Condominium unit buyers, agents get jail for backdating Option to Purchase to evade higher stamp duties

SINGAPORE: A couple and two property agents were sentenced to jail on Friday (Sep 24) for backdating an Option to Purchase on a condominium unit in order to evade newly raised stamp duties.

Property buyers Daniel Halim and his wife Lee Liu Ying, both 44, were given six weeks' jail each and ordered to pay a penalty of S$276,000, four times the amount of additional buyer's stamp duties evaded.

Property agents Mu Shen, 50, and 44-year-old Loy Thye Wei were given eight weeks' jail each.

This is the first prosecution under the Stamp Duties Act for executing an Option to Purchase when all the facts and circumstances were not fully set out.

The court heard that Mu was the property agent acting for the couple in 2018, while Loy was the seller's agent. 

Halim and Lee already owned two other properties - a condominium in West Coast Crescent, and an HDB flat in Strathmore Avenue - and wanted to buy a fourth-floor apartment at Sandy Palm condominium in Loyang.

On Jul 5, 2018, the Government announced property cooling measures, raising rates for additional buyer's stamp duties. 

Rates on or before Jul 5, 2018 were charged at 10 per cent for Singaporeans buying their third and subsequent residential property, while the revised rates that kicked in from Jul 6, 2018 were 15 per cent.

There was a transitional remission for residential properties acquired on or after Jul 6, 2018, where the lower additional buyer's stamp duties applied if certain conditions were fulfilled.

As Mu's buyers already owned two properties, and their Option to Purchase had not been granted on or before Jul 5, 2018, they were supposed to pay the increased additional buyer's stamp duties.

The couple viewed the property for the first time on Jul 7, 2018. After this, Mu proposed to Loy a scheme to backdate the Option to Purchase.

The couple returned to the property for a second viewing the next day and agreed on the purchase price of S$1.38 million, but told Mu they would proceed only if the Option to Purchase was backdated, as they had cash flow problems.

If they had to pay the increased buyer's stamp duties, they would not have enough cash on hand to complete the purchase of the property.

Mu then instigated Loy to backdate the Option to Purchase to Jul 4, 2018, intending to evade the increased stamp duty. The seller that Loy was acting for was unaware of the scheme.

Halim's cheque for the 1 per cent deposit for the option fee was also illegally backdated to add a "cloak of legitimacy", the court heard.

On Jul 24, 2018, the buyers executed the Option to Purchase and evaded S$69,000 in stamp duties by paying 10 per cent of additional buyer's stamp duties instead of 15 per cent.

The seller raised Loy's commission from 1 per cent to 1.5 per cent as a reward for closing the transaction at that selling price, and Loy and Mu agreed to share the higher commission that Loy received.

Court documents did not indicate how the offences came to light, only that a principal tax investigator with the Inland Revenue Authority of Singapore (IRAS) investigated the case.

In a statement after the sentencing, IRAS said it "takes a very serious view of any individual who evades stamp duty by executing instruments containing false information".

It urged individuals who are aware of such evasions to contact IRAS, and said a reward based on 15 per cent of the tax recovered, capped at S$100,000 would be given to informants in successful cases.

For omitting information in the Option to Purchase with intent to evade duties, the accused could have been jailed up to three years, fined up to S$10,000, or both.