Group Relief enables companies to deduct unutilised capital allowances/ trade losses/ donations of 1 company from the assessable income of another company in the same group.

What is Group Relief

Group Relief is a system which treats companies in the same group as if they are 1 single company. Under this relief, the following items (referred to as 'loss items') of 1 company can be deducted from the assessable income of the other company of the same group:

  • Current year unutilised capital allowances
  • Current year unutilised trade losses
  • Current year unutilised donations

The company which transfers any of its loss items is called 'transferor'. The company which receives the loss items is called 'claimant'.

Learn more about the Group Relief system (PDF, 901KB) and read the frequently asked questions (PDF, 1.01MB).

Specific Exclusions

Loss items that do not qualify for transfer under Group Relief include:

  • Loss items of foreign branches
  • Investment allowances
  • Loss items in respect of income wholly exempt from tax (e.g. loss from pioneer trade)
  • Loss items in respect of specific categories of activities or trade where there are rules to quarantine the unutilised losses and capital allowances (e.g. income from finance leases under  Section 10D and income from hiring motor vehicle under Section 10H)
  • Unutilised Section 14Q deduction arising in and before the Year of Assessment (YA) 2012
  • Expenses of dormant companies for the current year that are not allowed to be deducted in the dormant company's tax computation. However, current year unutilised donations may be transferred under the Group Relief system
  • Current year unutilised losses arising from excess of expenses over investment income of investment holding companies. However, current year unutilised Industrial Building Allowance/ Land Intensification Allowance and donations may be transferred under the Group Relief system
  • Current year unutilised losses/ capital allowances of Section 10E companies (PDF, 184KB). However, current year unutilised Industrial Building Allowance, Land Intensification Allowance and donations may be transferred under the Group Relief system

 

Qualifying Conditions

The transferor and claimant of the loss items must:

  1. Be Singapore incorporated companies;
  2. Belong to the same group of companies and maintain 75% shareholding threshold; and
  3. Have the same financial year end.

Incorporated in Singapore

The transferor and claimant must be Singapore incorporated companies.

Same Group with 75% Shareholding

2 Singapore incorporated companies are members of the same group when:

  • At least 75% of the ordinary share capital in 1 company is beneficially held, directly or indirectly, by the other; or
  • At least 75% of the ordinary share capital in each of the 2 companies is beneficially held, directly or indirectly, by a third Singapore incorporated company.

The ordinary shareholding must be maintained at or above 75% during the continuous period that ends on the last day of the basis period.

Where the ordinary shareholding level had fallen below 75% during the basis period but is at least 75% on the last day of the basis period for a Year of Assessment (YA), the amount of loss items allowed to be transferred or claimed is restricted to the amount applicable to the continuous period ending on the last day of that basis period, during which the relevant holding company's ordinary shareholding level is maintained at or above 75%.

View an example on how to determine the quantum of loss items to be transferred if the continuous period does not cover the whole basis period (PDF, 1.01MB).

There are 2 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.

In determining the ordinary shareholding level, any holdings by or through non-Singapore incorporated companies are disregarded.

In other words, where there is a foreign incorporated company in the ownership chain, shareholdings by the foreign incorporated company are not considered for the purpose of determining direct or indirect shareholdings. Similarly, any direct or indirect shareholdings by an entity that is not a Singapore incorporated company (e.g. a trade association, an individual) are disregarded.

Example 1

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). 

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

The parent company, Subsidiary A and Subsidiary B are therefore all members of the same group.

Example 2

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).

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). The parent company, Subsidiary A and Subsidiary B are therefore all members of the same group.

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:

  • Any residual profits of the company available for distribution to the company's equity holders; and
  • 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 Group Relief:

  • 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.
  • 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.
  • 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

The transferor and claimant must have the same financial year end to qualify for Group Relief. Other companies in the same group may have different financial year ends as long as they are not the transferor or claimant.

Example

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

How to Claim Group Relief

Order of Transfer/ Claim of Loss Items

Loss items are to be transferred/ claimed in the following order:

  1. Current year unutilised capital allowances
  2. Current year unutilised trade losses
  3. Current year unutilised donations


Note: Income subject to tax at the higher rate is to be transferred first, followed by the amount subject to tax at a lower rate (subject to the adjustment specified under Section 37B of Income Tax Act, if applicable).

A transferor company may transfer 100% of its loss items to a claimant company as long as the loss can be absorbed by the claimant company and the qualifying conditions are met.

New Companies Claiming Group Relief

Where the first set of financial statements is submitted for a period exceeding 12 months, the losses to be transferred or claimed under Group Relief should be ascertained after the losses or income of the new company have been apportioned to its respective Years of Assessment (YAs).

For example, if the first set of financial statements is for the period from 1 Jun 2019 to 31 Dec 2020, the losses should be apportioned to YAs 2020 (i.e. 1 Jun 2019 to 31 Dec 2019) and 2021 (i.e. 1 Jan 2020 to 31 Dec 2020).

Transferring/ Claiming Loss Items to/ from More than 1 Company

Where there are multiple transferors/ claimants, the loss items are transferred/ claimed in accordance with the priority spelt out in the companies' respective Form GR-A (PDF, 619KB) and Form GR-B (PDF, 639KB).

  • Single Transferor, Multiple Claimants

Where a transferor company wishes to transfer its loss items to more than 1 claimant company, the loss items must be fully deducted from the available assessable income of the first claimant company before any excess loss items are deducted from the available assessable income of the second claimant company, and so on.

  • Multiple Transferors, Single Claimant

Similarly, a claimant company may claim loss items from 1 or more transferor companies within the same group. The loss items transferred from the first transferor company must be fully deducted from the assessable income of the claimant company before loss items from a second transferor company can be deducted.

When the transferor company is unable to ascertain the exact number of claimant companies to transfer its loss items to because the tax positions of the transferor/ claimant have not been finalised yet, the company may specify a list of claimant companies even though the combined provisional assessable income of these claimant companies may exceed the provisional quantum of loss items available for set-off.

Similarly, the claimant company may specify a list of transferor companies even though the combined provisional quantum of loss items of the transferor companies available for set-off is higher than the provisional assessable income of the claimant company.

When the priority list submitted by the transferor company is inconsistent with the list submitted by the claimant company, the order of priority specified by the transferor company takes precedence.

Administrative Procedures

To apply for Group Relief, the transferor company has to submit the completed Form GR-A (PDF, 619KB) while the claimant company has to submit the completed Form GR-B (PDF, 639KB) at the time of filing of their Corporate Income Tax Return (Form C). Otherwise, the company will not be eligible for Group Relief for that Year of Assessment (YA). 

Companies that wish to make the claim cannot use Form C-S or Form C-S (Lite).

The election for Group Relief is irrevocable. Your company cannot amend the Group Relief form after submission. Do ensure accuracy (e.g. the order of claimant companies) before filing your company’s Corporate Income Tax Return by the due date.

When There is a Change in the Company's Tax Position

A company is allowed to submit a revised Group Relief form only when there is a change in the company's tax position from a taxable to a loss position or vice versa. The revised Group Relief form must be submitted within 2 months from the date of the Notice of Amended/ Additional Assessment.

When the assessment of a claimant company is revised from a taxable to a loss position:

  • The company (new transferor) may submit a Form GR-A (PDF, 619KB) within 2 months from the date of the Notice of Assessment.
  • The claimant companies to which loss items are to be transferred by the new transferor company must submit a Form GR-B (PDF, 639KB) within 2 months from the date of the said Notice of Assessment. If the claimant companies have previously submitted a  Form GR-B (PDF, 639KB), it cannot change the ranking previously specified but may add the new transferor company.

When the assessment of a transferor company is revised from a loss position to a taxable position:

  • Any Form GR-A submitted previously becomes void.
  • The company (new claimant) may claim the loss items to be transferred by submitting a Form GR-B (PDF, 639KB)  within 2 months from the date of the Notice of Assessment.
  • The transferor company from which loss items are to be claimed by the new claimant must submit Form GR-A (PDF, 619KB) within 2 months from the date of the said Notice of Assessment. If the transferor company has previously submitted Form GR-A (PDF, 619KB), it cannot change the ranking previously specified but may add the new claimant company.