Couple admits evading S$69,000 in stamp duty by backdating option to purchase to avoid new tax rules
- Married couple Daniel Halim and Lee Liu Ying wanted to buy a Pasir Ris condominium unit
- Since they already owned two other properties, they would have to pay Additional Buyer’s Stamp Duty
- Then, new tax rules kicked in a few days before they signed their option to purchase
- This meant that they had to pay 15 per cent in the stamp duty instead of 10 per cent
- To avoid paying an extra $69,000, they backdated their option to purchase
SINGAPORE — A married couple pleaded guilty on Thursday (Sept 2) to executing a backdated option to purchase, in order to avoid paying a higher amount of the Additional Buyer’s Stamp Duty (ABSD) that came to S$69,000.
This was the first prosecution of its kind under the Stamp Duties Act.
Daniel Halim and Lee Liu Ying, both aged 44, wanted to buy a unit at Sandy Palm condominium, located along Jalan Loyang Besar in Pasir Ris.
The option to purchase was agreed on July 8, 2018 or later. However, they told their property agent to instigate the sellers’ agent to backdate it to July 4.
Higher ABSD rates had kicked in on July 6 that year for Singapore citizens buying their second or subsequent residential property as part of the Government's property cooling measures.
Those getting a third or subsequent property would have had to pay 15 per cent in ABSD, instead of 10 per cent.
The couple took advantage of the transitional remission for residential properties acquired on or after July 6, where the previous lower ABSD rate of 10 per cent would apply if all the following conditions were met:
The option to purchase was granted on or before July 5
It was exercised on or before July 26, or the date of expiry of its validity period, whichever was earlier
It was not varied, including any extension of the validity period, on or after July 6
CASH FLOW PROBLEMS
Investigations revealed that Halim and Lee first viewed the Sandy Palm apartment on July 7.
The couple made an initial offer of S$1.35 million for the unit but when they viewed it a second time on July 8, they increased the offer to S$1.38 million, which the seller accepted through the sellers’ agent Loy Thye Wei.
In order to afford the initial cash outlay to buy the property, Halim and Lee thought of saving on ABSD by using the transitional remission rate.
The court heard that this was because they had cash flow problems at the time and did not have enough cash on hand to pay S$69,000 in ABSD.
Through their property agent Mu Shen, they proposed to Loy to backdate the option to purchase.
The couple told Mu that they would only proceed with the transaction if this was done.
Halim also backdated the option cheque to July 4 to match the date of the backdated option to purchase. They executed the option on July 24.
Mr Norman Teo, prosecutor for the Inland Revenue Authority of Singapore, told the court that he was seeking 12 weeks’ jail for both husband and wife.
Their lawyer Audrey Koo said that they were asking for a fine or a short custodial sentence, but asked for time to prepare a written mitigation plea.
The couple will return to court next week to be sentenced.
If convicted of executing an instrument or omitting facts and circumstances in the instrument with intent to evade payment of duty, they could be jailed up to three years or fined up to S$10,000, or be punished with both.
Mu and Loy, the property agents, have been charged. Mu has pleaded guilty while Loy's case is pending.
TODAY’s earlier checks with the Council for Estate Agencies’ public register revealed that Loy worked for ERA Realty, while Mu was employed by Propnex Realty.
