this test, there has to be ownership of at least 75% of the ordinary share capital in the company. Ordinary shares are all shares issued by a company that carry a right to variable profit participation and exclude shares that carry only a right to fixed dividends.

Second-Level Test: Profits and assets available for distribution

Holders of ordinary shares must demonstrate that they are beneficially entitled, directly or indirectly, to at least 75% of:

  1. any residual profits of the company available for distribution to the company's equity holders; and
  2. any residual assets of the company available for distribution to the company's equity holders upon winding-up of the company.

For the purpose of GR, residual profits refer to the profits of the company after deducting any fixed dividends on all shares including any fixed dividends on ordinary shares and before deducting any non-fixed return on non-commercial loans and any non-fixed dividends on ordinary shares.

For the purpose of GR, residual assets refer to the net assets of the company upon a notional winding-up, after distribution to commercial loan creditors and shareholders other than ordinary shareholders

For the purpose of GR, equity holders include all holders of ordinary shares (i.e. all shares excluding shares that carry only a right to fixed dividends) in the company, as well as any creditors in respect of non-commercial loans.

Same Financial Year End

Members of the same group must have the same financial year end to qualify for GR. This requirement is only applicable between a transferor company and claimant company. Other companies in the same group may have different financial year end as long as they are not the transferor or claimant.

Company A is a transferor and company B is a claimant. Both companies are also related indirectly through company C within the same group. C need not have the same financial year end if it is neither transferring its loss items to B nor claiming loss items from A.

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