On 28 Aug 2018, STEP Singapore held a full-house seminar on the topic of “Trust Over Cryptocurrencies”. Interest in the subject was sky-high and the venue was filled to absolute capacity. Chaired by STEP Singapore Branch Committee member Chan Ee Lin, Director of Wealth Management Institute, Nanyang Technological University, the seminar featured cryptocurrency legal eagles Koh Chia Ling, Managing Director, OC Queen Street LLC, and Bryan Tan, Partner, Pinsent Masons MPillay, who spoke on Cryptocurrencies, ICOs and the current state of play including regulations, as well as Professor Tang Hang Wu, School of Law, Singapore Management University, who focused on trustee duties in respect of digital assets.

Technological jargon was kept at a minimum and discussions kept laser-focused within the context of trustees’ overarching duty of care with regard to investments in cryptocurrency, i.e. trustees with duty to act prudently and safely and to take such care and act as an ordinary prudent man if he was minded to make an investment for the benefit of other people for whom he felt morally bound to provide (per Lindley LJ in Re Whitley) and to judge the risk against the entire portfolio rather than the risk attached to each investment alone. Participants learned how to analyse investing in tokens, understood what hot and cold storage issues were, and realised that the lack of clarity in relation to tax, legal and regulatory aspects etc, continued to present challenges to holding a trust over cryptocurrencies.

An informal poll taken at the seminar revealed that no trustee present was yet accepting cryptocurrencies into trusts, but many had clients who had expressed interest in injecting such assets into trusts. Also currently, it seemed that none of the Big 4 or other large audit players were willing to audit portfolios containing cryptocurrency elements, and no insurer was yet willing to insure against cryptocurrencies. Additionally, apparently not many advisors were yet willing to accept cryptocurrencies into existing portfolios. Hence, whether a prudent trustee should invest in cryptocurrencies at this point in time, may depend substantially on the trustee’s ability to hand-over-heart objectively justify the prudence of doing so.

Click HERE to view event photos.

Contributed by: 

Ms. Chan Ee Lin

Director, Wealth Planning & Risk Management, Wealth Management Institute, NTU

 

The United States of America (USA) signed into law The Tax Cuts and Jobs Act (TCJA) in December 2017. TCJA took effect on 1 January 2018.

The introduction of this Act, which has some element of “territorial regime”, provided some reductions on the income tax rates and better exclusions for US resident individuals, trusts, estates and gifts. It also provided tax incentives for US-sourced business income for corporations.

The two speakers covered quite extensively the impact of the new Act on corporations, including dividends, transition tax, global intangible low-taxed income, foreign deemed intangibles income, based erosion and avoidance tax and CFC changes. They also took the attendees through various practical considerations when structuring to do business in the USA.

The takeaway points from the talk were:

  • Individual income tax rates remain in 7 brackets, but the top rate has been reduced from 39% to 37%.
  • Bracket for estate and trusts for top rate of 37% has been lowered to US$12,500, which means it is easier to reach the top rate.
  • Corporate tax rate has been reduced from 35% to 21%.
  • Dividends received from foreign subsidiaries by US corporate shareholders who owns at least 10% of that foreign subsidiary will be allowed 100% deductions. US individual shareholders will not have this benefit.
  • Analysis and advice should be sought to ensure the correct structure is done for US persons looking to invest outside of the USA or non-US persons looking to invest into the USA.

53 STEP members and non-members attended the talk.

Click HERE to view event photos.

Contributed by: 

Ms. Linda Wong

Managing Director, Kensington Trust Singapore Limited

 

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