Mother, son jailed 2 weeks for lying to IRAS over '99-to-1' property purchase
Each of the accused pleaded guilty in the first prosecution of its kind.
Ng Chiew Yen (left) and her son, Keith Tan Kai Wen, arriving at the State Courts on February 28, 2025. Both lied to IRAS to avoid paying additional property tax in the first such prosecution. (Photos: CNA/Lauren Chian and Ili Nadhirah Mansor)
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SINGAPORE: A mother and her son were sentenced to jail on Friday (Feb 28) over an attempt to minimise stamp duty for a condominium purchase via a "99-to-1" scheme.
Ng Chiew Yen, 56, and Keith Tan Kai Wen, 26, were each handed two weeks' jail in the first such prosecution of its kind.
Ng and Tan each pleaded guilty to two charges of providing false and misleading information to the Inland Revenue Authority of Singapore (IRAS). Three charges of a similar nature were considered for their sentencing.
The government previously said that such cases are on the rise. On May 7 last year, Finance Minister Lawrence Wong said that IRAS will claw back about S$60 million (US$44 million) in the additional buyer’s stamp duty (ABSD) and surcharges.
IRAS previously told CNA that if it determines that tax avoidance has taken place, it will also impose a 50 per cent surcharge on the additional duty payable.
This was after the taxman uncovered 166 cases of private property purchases involving the “99-to-1” scheme as a means to avoid paying the ABSD.
The two-step “99-to-1” property purchase arrangements typically involve individuals without any prior property buying residential properties in their name initially.
Within a very short period, the individual would sell a small share of the property - such as 1 per cent - to another individual with a higher ABSD profile.
In doing so, the ABSD would be payable on 1 per cent rather than the full value of the property.
SON BOUGHT CONDO IN HIS NAME FIRST
The duo's offences relate to the sale and purchase of a condominium unit at 49 Canberra Drive.
They both knew that Tan could only purchase a property if Ng took out a loan, as Tan was unemployed and hence ineligible. For this to happen, Ng had to be a legal mortgagor.
However, both also knew that if they bought the property jointly at the outset, they would have to pay for ABSD on the full amount of the purchase price.
To avoid doing so, Tan bought the property in his name on Sep 24, 2021 for S$1,113,000. Three days later, he sold a 1 per cent share in the property to Ng for S$11,130.
As Ng owned a residential property at the time, she paid ABSD on 1 per cent of the share of the purchase. A housing loan was later extended to them.
IRAS subsequently commenced an audit to ascertain if the two had avoided paying ABSD.
The pair then conspired to provide false answers and misleading information to avoid being discovered, ignoring warnings from IRAS about the consequences of lying.
DELETED MESSAGES
Tan said he made a hasty decision to buy the property with the understanding that his family would support him financially.
He said his family was unable to do so subsequently, so that Ng had to be added as a joint owner to take a loan.
When asked to provide his messages with Ng and a banker, Tan provided incomplete messages, after having deleted those that the pair thought would contradict their lie.
Had IRAS accepted the explanation and been deceived, it would have failed to impose ABSD of S$130,779 and the 50 per cent surcharge of S$65,389.
The offence was uncovered and both came clean in 2024.
As a result of the falsehoods, IRAS conducted a raid of the accused persons' home, seizing mobile devices and recorded statements from the banker and property agent involved.
Senior Tax Prosecutor Goh Yong Ngee said the duo wove a "web of lies" and took steps to "bolster the deception" by providing a set of curated messages.
They deleted a total of 109 messages after going through each one, said Mr Goh.
The duo's lawyer Amolat Singh said his clients had not intended defraud but had stumbled into "a minefield". But Mr Goh said both had tried to navigate and circumvent the minefield instead.
District Judge Chay Yuen Fatt noted that there was clear premeditation as both had discussed the cover-up.
The judge also took into consideration the effort needed to investigate the offences.
Each offence carries a jail term of up to two years, a fine of up to S$10,000, or both.
