If a single family office fund under the Section 13O, 13OA or 13U scheme misses one of its annual economic conditions, MAS’s current circular (FDD Cir 05/2026, dated 31 July 2026) says the fund cannot claim the tax exemption for that basis period only. The award is not lost: if the fund meets every economic condition in a later basis period, it can claim the exemption again for that later year. The exceptions are more serious. Failing the first-year hiring ramp-up, breaching the banking account condition, not filing the Annual Declaration or not producing documents MAS asks for can lead to revocation of the award.
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What does “missing a condition” actually cost the fund?
The schemes are tested year by year. Each “basis period” is the fund’s financial year preceding the Year of Assessment (YA) in which its income is assessed. The circular states that funds unable to fulfil any of the economic conditions in a basis period will not be able to avail themselves of the tax exemption for that basis period, and that a fund meeting all the economic conditions in a subsequent basis period can claim the exemption for that subsequent period.
In practice, a missed condition means:
- No exemption for that YA. The fund’s income for that year is dealt with under the ordinary rules of the Income Tax Act 1947 rather than the incentive, so gains and income that would normally be exempt may become taxable, subject to any other relief that applies.
- A possible GST knock-on the following year. Under Annex 4 of the circular, GST remission for qualifying funds depends on the fund satisfying the income tax conditions as at the last day of its preceding financial year.
- Loss of the automatic economic substance treatment. The circular explains that an incentivised fund is regarded as meeting the economic substance requirement for foreign-sourced disposal gains under section 10L for a basis period if it submits its Annual Declaration and meets the scheme conditions. A year in which conditions are missed needs separate analysis of section 10L.
For the differences between the two schemes, see our guide to setting up a family office under Section 13O or 13U.
When can a missed condition lead to revocation instead?
Several failures go beyond losing one year’s exemption:
- The first-year investment professional ramp-up. For SFO fund awards approved on or after 1 August 2026, MAS lets a 13O or 13OA fund apply while the family office employs one qualifying investment professional (IP), and a 13U fund apply with two. The second IP (13O/OA) or third IP (13U), including at least one who is not a family member, must be employed by the end of the basis period of the first YA of the award. If not, the award is revoked from the award commencement date. Our article on planning the second investment professional’s hiring deadline covers how a year-end close to the award date shortens this window.
- The banking account condition. An SFO fund must hold a private banking account with an MAS-licensed financial institution at application and throughout each basis period. MAS reserves the right to revoke the award if this is breached.
- Non-economic conditions. MAS reserves the right to revoke an award permanently where a fund fails non-economic conditions, such as failing to provide supporting documents on request, or where a serious offence has been committed.
- The Annual Declaration. A fund that does not submit its Annual Declaration for a YA, or is uncontactable, is regarded as failing the conditions and is denied the exemption for that YA. MAS also reserves the right to terminate the award.
Which annual conditions are tested for a single family office fund?
The table below summarises the conditions in Annex 6B of FDD Cir 05/2026 for new SFO fund awards approved on or after 1 August 2026, and the matching 13U conditions in the body of the circular. SFO funds with older awards (the “pre-18Apr22”, “18Apr22” and “5Jul23” groups) move to a revised set of annual conditions from the YA whose basis period ends on or after 1 August 2026, and the circular sets these out by group. Check your letter of award and the transition table before relying on the figures below.
| Condition | 13O / 13OA SFO fund | 13U SFO fund | How to evidence it |
|---|---|---|---|
| Qualifying IPs employed by the SFO, throughout each basis period | At least 2, including at least 1 non-family member | At least 3, including at least 1 non-family member | Employment contracts, payroll records showing monthly pay above S$3,500, job descriptions showing portfolio management, research or trading work, tax residence evidence |
| Minimum AUM in designated investments (DI), at the end of each basis period | S$20 million | S$50 million | Year-end portfolio valuation mapped to the DI list, custodian and bank statements, with family operating-business investments shown separately |
| Tiered minimum local spending, each basis period | S$200,000 if AUM in DI is below S$250 million; S$500,000 from S$250 million to below S$2 billion (local business spending of at least S$300,000); S$1 million at S$2 billion or more (local business spending of at least S$500,000) | Expense ledger tagged to Singapore contracting parties, invoices, eligible donation receipts, grant documents | |
| Capital deployment requirement (CDR), end of each basis period from the first full YA | At least the lower of 10% of AUM in DI or S$10 million in the specified investment options (with a 2x multiplier for certain Singapore investments) | Schedule of qualifying holdings by option, exchange listings, distributor confirmations, evidence of substantive Singapore presence for unlisted investee companies | |
| Private banking account with an MAS-licensed financial institution | At application and throughout each basis period | Bank account statements covering the full year | |
Key definitions:
- Qualifying IP. Portfolio managers, research analysts and traders who are Singapore tax residents, earn more than S$3,500 a month and engage substantially in fund management.
- AUM in DI. Only investments that qualify as designated investments count. The fund’s investments in the family’s own operating businesses cannot be counted towards the minimum AUM threshold, although they still count for other conditions if they qualify as DI. Our article on what a family office fund can hold as designated investments explains the list.
- Local business spending. Operating expenses recognised under accounting principles, including remuneration and fund management fees, paid to contracting parties in Singapore.
What must the fund file and tell MAS each year?
Every 13O, 13OA and 13U fund must submit an Annual Declaration to MAS for each YA within four months after the end of the corresponding basis period. MAS can ask for supporting documents or audit certification covering investment professionals, AUM in DI, investment strategy or fund structure.
Between declarations, the circular’s FAQs ask SFO funds to notify MAS at [email protected] of additions or replacements of:
- beneficial owners of the fund (or beneficiaries, for a trust structure);
- shareholders, directors, key C-suite employees and investment professionals in the SFO; and
- new intermediate entities in the holding structure of the fund or the SFO.
Funds should also keep MAS updated on changes in investment strategy for information. If a fund knows it will fail the conditions permanently, MAS must be given advance notice of its withdrawal from the scheme. A fund that withdraws can later apply again on a prospective basis if it meets the conditions.
What should the family office do when a condition is at risk?
Most failures are visible months before year end:
- Test quarterly. Compare headcount, local spending to date, estimated year-end AUM in DI and the CDR ratio against the thresholds.
- Protect the IP count. The IP condition applies throughout the basis period, so a resignation can create a gap. Start replacement hiring as soon as notice is given.
- Check the spending tier against the year-end AUM. Strong markets can push AUM in DI over S$250 million and lift the spending requirement from S$200,000 to S$500,000 in the same year. Spending is measured on expenses recognised in the year, so plan genuine Singapore costs early.
- Rebalance for the CDR, if needed. Review whether enough of the portfolio sits in the three specified options at year end. Any reallocation should follow the fund’s investment mandate and be on market terms; tax conditions should not drive unsuitable investments.
- Record and plan. If a condition will be missed, note what happened, declare the true position, and put the fix in place early in the next basis period so the exemption can be reclaimed.
Which records should the fund and the family office keep?
- Letter of award, all MAS correspondence and change notifications
- Annual Declarations and the working papers behind each figure
- The evidence listed in the table above for each condition
- Audited financial statements and the fund’s corporate income tax filings
Corporate records sit alongside these incentive records; our comparison of a VCC or private company for an SFO fund explains how they differ.
Example: an investment professional resigns mid-year
Example: A hypothetical 13O SFO fund has a 31 December year end and an award approved after 1 August 2026. Its family office employs two qualifying IPs, one of whom is not a family member. The non-family portfolio manager resigns and leaves on 30 September 2027, and the replacement starts on 5 January 2028. Because the IP condition must be met throughout the basis period, the fund fails it for the year ended 31 December 2027 and cannot claim the exemption for YA 2028. It still files the Annual Declaration by 30 April 2028, reporting the gap. If every condition is met for 2028, the fund can claim the exemption again for YA 2029. If the gap had arisen in the first basis period of the award, the consequence would have been revocation from the commencement date instead.
Frequently asked questions
Does failing one year mean we must apply for a new award?
No, not for a missed economic condition. The award continues, and the exemption is available again for any later basis period in which all the economic conditions are met. A new application is needed only if the award is revoked or the fund withdraws.
Is the AUM test applied throughout the year?
For new SFO fund awards, the circular says the fund only reports that it meets the minimum AUM in DI at the point of application and at the end of each basis period. The investment professional and banking account conditions, by contrast, must be met throughout the period.
Can donations count towards the local spending condition?
Partly. Eligible donations to Singapore registered charities, exempt charities or Institutions of Public Character can make up part of the higher spending tiers, subject to the minimum local business spending in each tier. Receipts must be produced if MAS selects the fund for review.
What if we miss the four-month Annual Declaration deadline?
The circular treats a fund that fails to submit the declaration for a YA as failing the conditions for that YA, and MAS may also terminate the award.
Official sources: MAS Circular FDD Cir 05/2026, MAS: tax incentive schemes for family offices.
Need help with your 13O or 13U fund’s annual compliance?
If your family office fund needs help tracking its annual conditions, contact the Raffles Corporate Services team at [email protected] or on WhatsApp at +65 8501 7133. We can keep the fund’s accounts and local spending schedules, prepare the working papers behind the Annual Declaration, maintain corporate registers and change records, prepare corporate tax filings and coordinate with your auditors and tax advisers.
Kevin Yeo, Raffles Corporate Services