Tan Kai Wen Keith, 26, and his mother 56-year-old Ng Chiew Yen. Both charged in court with lying to IRAS over 99-to-1 property purchase

[Franjipani]

Mother and son charged with lying to IRAS over 99-to-1 property purchase in first such prosecution​

Tan Kai Wen Keith, 26, had purchased a condominium unit at 49 Canberra Drive in his name before selling 1 per cent to his mother Ng Chiew Yen, in a move IRAS suspects was meant to avoid tax.

File photo of the State Courts of Singapore



SINGAPORE: A mother and her son were charged on Friday (Sep 20) with lying to the tax authority over a "99-to-1" property purchase arrangement.

Tan Kai Wen Keith, 26, had bought a condominium unit in his name before selling 1 per cent of it to his mother, 56-year-old Ng Chiew Yen.

The Inland Revenue Authority of Singapore (IRAS) suspects the transaction was arranged to avoid paying additional buyer's stamp duty (ABSD).

Charge sheets state that the property is located at 49 Canberra Drive - the address of an upcoming development The Watergardens at Canberra. Units there are priced at S$1.19 million to S$2.87 million, according to listings on PropertyGuru.

This is the first such prosecution involving taxpayers accused of giving false and misleading information to IRAS as part of its audit of two-step 99-to-1 property transactions.

Such transactions involve one person owning 99 per cent of a property while a second person holds 1 per cent.

Abusers of the scheme typically have one owner buy the property at 100 per cent before transferring 1 per cent to the co-owner, who presumably is liable for more taxes because they already have property under their name.

By structuring the transaction this way, ABSD is payable only on the 1 per cent share of the property, rather than the full value of the property if the purchase was done jointly at the outset.

THE CASE​

The Singaporean pair charged on Friday received five charges each under the Stamp Duties Act for conspiring to provide misleading information to IRAS.

Tan purchased the residential property in his name on Sep 24, 2021, and subsequently sold a 1 per cent share to his mother.

In 2023, IRAS began auditing the related transactions and sought information from Tan via email.

When asked why he did not jointly purchase the property with his mother at the outset, Tan allegedly said that he had made a hasty decision to buy the property, with the understanding that his family would support him financially.

He is also accused of lying that his family was unable to do so and that he had to add his mother as a joint owner to take a loan.

Tan is also accused of providing misleading information to IRAS in the form of incomplete WhatsApp messages.

Neither Tan nor his mother have indicated how they would plead. They will return to court in October.

If convicted of providing false and misleading information to IRAS, Tan and Ng could be jailed for up to two years, fined up to S$10,000, or both.

IRAS said it will recover the rightful amount of stamp duty from buyers if it discovers tax avoidance. A surcharge of 50 per cent of the additional duty payable can be imposed, and there is no statutory time limit for stamp duty audits.

Purchasers who entered into a two-step 99-to-1 property purchase arrangements should voluntarily disclose their arrangements to IRAS, the taxman said.

"Depending on the circumstances, IRAS is prepared to consider such cases more favourably," the agency added.

Finance Minister Lawrence Wong said in May that IRAS had found 166 cases involving tax avoidance in its review of 187 such 99-to-1 cases, adding that about S$60 million in ABSD and surcharges will be clawed back.

 

[NanoSpeed]

What is the difference ? Didn't the son pay the full ABSD when he bought 100% under his name ? Would it be any cheaper if they bought the condo as joint tenants from the outset ? I don't think so.

What kind of fuck up journalism is this ?

 

[Franjipani]

What is the difference ? Didn't the son pay the full ABSD when he bought 100% under his name ? Would it be any cheaper if they bought the condo as joint tenants from the outset ? I don't think so.

What kind of fuck up journalism is this ?

Son first property no absd

 

[shiokalingam]

ChatGPT :

The "99-to-1" private property purchase in Singapore refers to an ownership structure where two buyers co-own a property, but their ownership shares are highly disproportionate. One buyer holds 99% of the property, while the other holds just 1%. This arrangement is often used as a legal strategy to minimize taxes, particularly the Additional Buyer's Stamp Duty (ABSD).

Here's how it works and why it's used to avoid or reduce taxes:

1. Understanding ABSD in Singapore

In Singapore, ABSD is a tax imposed on the purchase of residential properties. The rates vary depending on the residency status and the number of properties owned. For Singapore citizens, ABSD starts from the second property, while for Permanent Residents and foreigners, the rates differ based on the number of properties they own and their residency status.

Singapore Citizens: 17% ABSD for the second property, 25% for the third and subsequent properties.

Singapore Permanent Residents: 5% for the first property, 25% for the second, and 30% for subsequent properties.

Foreigners: 60% ABSD on any property.


2. How the "99-to-1" Scheme Works

Initial Purchase: A property is bought with a 99-to-1 ownership split between two parties, typically a couple or family members. The person holding the 99% share might already own other properties, while the one holding the 1% share often does not own any.

Ownership Transfer: After the purchase, the 99% owner transfers their share to the 1% owner, effectively making the 1% owner the full or majority owner of the property.

Avoiding ABSD: If the person holding 1% does not own any other properties, the ABSD is either reduced or eliminated since the bulk of the property is now owned by someone for whom this is the first property.


3. Why Buyers Use This Strategy

The main reason buyers use the 99-to-1 scheme is to avoid or reduce ABSD, which can significantly increase the overall cost of purchasing a property. By structuring ownership this way, the higher ABSD applicable to the primary owner with multiple properties can be avoided, or reduced, because the 1% owner (who later becomes the full owner) typically qualifies for a lower or zero ABSD.

4. Risks and Legal Considerations

While this method has been used to reduce ABSD, there are some risks and legal complexities:

Stamp Duty on Transfer: Transferring the 99% share to the 1% owner may attract additional stamp duties.

Legal Risks: The government has been tightening regulations and monitoring such transactions. If the transfer is seen as a tax avoidance scheme, penalties may be imposed.

Ownership Rights: The original owner with the 1% share might not have much say in decisions regarding the property until the full transfer occurs, creating potential disputes.


5. Tightened Regulations

The Singapore government has been aware of such tax-avoidance strategies and has taken steps to close loopholes. While not illegal, authorities may challenge the validity of such transfers if they are deemed to be motivated purely by tax avoidance. Buyers should consult with legal and tax professionals before engaging in such schemes to ensure compliance with the latest regulations.

In short, the 99-to-1 property purchase is a method used by some buyers in Singapore to minimize ABSD. However, it carries risks and complexities, and with tighter regulations, buyers should approach it cautiously.

 

[shiokalingam]

 

[Franjipani]

NG Chiew Yen is Hokkien accountant?

 

[yubenOh]

Cheat ah Gong's money ?? Confirm go jail one.

 

[Balls2U]

Lao kway bu Ng Chiew Yen how? Can eat don't waste?

 

[Balls2U]

99-1 is so bloody obvious. They should have structured it 70-30. They IRAS can't touch them.