If a family fund includes an investment in the family’s operating business, do not assume the same portfolio total answers every incentive condition. Identify the calculation being performed and apply its actual definition and exclusions.
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The 31 July 2026 MAS fund-tax circular distinguishes the minimum AUM-in-designated-investments condition from other calculations for SFO funds. It excludes family operating-business investments from the minimum-AUM test, while qualifying designated investments can count for other conditions.
Start with the actual investment
Identify the issuer, ownership relationship, instrument and value. The investment might be shares, debt or another financing arrangement. Keep the documents showing what the fund holds, rather than relying on a portfolio label such as “private equity”.
Establish whether it is an operating business of the family for the relevant rule. A group chart and the underlying activity information can be important. Do not assume a passive holding company and an active family business are identical.
Example: one portfolio summary, two different results
The fund’s management report includes both marketable investments and financing provided to a family business. The tax adviser should prepare separate schedules for the relevant conditions. Removing the family-business item from one minimum-AUM calculation does not necessarily mean deleting it from every other accounting or incentive schedule.
Give each calculation its own columns
- Instrument and legal owner.
- Value and valuation date.
- Designated-investment assessment.
- Family operating-business relationship.
- Inclusion or exclusion for the particular condition.
- Evidence and adviser’s conclusion.
Use the applicable award, circular and relevant basis-period requirements. An all-purpose AUM total should not be copied into every field without review.
Keep valuation and eligibility separate
A well-supported valuation does not by itself establish that an investment counts under a specific condition. Conversely, an eligible category still needs an appropriate value. Record both assessments and any uncertainty.
If valuation information is incomplete, preserve the available evidence and seek advice before making a declaration. Avoid selecting an unsupported value merely to exceed a threshold.
Reconcile the schedules to the accounts
The fund’s financial statements may include assets that are excluded from a particular incentive calculation. Explain the reconciliation instead of forcing the accounts to match a tax-eligibility total. Check movements, related-party balances and classification changes.
Review the current MAS family-office tax-scheme guidance and the conditions of the actual award. Scheme-specific assessment should not be replaced by a generic online comparison of fund sizes.
Review changes before the reporting point
Flag new family-business investments, disposals, restructurings and material valuation changes for the responsible adviser. Give the family decision-makers time to understand a potential shortfall and lawful options. Do not assume an intention to invest later satisfies a condition already due.
Does the fund’s accounting AUM equal its incentive AUM?
Not automatically. The relevant definition and exclusions need to be applied.
Should the investment be removed from all records?
No. Preserve the actual holding and explain its treatment in each separate calculation.
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For family-office administration, accounting or tax advisory support, email [email protected] or WhatsApp +65 8501 7133. Legal advisers from our associated law firms can assist with structuring, contracts and regulatory advice where needed. Any incentive or regulatory application remains subject to the applicable official requirements and assessment.