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Legal first: Jail for buyers, agents who evaded S$69,000 in stamp duty by backdating option to purchase

SINGAPORE — A married couple and two property agents were sentenced to jail time on Friday (Sept 24) for their roles in executing a backdated option to purchase when buying an apartment, in order to avoid paying a higher amount of the Additional Buyer’s Stamp Duty (ABSD) that came to S$69,000.

To avoid paying an Additional Buyer’s Stamp Duty of S$69,000 when buying a unit at Sandy Palm condominium in Pasir Ris, a married couple now have to pay a penalty of S$276,000 and spend time behind bars.

To avoid paying an Additional Buyer’s Stamp Duty of S$69,000 when buying a unit at Sandy Palm condominium in Pasir Ris, a married couple now have to pay a penalty of S$276,000 and spend time behind bars.

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  • 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
  • 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 stamp duty instead of 10 per cent
  • To avoid paying an extra S$69,000, they backdated their option to purchase

 

SINGAPORE — A married couple and two property agents were sentenced to jail time on Friday (Sept 24) for their roles in executing a backdated option to purchase when buying an apartment, 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.

The couple — Daniel Halim and Lee Liu Ying, both aged 44 — were jailed for six weeks each. They were also ordered to pay a penalty of S$276,000, which was four times the amount of ABSD evaded.

Their property agent Mu Shen, 50, and the seller’s agent Loy Thye Wei, 44, were each sentenced to eight weeks’ jail. Loy said that she plans to appeal against the sentence.

All four pleaded guilty to their offences earlier this year.

Halim and Lee had wanted to buy an apartment 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 Mu to instigate Loy 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 cooling measures on property prices.

Those getting a third or subsequent property would have had to pay 15 per cent in the stamp duty, instead of 10 per cent.

At the time, Halim and Lee already owned a condominium unit along West Coast Crescent and a Housing and Development Board flat in the Queenstown area.

They 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

The Inland Revenue Authority of Singapore (Iras) acted on information received and began investigations into the property purchase, the court previously heard.

Halim and Lee first viewed the Sandy Palm apartment on July 7 in 2018.

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 Loy.

In order to afford the initial cash outlay to buy the property, Halim and Lee thought of saving on the stamp duty 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, they proposed to Loy to backdate the option to purchase.

The couple told Mu that they would proceed with the transaction only 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.

If convicted of executing an instrument or omitting facts and circumstances in the instrument with intent to evade payment of duty, they could each have been jailed for up to three years or fined up to S$10,000, or be punished with both.

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.

Related topics

court crime Property ABSD Additional Buyer’s Stamp Duty

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