First prosecution of ‘99-to-1’ property purchase: Mother, son charged with giving false info to Iras

A woman and her son were charged on Sept 20 with providing false information to the Inland Revenue Authority of Singapore (Iras) during an audit of a “99-to-1” property purchase arrangement.

This is the first prosecution over an audit of the two-step “99-to-1” property transactions, said the statutory board.

Ng Chiew Yen, 56, and Keith Tan Kai Wen, 26, were each handed five charges under the Stamp Duties Act.

The so-called “99-to-1” scheme is a tax avoidance arrangement used by some property buyers to reduce the rightful additional buyer’s stamp duty (ABSD) payable on the purchase of a residential property.

It enables those who already own property to reduce or avoid paying ABSD, while still becoming an additional property’s co-owner and a co-applicant for a loan to finance the purchase.

Investigations revealed Tan bought a condominium unit in 49 Canberra Drive in his sole name on Sept 24, 2021, and subsequently sold a 1 per cent share of the property to his mother.

Their case was part of an audit into the “99-to-1” property transactions for possible tax avoidance. During the audit, Iras sought information from Tan via e-mail concerning the transactions. Tan was asked why he had not jointly purchased the property with Ng at the outset.

In response, Tan allegedly stated that he had made a hasty decision to purchase the property, with the understanding his family would support him financially. He was also said to have claimed his family was eventually unable to do so, and thus his mother had to be added as a joint owner in order to take a loan.

Tan also allegedly provided misleading information to Iras in the form of incomplete WhatsApp messages, as well as other false and misleading responses during the audit. Charge sheets showed Ng had allegedly conspired with her son to provide such false answers.

If convicted of providing false and misleading information, Tan and Ng could each be fined up to $10,000, jailed for up to two years, or both.

The two-step “99-to-1” property purchase arrangement typically involves an individual who does not own any property initially buying a residential property in their name and, within a very short period of time, selling a small share of the property, such as 1 per cent, to another individual who owns property.

As ABSD is paid on a purchase only by those who already own property, the arrangement means ABSD would be payable only on the 1 per cent share of the property, rather than on the full value of the property if the purchase had been done jointly at the outset, said Iras.

Should the statutory board determine that tax avoidance has occurred, it will recover the rightful amount of stamp duty from the buyers, and may impose a surcharge of 50 per cent of the additional duty payable. This is on top of the court fine handed to the accused if they are found guilty.

“When audited, individuals should cooperate and be upfront with Iras. Providing false statements or misleading information, such as information that has been tampered with, is considered a criminal offence, carrying penalties such as fines and/or imprisonment, if convicted,” said Iras.

On May 7, Finance Minister Lawrence Wong said Iras will claw back about $60 million in ABSD and surcharges after uncovering 166 cases of private home purchases that involved the use of the “99-to-1” scheme.

A reward based on 15 per cent of the tax recovered, capped at $100,000, will be given to informants if information or documents provided lead to a recovery of tax that would have otherwise been lost.

Source: Straits Times © SPH Media Limited. Permission required for reproduction.

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