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30 May 2022

The Government has announced changes in the Additional Buyer’s Stamp Duty (“ABSD”) and Additional Conveyance Duty (“ACD”) regimes to plug gaps in these regimes.

On 8 May 2022, the Government announced that ABSD of 35% will apply on any transfer of residential property into a living trust (“ABSD (Trust)”) where the transfer takes place on or after 9 May 2022. A living trust is a trust that is created by a person during his or her lifetime.

On 9 May 2022, a Bill to amend the Stamp Duties Act 1929 was tabled in Parliament to introduce the Additional Conveyance Duties for Trust (“ACD (Trust)”) and the stamp duty treatment for renunciation of interest in residential property that is held on a trust. The Inland Revenue Authority of Singapore (“IRAS”) has stated that all transfers of equity interests in property holding entities (“PHEs”) into a living trust (whether new or existing) with non-identifiable beneficial owners will be subject to ACD (Trust), where the transfer is executed on or after 10 May 2022.

The new ABSD (Trust) and ACD (Trust) ensure that ABSD and ACD apply to transfers of residential properties and equity interests in PHEs into living trusts, even if there is no identifiable beneficial owner of those properties or equity interests at the time of their transfer into the living trusts.

ABSD (Trust)

ABSD of 35% will apply on any transfer of residential property into a living trust with effect from 9 May 2022.

Residential properties transferred into trusts for housing developers will continue to be subject to the ABSD rate of 40% (i.e. 5% non-remittable, plus 35% remitted upfront subject to conditions).

When a residential property is transferred into a living trust, Buyer’s Stamp Duty (“BSD”) is payable. Previously, ABSD may or may not also be payable, depending on the profile of the beneficial owner(s) of the residential property transferred into the trust. Where the living trust was structured such that there was no identifiable beneficial owner at the time of transfer, ABSD was previously not payable. 

The Government has introduced ABSD (Trust) at 35% to address and close this gap. ABSD is now payable even if there is no identifiable beneficial owner at the time the residential property is transferred into a trust. Any conveyance, assignment or transfer on sale of residential property to a trustee to hold on trust and any instrument chargeable in like manner will be subject to the ABSD (Trust) rate of 35%.

ABSD (Trust) is to be payable upfront when the residential property is transferred into any living trust. As a concession, a trustee may apply to IRAS for a refund of ABSD (Trust) provided the requisite conditions are satisfied. The application must be made within six months after the date of execution of the instrument. The amount refunded will be based on the difference between the ABSD (Trust) rate of 35% and the ABSD rate corresponding to the profile of the beneficial owner with the highest applicable ABSD rate.

Further information is available on the IRAS ABSD webpage.

ACD (Trust)

ACD applies and will continue to apply to transfers of equity interests in PHEs into living trusts with identifiable beneficial owners who are or become significant owners of the PHEs. Previously, where there was no identifiable beneficial owner at the time when the equity interests in PHEs are transferred into the trust, ACD might not apply.

The Government will introduce ACD (Trust) to address and close this gap. ACD (Trust) will be payable on transfers executed on or after 10 May 2022 of equity interests in PHEs into all living trusts where the significant ownership threshold has been reached, even if there is no identifiable beneficial owner of such equity interests at the time of transfer. In determining whether the significant ownership threshold is reached in a case of a living trust with non-identifiable beneficial owners, IRAS will consider the equity interests that the trustee holds for the trust, together with those held by his associates.

All transfers of equity interests in PHEs into a living trust (whether new or existing) with non-identifiable beneficial owners will be subject to ACD (Trust), where the transfer is executed on or after 10 May 2022.

Further information is available on the IRAS ACD webpage.

Stamp duty on renunciation of interest in residential property held on trust

The Bill tabled to amend the Stamp Duties Act 1929 also provides for the stamp duty treatment for renunciation of interest in residential property that is held on a trust. In this regard, the Bill seeks to impose ad valorem duty in relation to a case where a beneficiary of a bare trust over residential property renounces the beneficiary’s interest in the property, and a resulting trust of the renounced interest arises in favour of the settlor.

When interest in a residential property held on trust is renounced by a beneficial owner, the Government will impose BSD and, where applicable, ABSD and Seller’s Stamp Duty (“SSD”), where:

  • a residential property is transferred into a living trust on or after 10 May 2022; 
  • all the beneficial owners of the residential property are identified at the time of transfer; and
  • a beneficial owner of that property renounces his interest in the property on or after 10 May 2022.

The beneficial owner who renounces his interest must notify the settlor and the Commissioner of Stamp Duties of the renunciation in writing through the prescribed form and within a prescribed period. Failure to do so is an offence and will be liable on conviction to a fine not exceeding S$1,000. The original beneficial owner may also be liable for SSD upon his renunciation.

As the new beneficial owner, the settlor will have to pay the applicable stamp duty (e.g. BSD, ABSD) within a specified period.

The above changes relating to renunciation apply for residential properties that are transferred into a living trust (whether existing or new), where such transfer and such renunciation occur on or after 10 May 2022.

Reference materials

The following materials are available on the MOF website www.mof.gov.sg and the Singapore Parliament website www.parliament.gov.sg: