139
Annual Report 2015
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.13 Tax (cont’d)
Although H-REIT is not taxed on its taxable income distributed, the H-REIT Trustee and the H-REIT Manager are
required to deduct income tax at the applicable corporate tax rate from distributions of such taxable income of H-REIT
(i.e. which has not been taxed in the hands of the H-REIT Trustee) to certain holders of H-REIT units. The H-REIT Trustee
and the H-REIT Manager will not deduct tax from distributions made out of H-REIT’s taxable income to the extent that
the beneficial holder of H-REIT units is:
• An individual (excluding a partnership in Singapore);
• A tax resident Singapore-incorporated company;
• A body of persons registered or constituted in Singapore (e.g. town council, statutory board, registered charity,
registered co-operative society, registered trade union, management corporation, club or trade or industry
association); or
• A Singapore branch of a foreign company which has presented a letter of approval from the IRAS granting
waiver from tax deduction at source in respect of distributions from H-REIT. For distributions received on or after
1 January 2015, a Singapore branch of a company incorporated outside Singapore will receive such distributions
without deduction of tax. There is no need for the branch to obtain prior approval from Comptroller of Income Tax.
The above tax transparency ruling does not apply to gains from sale of real properties. Such gains which are considered
as trading gains are assessable to tax on H-REIT. Where the gains are capital gains, H-REIT will not be assessed to tax
and may distribute the capital gains without tax being deducted at source.
HBT is treated like a company under the one-tier corporate tax system for Singapore income tax purposes. Consequently,
HBT is assessed to Singapore income tax on its profits, just like any other company. Distributions are exempt from
Singapore income tax in the hands of the unitholders, regardless of their respective tax status.
3.14 Segment reporting
An operating segment is a component of the HBT Group, the H-REIT Group and the Stapled Group that engages
in business activities from which they may earn revenues and incur expenses, including revenues and expenses that
relate to transactions with any of the other components of the HBT Group, the H-REIT Group and the Stapled Group.
All operating segments’ operating results are reviewed regularly by the HBT Board or the H-REIT Board ("
Boards
") to
make decisions about resources to be allocated to the segment and assess its performance, and is a component for
which discrete financial information is available.
Segment results that are reported to the Boards include items directly attributable to a segment as well as those that
can be allocated on a reasonable basis. Unallocated items comprise mainly finance income, finance costs and trust
expenses.
Segment capital expenditure is the total cost incurred on properties during the year.
3.15 New standards and interpretations not adopted
A number of new standards, amendments to standards and interpretations are effective for annual periods beginning
after 1 January 2015, and have not been applied in preparing these financial statements. In addition, Singapore-
incorporated companies listed on the Singapore Exchange ("
SGX
") will apply a new financial reporting framework
identical to the International Financial Reporting Standards ("
IFRS
") for financial year ending 31 December 2018
onwards. Singapore-incorporated companies listed on SGX will have to assess the impact of IFRS 1:
First-time adoption
of IFRS
when transitioning to the new reporting framework. The H-REIT Manager and the HBT Trustee-Manager is
currently assessing the potential impact of adopting these new standards and interpretations and the new financial
reporting framework, on the financial statements of the HBT Group, the H-REIT Group and the Stapled Group.
NOTES TO THE FINANCIAL STATEMENTS
