Speeches

1. Mr Speaker, Sir, I beg to move, ''That the Bill be now read a second time''.

2. The Bill will amend the Stamp Duties Act to give legislative effect to the following measures:

a) To specify the conditions under which stamp duty relief may be granted for gifts of property made as a consequence of marriage;

b) To charge stamp duty on an arrangement to dispose of shares by cancelling existing shares and re-issuing new shares;

c) To limit stamp duty exemption only to co-operative societies, instead of granting exemption of stamp duty to all parties transacting with co-operative societies;

d) To give finality to the assessment by the Commissioner of Stamp Duties if the taxpayer does not object within 30 days from the date of assessment.

e) To treat an exchange of properties as two distinct transactions and to levy two sets of buyer and seller stamp duty; and

f) To charge ad valorem duty on transfer of shares and/or properties to a shareholder where he becomes a shareholder only after winding up proceedings have commenced;

3. Sir, I shall now explain the main amendments in the Bill.

Transfers made in Consideration of Marriage

4. It is common for parents to transfer property to their children when they marry to provide a matrimonial home for them. The current Act already provides stamp duty relief for property that is transferred to a newly-wedded couple by their family as a wedding gift. However, the conditions to qualify for this relief are not specified.

5. Clause 3 of the Bill amends Section 16 of the Act by inserting a new Section 16(3A) to specify that the relief is only granted for the transfer of property to a party to the marriage. The property must be transferred from their spouse or a parent, grandparent or sibling of a party to the marriage. In addition, the transfer must take place within one year of the date of solemnisation of the marriage, and the property must be used as the matrimonial home of couple. These conditions are put in place to ensure that the transfer represents a genuine gift to the couple for their marriage.

Stamp Duty on Disposal and re-issue of shares

6. Currently, no stamp duty is levied on the cancellation and issue of shares. Thus, a company intending to sell existing shares to a buyer may avoid incurring stamp duty by cancelling existing shares followed with an allotment and issue of new shares to the same purchaser for a consideration. Clause 5 will close this loophole by amending Section 33 of the Act to impose one set of stamp duty on a document that effects such an arrangement to cancel and re-issue shares.

Limiting stamp duty exemption only to co-operative societies

7. Currently, Section 36(e) exempts instruments executed by or on behalf of co-operative societies from stamp duty if the underlying transaction in the instrument relates solely to the business of the society. Both the co-operative society and the party they enter into a contract with are exempted from stamp duty.

8. Under the current laws, parties entering into such commercial agreements with co-ops would stand to benefit from stamp duty exemption. There is no good reason for parties transacting with the co-ops to enjoy the exemption from stamp duty, as they have entered into the agreement based on pure commercial considerations. Thus, Clause 6 amends Section 36(e) of the Act such that the exemption from stamp duty will be limited only to co-operative societies, and will not be extended to the parties transacting with co-operative societies.

Objections to the Commissioner's assessment

9. Currently, objections to the Commissioner's assessment under Section 37 of the Act must be made within 30 days. Section 16(3) of the Act also empowers the Commissioner to impose an additional dutiable amount when he assesses that the consideration is far lower than the market value. However, there is no finality to the time period a taxpayer can object to the Commissioner's assessment in this instance. As such, it is possible for a taxpayer to dispute the assessment many years after the assessment.

10. Clause 8 amends Section 39A(1) such that any objection to the Commissioner's assessment of an additional dutiable amount must be made within 30 days. The 30 days time period is the same period as that currently provided in the Income Tax Act for a taxpayer to raise any objections to the assessment of income tax.

Levying two sets of Stamp Duty on exchanges of properties

11. Presently, for an exchange of properties, only one set of stamp duty is payable, based on the property with the higher value. However, a transaction involving the exchange of properties between two parties should be treated as two transactions involving two parties each buying and selling a property at the same time. Hence, an exchange of properties should be levied with two sets of stamp duty. Clause 9 amends the First Schedule of the Act to effect this.

Stamp duty on distribution of assets in specie upon liquidation

12. Clause 9 also amends the First Schedule of the Act such that if a person becomes a shareholder only after winding up proceedings have commenced, he would be charged ad valorem duty on the transfer of shares or properties instead of a fixed duty of $10. This amendment will prevent opportunistic attempts to acquire the liquidating company's assets with minimal stamp duty.

Conclusion

13. Mr. Speaker, Sir, I beg to move.

25 Nov 2002