§ 10H — Securities lending or repurchase arrangement

10H.—(1) For the purpose of determining whether an amount, other than any fee payable under a securities lending or repurchase arrangement, should be taken into account in ascertaining the gains or profits from any transfer of securities under the arrangement in respect of which a transferor is chargeable to tax, the transferor is to be treated as if —(a)

the transfer of the transferred securities had not been made;

(b)

the transferor had held the transferred securities at all times during the borrowing period; and

(c)

the return of the transferred securities or equivalent securities had not been made at the end of the borrowing period.

(2) Despite subsection (1), where a transferor is a person who carries on a trade or business of sale and purchase of securities, any gains or profits derived by the transferor from any transfer of securities under a securities lending or repurchase arrangement are chargeable to tax under section 10(1)(a) if subsequent to the transfer of the transferred securities —(a)

the transferred securities are redeemed;

(b)

the transferee accepts a takeover offer for the transferred securities upon the direction of the transferor;

(c)

the arrangement is terminated because the transferor or transferee is unable to perform any of the obligations specified in the arrangement, unless the transferor applies the collateral held by the transferor to re‑acquire equivalent securities under the terms of the arrangement;

(d)

the transferee sells the transferred securities to the issuer of such securities upon the direction of the transferor; or

(e)

any other event occurs which, in the Comptroller’s opinion, results in the condition specified in paragraph (a)(iii) or (iv) of the definition of “securities lending or repurchase arrangement” not fulfilled,

and the gains or profits are deemed to arise at the time any of the events referred to in paragraph (a), (b), (c), (d) or (e) occurs.

(3) Where a transferee is a person who carries on a trade or business of sale and purchase of securities, any gains or profits derived by the transferee from any transfer of securities under a securities lending or repurchase arrangement are chargeable to tax under section 10(1)(a), and the gains or profits are deemed to arise at the time any of the following events occurs:(a)

the transferee disposes of the transferred securities to a person other than the transferor;

(b)

subsequent to such disposal, the transferee returns equivalent securities to the transferor or any of the events specified in subsection (2) occurs, whichever is the earlier.

(4) For the purposes of computing the gains or profits of a transferee under subsection (3), the transferee is to be treated as if the transferee had acquired the transferred securities from or returned equivalent securities to the transferor (as the case may be) for a consideration equal to the market value of the transferred securities at the beginning of the borrowing period under the securities lending or repurchase arrangement.

(5) Where any distribution in respect of transferred securities is made to a Singapore‑based transferee and received by a transferor under a securities lending or repurchase arrangement, the distribution must be included in the statutory income of the transferor of the year in which the distribution is made to the transferee, and be assessed as if the distribution had been made to the transferor.[Act 35 of 2024 wef 27/11/2024]

(6) [Deleted by Act 19 of 2013]

(7) A Singapore‑based transferee (other than a transferee under a buy and sell back arrangement in respect of qualifying debt securities or foreign debt securities) is not entitled to any tax credit under section 50 or 50A for any distribution received by the transferee from outside Singapore in respect of transferred securities under a securities lending or repurchase arrangement.

(8) Where any compensatory payment derived under a securities lending or repurchase arrangement by a transferor from a Singapore‑based transferee is in place of —(a)

any distribution, the transferor is to be assessed at the tax rate that would have applied to the distribution had it been made directly to the transferor; or[Act 35 of 2024 wef 27/11/2024]

(b)

[Deleted by Act 19 of 2013]

(c)

a distribution of income derived from outside Singapore and where the transferor is resident in Singapore, no tax credit under section 50 or 50A is allowed to the transferor.

(9) Section 45 applies in relation to —(a)

any distribution of interest (other than interest derived from qualifying debt securities) in respect of transferred securities; and

(b)

any compensatory payment in place of —(i)

any distribution of income derived from outside Singapore; [Act 35 of 2024 wef 27/11/2024]

(ii)

[Deleted by Act 19 of 2013]

(iii)

any distribution of interest (other than interest derived from qualifying debt securities); or[Act 35 of 2024 wef 27/11/2024]

(iv)

any distribution of any other income that is not exempt from tax,

made under a securities lending or repurchase arrangement by a Singapore‑based transferee to a transferor who is not resident in Singapore, as that section applies to any interest paid by a person to another person not known to the firstmentioned person to be resident in Singapore, and for the purpose of such application, any reference in that section to interest is a reference to such distribution or compensatory payment.

[Act 35 of 2024 wef 27/11/2024]

(9A) Section 45 applies in the manner set out in section 45G in relation to —(a)

any distribution in respect of transferred securities that are units of a real estate investment trust or an approved REIT exchange-traded fund; and

(b)

any compensatory payment in place of any distribution mentioned in paragraph (a),

made under a securities lending or repurchase arrangement by a Singapore-based transferee to a transferor who is not known to the trustee to be resident in Singapore, as section 45 applies in relation to a distribution by a trustee of a real estate investment trust or by a trustee of an approved REIT exchange-traded fund to another person in accordance with section 45G(1), and for this purpose —

(c)

any reference in section 45G to a distribution is to the distribution or compensatory payment mentioned in paragraph (a) or (b);

(d)

section 45G(4) does not apply in relation to a compensatory payment mentioned in paragraph (b); and

(e)

section 45G(5) is omitted.[Act 35 of 2024 wef 27/11/2024]

(10) For the purposes of this section, the Comptroller may specify such requirement and obligation to be observed, and such information in respect of any transferor, transferee or transferred securities to be furnished, by the depository agent of the transferor or transferee.

(11) The Minister may make regulations to provide generally for giving full effect to or for carrying out the purposes of this section.

(12) In this section —“approved REIT exchange-traded fund” and “real estate investment trust” have the meanings given by section 43(10);[Act 35 of 2024 wef 27/11/2024]

“borrowing period”, in relation to any transferred securities, means the period commencing from the date the securities are transferred by the transferor to the transferee and ending on the date the securities or equivalent securities are returned to the transferor or are regarded as being disposed of by the transferor under subsection (2), whichever is the earlier;

“commercial purpose”, in relation to any securities lending or repurchase arrangement, means —(a)

the settling of a sale of securities, whether by the transferee or another person;

(b)

the replacement, in whole or in part, of the transferred securities obtained by the transferee under any earlier securities lending or repurchase arrangement;

(c)

the on‑lending of the transferred securities to another person;

(d)

the fulfillment by the transferee of its existing obligations arising from an uncovered written option position using transferred securities;

(e)

the hedging and arbitrage transactions entered into or to be entered into by the transferee;

(f)

the liquidity management by the transferee;

(g)

the holding of the transferred securities, without being disposed of, as collateral against the obligations of the counterparty to the securities lending or repurchase arrangement; or

(h)

any other purpose as the Minister (or such person as the Minister may appoint) may in writing allow;

“compensatory payment”, in relation to any transferred securities, means a payment made during the borrowing period to a transferor in place of any distribution or right to purchase warrants, options or additional securities in respect of the transferred securities under circumstances in which the transferee does not receive such distribution to be passed on to the transferor, and includes any amount which is in place of interest and is deducted from the price paid by the transferor to acquire equivalent securities or re‑acquire the transferred securities under a buy and sell back arrangement in respect of qualifying debt securities, Singapore Government securities or foreign debt securities;[Act 35 of 2024 wef 27/11/2024]

“distribution”, in relation to any transferred securities, includes the distribution of any income paid under the transferred securities to the holder of the transferred securities;[Act 35 of 2024 wef 27/11/2024]

“equivalent securities”, in relation to any transferred securities, means securities which are identical in type, nominal value (where applicable), description and amount to the transferred securities and includes —(a)

the securities into which the transferred securities have been converted, subdivided or consolidated;

(b)

the proceeds of the redemption of the transferred securities;

(c)

the cash or securities representing the proceeds of the acceptance of the takeover of the transferred securities;

(d)

if there is a call on partly‑paid securities and if the transferor has paid to the transferee the sum due on the call, the paid‑up securities;

(e)

if there is a bonus issue, the transferred securities together with the securities allotted by way of bonus;

(f)

if there is a rights issue and if the transferor has directed the transferee to take up the issue and has paid to the transferee any sum due on the issue, the transferred securities together with the securities allotted under the rights issue or, if the transferor has directed the transferee to sell the rights, the transferred securities together with the proceeds from the disposal of the rights;

(g)

if any distribution is made in the form of securities or a certificate which may be exchanged for securities or an entitlement to acquire securities, the transferred securities together with the securities or certificate or entitlement equivalent to those allotted; and

(h)

if the transferee is unable to return the transferred securities, such amount of money or securities equivalent to the transferred securities;

“foreign debt securities” means debt securities denominated in any foreign currency (including bonds and notes) issued by foreign governments, foreign banks outside Singapore and companies not incorporated and not resident in Singapore;[Act 35 of 2024 wef 27/11/2024]

“qualifying debt securities” has the meaning given by section 13(16);

“securities” includes —(a)

units in a collective investment scheme, exchange-traded fund, business trust or depository receipts; and

(b)

any securities (including units mentioned in paragraph (a)) provided as a collateral;[Act 35 of 2024 wef 27/11/2024]

“securities lending or repurchase arrangement” means any written arrangement made on or after 23 November 2001 —(a)

under which —(i)

a person (called in this section the transferor) transfers the legal interest in any securities (called in this section the transferred securities) to another person (called in this section the transferee) for any commercial purpose;

(ii)

the transferor re‑acquires the transferred securities or acquires equivalent securities from the transferee at a later time;

(iii)

the transferor retains the risk of loss or opportunity for gain in respect of the transferred securities;

(iv)

the transferor does not dispose of (by transfer, declaration of trust or otherwise) the right to receive any part of the total consideration payable or to be given by the transferee under the arrangement; and

(v)

if any distribution is made in respect of the transferred securities during the borrowing period, the transferor receives from the transferee the distribution or compensatory payment equal to the value of the distribution; and

(b)

where —(i)

the transferor and transferee are dealing with each other at arm’s length; and

(ii)

the transferor or transferee or both of them do not enter into the arrangement with the purpose, or main purpose, of avoiding, reducing or deferring any tax chargeable under this Act;

“Singapore-based transferee” means a transferee —(a)

who is resident in Singapore (except in respect of any business carried on outside Singapore through a permanent establishment outside Singapore); or

(b)

who is not resident in Singapore but enters into the securities lending or repurchase arrangement through a permanent establishment in Singapore or for the purpose of a business carried on through a permanent establishment in Singapore;[Act 35 of 2024 wef 27/11/2024]

“Singapore Government securities” and “debt securities” have the meanings given by section 43H.

(13) This section has effect despite anything to the contrary in this Act, except that this section does not affect the chargeability to tax of any income of a transferor or transferee under section 10 unless otherwise provided in this section.[10N

—(1) For the purpose of determining whether an amount, other than any fee payable under a securities lending or repurchase arrangement, should be taken into account in ascertaining the gains or profits from any transfer of securities under the arrangement in respect of which a transferor is chargeable to tax, the transferor is to be treated as if —(a)

the transfer of the transferred securities had not been made;

(b)

the transferor had held the transferred securities at all times during the borrowing period; and

(c)

the return of the transferred securities or equivalent securities had not been made at the end of the borrowing period.

(2) Despite subsection (1), where a transferor is a person who carries on a trade or business of sale and purchase of securities, any gains or profits derived by the transferor from any transfer of securities under a securities lending or repurchase arrangement are chargeable to tax under section 10(1)(a) if subsequent to the transfer of the transferred securities —(a)

the transferred securities are redeemed;

(b)

the transferee accepts a takeover offer for the transferred securities upon the direction of the transferor;

(c)

the arrangement is terminated because the transferor or transferee is unable to perform any of the obligations specified in the arrangement, unless the transferor applies the collateral held by the transferor to re‑acquire equivalent securities under the terms of the arrangement;

(d)

the transferee sells the transferred securities to the issuer of such securities upon the direction of the transferor; or

(e)

any other event occurs which, in the Comptroller’s opinion, results in the condition specified in paragraph (a)(iii) or (iv) of the definition of “securities lending or repurchase arrangement” not fulfilled,

and the gains or profits are deemed to arise at the time any of the events referred to in paragraph (a), (b), (c), (d) or (e) occurs.

(3) Where a transferee is a person who carries on a trade or business of sale and purchase of securities, any gains or profits derived by the transferee from any transfer of securities under a securities lending or repurchase arrangement are chargeable to tax under section 10(1)(a), and the gains or profits are deemed to arise at the time any of the following events occurs:(a)

the transferee disposes of the transferred securities to a person other than the transferor;

(b)

subsequent to such disposal, the transferee returns equivalent securities to the transferor or any of the events specified in subsection (2) occurs, whichever is the earlier.

(4) For the purposes of computing the gains or profits of a transferee under subsection (3), the transferee is to be treated as if the transferee had acquired the transferred securities from or returned equivalent securities to the transferor (as the case may be) for a consideration equal to the market value of the transferred securities at the beginning of the borrowing period under the securities lending or repurchase arrangement.

(5) Where any distribution in respect of transferred securities is made to a Singapore‑based transferee and received by a transferor under a securities lending or repurchase arrangement, the distribution must be included in the statutory income of the transferor of the year in which the distribution is made to the transferee, and be assessed as if the distribution had been made to the transferor.[Act 35 of 2024 wef 27/11/2024]

(6) [Deleted by Act 19 of 2013]

(7) A Singapore‑based transferee (other than a transferee under a buy and sell back arrangement in respect of qualifying debt securities or foreign debt securities) is not entitled to any tax credit under section 50 or 50A for any distribution received by the transferee from outside Singapore in respect of transferred securities under a securities lending or repurchase arrangement.

(8) Where any compensatory payment derived under a securities lending or repurchase arrangement by a transferor from a Singapore‑based transferee is in place of —(a)

any distribution, the transferor is to be assessed at the tax rate that would have applied to the distribution had it been made directly to the transferor; or[Act 35 of 2024 wef 27/11/2024]

(b)

[Deleted by Act 19 of 2013]

(c)

a distribution of income derived from outside Singapore and where the transferor is resident in Singapore, no tax credit under section 50 or 50A is allowed to the transferor.

(9) Section 45 applies in relation to —(a)

any distribution of interest (other than interest derived from qualifying debt securities) in respect of transferred securities; and

(b)

any compensatory payment in place of —(i)

any distribution of income derived from outside Singapore; [Act 35 of 2024 wef 27/11/2024]

(ii)

[Deleted by Act 19 of 2013]

(iii)

any distribution of interest (other than interest derived from qualifying debt securities); or[Act 35 of 2024 wef 27/11/2024]

(iv)

any distribution of any other income that is not exempt from tax,

made under a securities lending or repurchase arrangement by a Singapore‑based transferee to a transferor who is not resident in Singapore, as that section applies to any interest paid by a person to another person not known to the firstmentioned person to be resident in Singapore, and for the purpose of such application, any reference in that section to interest is a reference to such distribution or compensatory payment.

[Act 35 of 2024 wef 27/11/2024]

(9A) Section 45 applies in the manner set out in section 45G in relation to —(a)

any distribution in respect of transferred securities that are units of a real estate investment trust or an approved REIT exchange-traded fund; and

(b)

any compensatory payment in place of any distribution mentioned in paragraph (a),

made under a securities lending or repurchase arrangement by a Singapore-based transferee to a transferor who is not known to the trustee to be resident in Singapore, as section 45 applies in relation to a distribution by a trustee of a real estate investment trust or by a trustee of an approved REIT exchange-traded fund to another person in accordance with section 45G(1), and for this purpose —

(c)

any reference in section 45G to a distribution is to the distribution or compensatory payment mentioned in paragraph (a) or (b);

(d)

section 45G(4) does not apply in relation to a compensatory payment mentioned in paragraph (b); and

(e)

section 45G(5) is omitted.[Act 35 of 2024 wef 27/11/2024]

(10) For the purposes of this section, the Comptroller may specify such requirement and obligation to be observed, and such information in respect of any transferor, transferee or transferred securities to be furnished, by the depository agent of the transferor or transferee.

(11) The Minister may make regulations to provide generally for giving full effect to or for carrying out the purposes of this section.

(12) In this section —“approved REIT exchange-traded fund” and “real estate investment trust” have the meanings given by section 43(10);[Act 35 of 2024 wef 27/11/2024]

“borrowing period”, in relation to any transferred securities, means the period commencing from the date the securities are transferred by the transferor to the transferee and ending on the date the securities or equivalent securities are returned to the transferor or are regarded as being disposed of by the transferor under subsection (2), whichever is the earlier;

“commercial purpose”, in relation to any securities lending or repurchase arrangement, means —(a)

the settling of a sale of securities, whether by the transferee or another person;

(b)

the replacement, in whole or in part, of the transferred securities obtained by the transferee under any earlier securities lending or repurchase arrangement;

(c)

the on‑lending of the transferred securities to another person;

(d)

the fulfillment by the transferee of its existing obligations arising from an uncovered written option position using transferred securities;

(e)

the hedging and arbitrage transactions entered into or to be entered into by the transferee;

(f)

the liquidity management by the transferee;

(g)

the holding of the transferred securities, without being disposed of, as collateral against the obligations of the counterparty to the securities lending or repurchase arrangement; or

(h)

any other purpose as the Minister (or such person as the Minister may appoint) may in writing allow;

“compensatory payment”, in relation to any transferred securities, means a payment made during the borrowing period to a transferor in place of any distribution or right to purchase warrants, options or additional securities in respect of the transferred securities under circumstances in which the transferee does not receive such distribution to be passed on to the transferor, and includes any amount which is in place of interest and is deducted from the price paid by the transferor to acquire equivalent securities or re‑acquire the transferred securities under a buy and sell back arrangement in respect of qualifying debt securities, Singapore Government securities or foreign debt securities;[Act 35 of 2024 wef 27/11/2024]

“distribution”, in relation to any transferred securities, includes the distribution of any income paid under the transferred securities to the holder of the transferred securities;[Act 35 of 2024 wef 27/11/2024]

“equivalent securities”, in relation to any transferred securities, means securities which are identical in type, nominal value (where applicable), description and amount to the transferred securities and includes —(a)

the securities into which the transferred securities have been converted, subdivided or consolidated;

(b)

the proceeds of the redemption of the transferred securities;

(c)

the cash or securities representing the proceeds of the acceptance of the takeover of the transferred securities;

(d)

if there is a call on partly‑paid securities and if the transferor has paid to the transferee the sum due on the call, the paid‑up securities;

(e)

if there is a bonus issue, the transferred securities together with the securities allotted by way of bonus;

(f)

if there is a rights issue and if the transferor has directed the transferee to take up the issue and has paid to the transferee any sum due on the issue, the transferred securities together with the securities allotted under the rights issue or, if the transferor has directed the transferee to sell the rights, the transferred securities together with the proceeds from the disposal of the rights;

(g)

if any distribution is made in the form of securities or a certificate which may be exchanged for securities or an entitlement to acquire securities, the transferred securities together with the securities or certificate or entitlement equivalent to those allotted; and

(h)

if the transferee is unable to return the transferred securities, such amount of money or securities equivalent to the transferred securities;

“foreign debt securities” means debt securities denominated in any foreign currency (including bonds and notes) issued by foreign governments, foreign banks outside Singapore and companies not incorporated and not resident in Singapore;[Act 35 of 2024 wef 27/11/2024]

“qualifying debt securities” has the meaning given by section 13(16);

“securities” includes —(a)

units in a collective investment scheme, exchange-traded fund, business trust or depository receipts; and

(b)

any securities (including units mentioned in paragraph (a)) provided as a collateral;[Act 35 of 2024 wef 27/11/2024]

“securities lending or repurchase arrangement” means any written arrangement made on or after 23 November 2001 —(a)

under which —(i)

a person (called in this section the transferor) transfers the legal interest in any securities (called in this section the transferred securities) to another person (called in this section the transferee) for any commercial purpose;

(ii)

the transferor re‑acquires the transferred securities or acquires equivalent securities from the transferee at a later time;

(iii)

the transferor retains the risk of loss or opportunity for gain in respect of the transferred securities;

(iv)

the transferor does not dispose of (by transfer, declaration of trust or otherwise) the right to receive any part of the total consideration payable or to be given by the transferee under the arrangement; and

(v)

if any distribution is made in respect of the transferred securities during the borrowing period, the transferor receives from the transferee the distribution or compensatory payment equal to the value of the distribution; and

(b)

where —(i)

the transferor and transferee are dealing with each other at arm’s length; and

(ii)

the transferor or transferee or both of them do not enter into the arrangement with the purpose, or main purpose, of avoiding, reducing or deferring any tax chargeable under this Act;

“Singapore-based transferee” means a transferee —(a)

who is resident in Singapore (except in respect of any business carried on outside Singapore through a permanent establishment outside Singapore); or

(b)

who is not resident in Singapore but enters into the securities lending or repurchase arrangement through a permanent establishment in Singapore or for the purpose of a business carried on through a permanent establishment in Singapore;[Act 35 of 2024 wef 27/11/2024]

“Singapore Government securities” and “debt securities” have the meanings given by section 43H.

(13) This section has effect despite anything to the contrary in this Act, except that this section does not affect the chargeability to tax of any income of a transferor or transferee under section 10 unless otherwise provided in this section.[10N