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Family Office Private Credit Through a 13O or 13U Fund: Tax, Licensing and Loan Rules

By VCC Editorial Team · Published

Close-up of a man's hands signing a printed agreement with a fountain pen, a second page held in his other hand
Photo: Jakub Żerdzicki on Unsplash

Short answer: Yes. Loans are designated investments under MAS FDD Circular 05/2026, so interest earned by a 13O or 13U fund can be exempt specified income. The catches: loans tied to Singapore property are excluded, lending to the family’s own businesses does not count towards the SFO fund’s minimum AUM, and the Moneylenders Act 2008 and withholding tax still apply.

Key facts at a glance

  • Loans, including “secondary loans, credit facilities and advances”, are designated investments (DI) under item (j) of Annex 3 to MAS FDD Circular 05/2026 (31 July 2026), with three exclusions linked to Singapore immovable property.
  • A single family office (SFO) fund needs at least S$20 million (13O/13OA) or S$50 million (13U) of AUM in DI at application and at the end of each basis period, for awards approved on or after 1 August 2026. Debt investments in the family’s operating businesses cannot be counted towards that minimum.
  • Under section 2 of the Moneylenders Act 2008, a lender is an “excluded moneylender” if it lends solely to corporations, solely to accredited investors, or lends in the course of a business whose primary object is not lending.
  • Interest borne by a Singapore resident is deemed Singapore-sourced under section 12(6) of the Income Tax Act 1947. Interest paid to a non-resident attracts withholding tax under section 45, at 15% of the gross amount unless a tax treaty reduces it.
  • Under IRAS’s Transfer Pricing Guidelines (Ninth Edition, 4 June 2026), a related-party domestic loan made on or after 1 January 2025 is exempt from transfer pricing documentation where neither party is in the business of borrowing and lending and the IRAS indicative margin is applied.
  • Existing SFOs have until 15 June 2027 to meet the licensing exemption conditions and notify MAS.

This article is general information only and is not legal, tax or investment advice. For matters needing legal advice, we work with a panel of experienced Singapore law firms.

Family office private credit, whether direct loans, participations or commitments to credit funds, is now a common allocation for Singapore single family offices. When the lender holds a section 13O or 13U award, four rule sets apply to the same loan: the incentive conditions, the Moneylenders Act 2008, withholding tax under the Income Tax Act 1947 and transfer pricing. We checked all sources on 6 November 2026. For the general position of third-party credit funds, see our overview of fund tax incentives for private credit funds; this article covers what changes when the lender is the family’s own fund.

Are loans designated investments for a 13O or 13U fund?

Yes, with three property-related exceptions. Interest and gains from qualifying loans are specified income, which the schemes exempt from tax.

Annex 3 of MAS FDD Circular 05/2026 sets out the DI list that applies on or after 1 August 2026. Item (j) lists “Loans” and footnote 44 adds that this “includes secondary loans, credit facilities and advances”. The exclusions are loans:

Debt securities are a separate DI category under item (b). The circular then states: “Any income or gains derived on or after 1 August 2026 from designated investments specified above will be regarded as Specified Income”, subject to exceptions for certain trust, REIT, partnership and LLC income, none of which targets loan interest. A loan to a company buying a completed Singapore building falls within an exclusion, so its income is not exempt and it is not AUM in DI. Screen the borrower’s business and use of proceeds before committing, not at year end.

Can an SFO fund lend to the family’s own businesses?

The circular does not prohibit it, but such loans do not count towards the SFO fund’s minimum AUM.

For new SFO fund awards approved on or after 1 August 2026, a 13O or 13OA fund must have at least S$20 million of AUM in DI, and a 13U fund at least S$50 million, “at the point of application, and at the end of each basis period”. Footnotes 20 and 22 of the circular add: “The SFO fund’s investment (whether in the form of equity, debt or other financing arrangements) in the operating businesses of the family cannot be counted towards meeting the minimum AUM in DI condition. However, such investment shall count towards the SFO fund’s AUM in DI for the purposes of all other conditions, if the investment qualifies as DI.”

Illustration: a 13O SFO fund holding S$25 million of DI, of which S$8 million is a loan to the family’s trading company, has S$17 million counting towards the S$20 million floor and, on the circular’s wording, fails that test for the basis period. The S$8 million still counts when the fund works out its local spending tier and its capital deployment requirement (CDR).

Paragraph 5.1(a) adds that “all investments acquired by S13O/OA funds … are to be acquired on market terms and conditions”, so loan terms with family borrowers must be supportable as market terms. Older awards may be on earlier condition sets: see which SFO condition set binds your award and our guide to minimum AUM for Singapore family offices. On the CDR, Option 3 recognises investments in “Non-listed Singapore-incorporated companies with operating business(es) and with substantive presence in Singapore”; the text does not say whether a loan, as opposed to equity, qualifies, so confirm with MAS before relying on it.

Does the Moneylenders Act 2008 apply to family office private credit?

It can. Under section 3 of the Moneylenders Act 2008, anyone other than an excluded moneylender “who lends a sum of money in consideration of a larger sum being repaid is presumed, until the contrary is proved, to be a moneylender”. Most family funds therefore need to fall within an exclusion.

The definition of “excluded moneylender” in section 2 of the Moneylenders Act 2008 includes any person who:

Note the word “solely”. One personal loan to a family member who is not an accredited investor takes the fund outside the corporate exclusion, leaving only the “primary object” limb, which a credit-focused fund will find hard to argue. The Registry of Moneylenders’ FAQ for moneylenders (last updated 2 November 2026) says “You may wish to seek legal advice on whether your business activity falls within the definition of an excluded moneylender.” A licence is not a fallback: “The Registry has temporarily suspended the grant of any new moneylending licences.” A section 91 exemption remains possible, at S$1,000 a year for the non-consumer lending class, valid for up to three years.

Does the SFO licensing exemption cover a lending strategy?

It exempts the SFO from the fund management licence only; it is not a lending licence, and it holds only while clients and funding stay within the family.

MAS’s FAQs on the Licensing Exemption Framework for Single Family Offices (issued 12 June 2026) state that the SFO “can only conduct fund management for, or on behalf of” family members, family-funded charities and key employees (capped at 10% of AUM), under paragraph 5(1)(ba) of the Second Schedule to the Securities and Futures (Licensing and Conduct of Business) Regulations. New SFOs notify MAS within 14 days of starting; existing SFOs have until 15 June 2027.

If friends of the family want to join the loans as investors in the SFO fund, the SFO is no longer managing only family money, and MAS “will generally not grant case-by-case exemptions to SFOs unless there are exceptional reasons”. Outside co-lenders should sign their own facility agreements instead.

Who withholds tax on the interest, and when?

A Singapore borrower paying interest to a non-resident lender must withhold. The circular’s withholding exemption covers payments made by the fund, not payments made to it.

Section 12(6) of the Income Tax Act 1947 deems loan interest borne by a Singapore resident or permanent establishment to be derived from Singapore, and section 45 requires the payer to withhold. IRAS sets the rate for interest in connection with any loan or indebtedness at 15% of the gross payment, a final tax for a non-resident company that a tax treaty may reduce, payable by the 15th of the second month after payment.

When the fund lends abroad, the borrower’s country’s withholding rules apply.

How does transfer pricing apply to loans between the fund and family companies?

Section 34D of the Income Tax Act 1947 applies the arm’s length principle, and it matters even though the fund’s interest is exempt, because the borrower’s deduction depends on the price.

The current IRAS e-Tax Guide: Transfer Pricing Guidelines (Ninth Edition) was published on 4 June 2026 and replaces the Seventh (14 June 2024) and Eighth (19 November 2025) editions. Paragraph 6.18 lists the cases exempt from transfer pricing documentation. Two of them are relevant to family lending:

A fund running a credit strategy may struggle to show it is not “in the business of borrowing and lending money”; if so, the domestic loan exemption falls away and larger loans need full documentation. Our article on building a family office related-party loan register covers the record-keeping, and our decision framework for family-linked VCC loans covers the governance gates.

Which structure suits family office private credit: direct loan, participation or fund of credit funds?

All three can hold DI; they differ on Moneylenders Act exposure, withholding and underwriting load.

Route DI basis (FDD Cir 05/2026, Annex 3) Moneylenders Act 2008 point Withholding point Practical fit
Direct bilateral loan Item (j) loans, unless a Singapore property exclusion applies Fund must be an excluded moneylender, typically by lending solely to corporations Singapore borrower withholds if the lender is non-resident Families with in-house credit skills and concentrated relationships
Participation or secondary loan purchase Item (j); footnote 44 expressly includes “secondary loans, credit facilities and advances” Same analysis; check who the borrower is under each facility Follows the borrower’s residence and the lender of record Bank-originated facilities, with documentation and agency handled by the arranger
Commitment to third-party credit funds Depends on the target: e.g. item (a) shares, item (i) unit trusts (excluding unit trusts that grant excluded loans) or item (y) partnerships investing wholly in DI The SFO fund is an investor, not the lender Governed by the target fund’s distributions and its jurisdiction Diversification; less underwriting load on the SFO’s investment professionals

How should a family office document a loan from a 13O or 13U fund?

Document the loan as you would for an unrelated borrower, and add the incentive-specific checks below.

  1. Confirm the borrower’s business and use of proceeds against the three Singapore property exclusions in Annex 3, item (j), and record the conclusion.
  2. Record whether the borrower is an operating business of the family. If it is, exclude the loan from the minimum AUM calculation in the working papers for the basis period.
  3. Confirm the fund’s Moneylenders Act 2008 basis (corporate borrowers only, accredited investors only, or the primary-object limb) and check that no loan to an individual has been booked that would break the “solely” test.
  4. Set pricing with a written arm’s length rationale. If you rely on the IRAS indicative margin, record the base reference rate and the year it was fixed, in line with the Ninth Edition guidelines.
  5. Build withholding mechanics into the facility agreement: who is the lender of record, its tax residence, gross-up, and IRAS filing by the 15th of the second month after each payment.
  6. Approve the loan at the fund’s board or investment committee with conflicted family directors abstaining, and minute the market-terms basis (paragraph 5.1(a) of the circular states this expressly for 13O and 13OA funds).
  7. Reconcile the year-end AUM in DI, CDR and local spending workings to the loan register.

Where the lender is a VCC, keep its resolutions and registers consistent with the loan record; Singapore Secretary Services handles that statutory work.

Frequently asked questions

Is interest on a loan to an overseas company exempt in a 13O fund?

If the loan is a DI under item (j) and the fund meets its conditions for the basis period, the interest is exempt specified income. The exclusions concern Singapore immovable property only. Foreign withholding is a separate matter.

Can the fund lend to a family member personally?

The tax circular does not prohibit it, but it creates Moneylenders Act 2008 risk. Unless the individual is an accredited investor and the fund lends solely to accredited investors, a personal loan can take the fund outside the “solely to corporations” exclusion. It may also be hard to show the loan was made on market terms.

Does a loan count towards the 13O minimum AUM?

A qualifying third-party loan does. A loan to a family operating business does not count towards the S$20 million or S$50 million minimum, though it counts for the other conditions.

Is stamp duty payable on the loan agreement?

IRAS lists loan agreements not relating to property or shares among non-dutiable documents. Check security over Singapore property or shares separately.

Sources

Raffles Corporate Services helps family offices and fund managers with VCC incorporation, family office set-up and ongoing compliance, including the fund, company secretarial and record-keeping work behind a family private credit programme. Email hello@rafflescorporateservices.com or Call/SMS/WhatsApp +65 8501 7133, or visit Raffles Corporate Services.

Last reviewed: 6 November 2026. The Editorial Team, Variable Capital Companies Act.

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