Additional Conveyance Duties For Equity Interests Of Property Holding Entities Transferred Into A Living Trust

The Government announced today the introduction of the Stamp Duties (Amendment) Bill 2022 (the Bill). The Bill introduces (a) the Additional Conveyance Duties for Trust (ACD (Trust)), and (b) the stamp duty treatment for renunciation of interest in residential property that is held on a trust.  

2. Both Additional Buyer’s Stamp Duty (ABSD) and ACD promote a stable and sustainable residential property market. ACD (Trust), together with ABSD (Trust) announced by the Government on 8 May 2022, will plug a gap in the existing ABSD and ACD regime. 

3. Residential properties can be acquired directly, or via equity interests (including unlisted shares) in property holding entities (PHEs^[1]), and ABSD or ACD will apply respectively.  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^[2], even if there is no identifiable beneficial owner of those properties or equity interests at the time of their transfer into the living trusts.

A) ACD (Trust)

4. Background: ACD currently 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. Where there is no identifiable beneficial owner at the time when the equity interests in PHEs are transferred into the trust, ACD may not apply. 

5. Review: Following its periodic policy review, 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. 

6. In determining whether this threshold for significant ownership is reached in a case of a living trust with non-identifiable beneficial owners, we will consider the equity interests that the trustee holds for the trust, together with those held by his associates.  

7. 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. 

B) Stamp Duty on Renunciation of Interest in Residential Property Held on Trust

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

a) A residential property is transferred into a living trust on or after 10 May 2022; 

b) All the beneficial owners of the residential property are identified at the time of transfer; and 

c) A beneficial owner of that property renounces his interest in the property on or after 10 May 2022.

9. Obligations on beneficial owner who renounces interest: The beneficial owner who renounces his interest must notify the settlor and the Commissioner of Stamp Duties (COSD) of the renunciation in writing (i.e. through the Prescribed Notice (Renunciation)) within a specified period. Failure to do so is an offence and will be liable on conviction to a fine not exceeding $1,000. The original beneficial owner may also be liable for SSD upon his renunciation.

10. Obligations on settlor who attains interest in a residential property upon the renunciation: As the new beneficial owner, the settlor will have to pay the applicable stamp duty (e.g. BSD, ABSD) within a specified period. 

11. 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.

For more information, please visit www.iras.gov.sg.

Issued by:

Ministry of Finance

Singapore 

9 May 2022

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^[1] A PHE is an entity which has at least 50% of its total tangible assets comprising residential properties in Singapore. A significant owner (i.e. holding at least 50% equity interest in a PHE) is subject to ACD if the PHE shares are bought or sold. 

^[2] A living trust is one that is created by a person (the settlor) during his or her lifetime.