‘99-to-1’ Property Deals: Stamp Duty Avoidance or Honest Mistake

Abstract

This article explains in detail the legal issues surrounding the recent ABSD audit and how exactly the general anti-avoidance rule and the stamp duty avoidance surcharge in the Stamp Duties Act 1929 can be invoked by the IRAS.

The article highlights the fact that it may not be enough for a property buyer to show that the '99-to-1' holding was intended to enable the buyer to qualify for a home loan and not 'for stamp duty avoidance'. The property buyer must be able to answer the additional question of why the transfer of the property is 'staggered' in two stages and not transferred in the '99-to-1' proportion directly.

However, the article goes on to explain that there are a variety of bona fide commercial reasons why the transfer might have been staggered. It is not necessarily the case that every arrangement involving a '99-to-1' holding will constitute stamp duty avoidance. All this and more is set out in the article in detail.

The law on stamp duties in Singapore has become increasingly complex over time. There is a tendency for people to think that they can 'outsmart' the system but things can backfire with massive costs.

Keywords: Stamp duties, tax law, taxation, Singapore taxation