Nature of Single Family Offices (SFOs)
Introduction to Family Offices
Family offices are private wealth management advisory firms that serve ultra-high-net-worth individuals (“HNWI”). They are distinct from traditional wealth management shops in that they offer a total outsourced solution to managing the financial and investment side of an affluent individual or family. This is with the goal being to effectively seize opportunities, manage risk, transfer wealth across generations and protect family legacy.
A single family office (“SFO”) is one that provides services to members of the same family. This may be contrasted with a multi-family office which provides services to members of different families.
Tax incentive schemes for SFOs
- Enhanced-Tier Fund Tax Exemption Scheme (Section 13U of the Income Tax Act):
Applies to funds with a minimum size of S$50 million that are managed or advised by a Singapore fund manager, which can be an exempted SFO or a licensed multi-family office. The family office is required to incur a minimum annual business spend of S$500,000, which is subject to the tiered business spending framework.
- Singapore Resident Fund Scheme (Section 13O of the Income Tax Act):
This scheme exempts specified income received by an approved company in Singapore from tax, where such income is derived from designated investments in funds managed in Singapore by a licensed or exempt resident fund manager. It will not be applicable if all of the approved Singapore companies’ issued securities are beneficially owned by Singapore persons. The family office is required to incur a minimum annual business spend of S$200,000, which is subject to the tiered business spending framework.