A mother and her son have been charged in Singapore for lying about a “99-to-1” property purchase arrangement, a method used by some to avoid the additional buyer’s stamp duty (ABSD). This marks the first prosecution following an Inland Revenue Authority of Singapore (IRAS) audit into these two-step property transactions. IRAS suspects the duo’s transaction was designed to evade ABSD.
Background
The 99-to-1 property purchase arrangement allows one party, who already owns another property, to still be eligible for a home loan while avoiding additional taxes. In this structure, ABSD is payable only on the 1 per cent share of the property, rather than the full value. This case involves Tan Kai Wen Keith, 26, who bought a condominium unit in Canberra on Sep. 24, 2021, and later sold a 1 per cent share to his mother, Ng Chiew Yen, 56. The property is located at 49 Canberra Drive, part of The Watergardens at Canberra development.
Slapped with 5 charges each
Both Tan and Ng face five charges under the Stamp Duties Act for conspiring to provide misleading information to IRAS. The audit began in 2023, during which IRAS questioned Tan via email about why he did not jointly purchase the property with his mother from the start. Tan allegedly claimed he bought the property hastily, believing his family would support him financially. He also stated he added his mother as a joint owner to secure a loan when his family could not provide financial support. Additionally, Tan is accused of providing incomplete WhatsApp messages to IRAS. The duo will return to court in October. If convicted, they could face up to two years in jail, a fine of up to S$10,000, or both. IRAS has stated it will recover the rightful amount of stamp duty from buyers, with a potential surcharge of 50 per cent of the additional duty payable.
Voluntary disclosure
There is no statutory time limit for stamp duty audits. IRAS encourages purchasers who have entered into two-step 99-to-1 property purchase arrangements to voluntarily disclose their transactions. The authority has indicated it will consider such cases “more favourably” depending on the circumstances.
