FRS 109 – Financial Instruments replaces the FRS 39 – Financial Instruments: Recognition and Measurement.
It is applicable to entities for financial periods beginning on or after 1 January 2018. Early adoption is permissible.
On the tax front, a new section 34AA of the Income Tax Act (ITA), which sets out the tax treatment of financial instruments under FRS 109 was legislated on 26 October 20171. The legislation is consistent with the Inland Revenue Authority of Singapore’s (IRAS) thinking as set out in their consultation paper and the subsequent e-Tax guide issued on 1 July 2016 and 22 November 2017 respectively.
The IRAS’ e-Tax guide provides guidance to entities that are required to comply with FRS 109 and incorporates some of the feedback received from the public previously in July 2016 on the proposed positions for the income tax implications arising from the adoption of FRS 109.
