SINGAPORE: A mother and son who had lied to the Inland Revenue Authority of Singapore (IRAS) to avoid paying a large amount for stamp duty were given a two-week jail sentence on Friday (Feb 28).
This is the first time this type of case has been prosecuted since the tax avoidance arrangement some people have been using was made public by the authorities. Then Deputy Prime Minister Lawrence Wong explained in May 2024 that the “99-to-1” arrangement is a tax avoidance arrangement some property buyers use to reduce the correct Additional Buyer’s Stamp Duty (ABSD) amount.
Ng Chiew Yen, 56, and her son, Keith Tan Kai Wen, 26, pleaded guilty to two counts each of providing false and misleading information to IRAS. Three additional charges were taken into consideration for their sentencing.
In April 2023, then Senior Minister of State for Finance Chee Hong Tat told Parliament that less than 1% of private residential property transactions involved arrangements such as the “99-to-1” scheme that allowed home buyers to avoid paying tax or stamp duties. IRAS told CNA last year that there were 166 such cases.
In 2018, the government increased the ABSD as a property cooling measure in response to the en-bloc frenzy that began the year before. As part of the curbs introduced to ease the property market, the authorities raised the ABSD for citizens buying second and subsequent homes to 12 per cent.
What the mother and son did
In September 2021, Tan bought a condominium unit at 49 Canberra Drive for S$1,113,000 under his name alone, according to a report in CNA.
However, he could only really pay for the unit if his mum took out a loan. Since he had no work at the time, he was ineligible to borrow money from a bank, which meant that his mum needed to be a legal mortgagor.
For the two of them to buy the property together, they would need to pay ABSD on the full amount of the purchase price.
Three days after buying the unit, Tan sold his mother a 1% share in the unit for S$11,130. Since she was already a property owner, she only paid ABSD on 1% of the share of the purchase, and the pair was given a housing loan.
However, the transaction was audited by the IRAS to ascertain whether the correct amount had been paid for ABSD. In the course of IRAS’s investigations, it was found that the two lied and deleted messages with their banker, even after they were warned that this would have consequences.
According to District Judge Chay Yuen Fatt, the pair had premeditated the cover-up of their misdeeds. /TISG
Read also: IRAS discovered 166 cases of tax avoidance; set to recover S$60M ABSD and surcharges