Speech by Mr Louis Ng Kok Kwang, MP for Nee Soon GRC, at the Second Reading of the Stamp Duties (Amendment) Bill (Bill No. 13/2022)
This Bill will introduce additional conveyance duties for trust (ACD (Trust)) and stamp duty treatment for the renunciation of interest in residential property held on trust.
This will harmonise the stamp duty treatment for equity interests held in trust.
ACD (Trust) along with the introduction of additional buyer’s stamp duty for transfer of residential property into a living trust (ABSD (Trust)) will help to raise tax revenues and go towards stabilising the property market.
I have 2 clarifications to raise on this Bill.
Definition of associates
First, in determining whether a grantee or grantor is a significant owner of a property holding entity, the new section 23 will take into account equity interests held by an associate of the grantee or grantor.
IRAS has provided on its website guidance on who is to be deemed an associate. This includes parties with an agreement or arrangement whether oral, written, expressed, implied to act together to acquire, hold or dispose of equity interest in or to exercise votes.
Determining the existence of an oral or implied agreement or arrangement is a very fact-specific exercise that can be very time and resource-consuming. It does not seem practical for IRAS to be undertaking such an assessment for every transaction.
Can Minister clarify under what circumstances will IRAS undertake the process to determine the existence of any oral or implied agreement or arrangement?
Application of ABSD (Trust)
My second clarification has to do with the related changes to the ABSD regime.
The new ABSD (Trust) will only apply to instruments executed on or after 9 May 2022. It’s not intended to apply retrospectively.
There may be a case of a discretionary trust with no identifiable beneficial trust that was set up before 9 May 2022 where action was subsequently taken after 9 May 2022 to appoint assets to an identifiable beneficiary or to distribute assets to any identifiable beneficiary.
Can Minister clarify if the documents which arise after 9 May 2022 for such a trust is stampable under the new ABSD (Trust) regime?
Mdm, notwithstanding these short clarifications, I stand in support of the Bill.
Watch the speech here.