§ 10K — Tax treatment for covered bond transactions

10K.—(1) This section applies where —(a)

an approved covered bond company derives income from any cover pool for covered bonds issued by a bank incorporated in Singapore (directly or through its overseas branch), being covered bonds that are issued in compliance with the MAS Notice during the period from 15 February 2023 to 31 December 2028 (both dates inclusive); and

(b)

the bank had transferred the cover pool to the approved covered bond company under a covered bond transaction entered into during that period, for the purpose of securing the bank’s liabilities under the covered bonds.

(2) Despite any provision in this Act, if (and only if) the conditions prescribed by rules made under section 7 for the purposes of this section are complied with, then any income derived by the approved covered bond company from the cover pool is treated for the purposes of this Act as income of the bank (and not that of the approved covered bond company) for the year of assessment relating to the basis period in which the income is derived.

(3) Rules made under section 7 for the purposes of this section may provide for the deduction of expenses, allowances and losses otherwise than in accordance with this Act.

(4) In this section —“approved covered bond company” means a company incorporated and resident in Singapore, that is —(a)

incorporated principally to enter into a covered bond transaction with a bank incorporated in Singapore that issues (directly or through its overseas branch) covered bonds; and

(b)

approved by the Minister or an authorised body for the purposes of this section;

“cover pool”, in relation to any covered bonds, means the pool of assets against which the covered bonds are collateralised;

“covered bond” means any bond, note or other debenture, where payment of the liabilities to the holder thereof and any liabilities arising from the enforcement of the rights of the holder, is —(a)

secured by a cover pool; and

(b)

recoverable from the issuer of the bond, note or debenture, regardless of whether the cover pool is sufficient to pay off such liabilities;

“covered bond transaction” means —(a)

the issue of any covered bonds; and

(b)

the transfer, by the issuer of the covered bonds, of the cover pool for those covered bonds to another entity for the purpose of securing the liabilities of the issuer under those covered bonds;

“MAS Notice” means the applicable notice of the Monetary Authority of Singapore relating to the issuance of covered bonds given under section 55 of the Banking Act 1970;

“overseas branch”, in relation to a bank incorporated in Singapore, means a branch of the bank situated outside Singapore.[Act 30 of 2023 wef 15/02/2023]

—(1) This section applies where —(a)

an approved covered bond company derives income from any cover pool for covered bonds issued by a bank incorporated in Singapore (directly or through its overseas branch), being covered bonds that are issued in compliance with the MAS Notice during the period from 15 February 2023 to 31 December 2028 (both dates inclusive); and

(b)

the bank had transferred the cover pool to the approved covered bond company under a covered bond transaction entered into during that period, for the purpose of securing the bank’s liabilities under the covered bonds.

(2) Despite any provision in this Act, if (and only if) the conditions prescribed by rules made under section 7 for the purposes of this section are complied with, then any income derived by the approved covered bond company from the cover pool is treated for the purposes of this Act as income of the bank (and not that of the approved covered bond company) for the year of assessment relating to the basis period in which the income is derived.

(3) Rules made under section 7 for the purposes of this section may provide for the deduction of expenses, allowances and losses otherwise than in accordance with this Act.

(4) In this section —“approved covered bond company” means a company incorporated and resident in Singapore, that is —(a)

incorporated principally to enter into a covered bond transaction with a bank incorporated in Singapore that issues (directly or through its overseas branch) covered bonds; and

(b)

approved by the Minister or an authorised body for the purposes of this section;

“cover pool”, in relation to any covered bonds, means the pool of assets against which the covered bonds are collateralised;

“covered bond” means any bond, note or other debenture, where payment of the liabilities to the holder thereof and any liabilities arising from the enforcement of the rights of the holder, is —(a)

secured by a cover pool; and

(b)

recoverable from the issuer of the bond, note or debenture, regardless of whether the cover pool is sufficient to pay off such liabilities;

“covered bond transaction” means —(a)

the issue of any covered bonds; and

(b)

the transfer, by the issuer of the covered bonds, of the cover pool for those covered bonds to another entity for the purpose of securing the liabilities of the issuer under those covered bonds;

“MAS Notice” means the applicable notice of the Monetary Authority of Singapore relating to the issuance of covered bonds given under section 55 of the Banking Act 1970;

“overseas branch”, in relation to a bank incorporated in Singapore, means a branch of the bank situated outside Singapore.[Act 30 of 2023 wef 15/02/2023]