The Stamp Duties (Amendment) Bill (the “Bill”) was introduced in Parliament on 9 May 2022. The Bill will introduce Additional Conveyance Duty (“ACD”) for (i) transfers of equity interests in Property Holding Entities (“PHEs”) into trusts for non-bare trust beneficiaries; and (ii) distribution of equity interests by trustee to non-bare trust beneficiaries. These changes proposed in the Bill will take effect from 10 May 2022.

What is the Duty that I need to pay as a Buyer acquiring equity interests in Property-Holding Entities (PHEs)?

Acquisition of equity interests in the PHE

Additional Conveyance Duties for Buyers (“ACDB”) will apply on qualifying acquisitions of equity interests in the PHE (“Target”) based on the market value of the underlying residential property. This is in addition to existing stamp duty on shares.

(NEW!) For ACDB purposes, where the equity interest in the PHE is held on trust such that the beneficial owner of the equity interest in the trust is not identifiable (i.e. a non-bare trust beneficiary), the beneficial owner of the equity interest in the trust is deemed to be the trustee.

ACDB is also payable on qualifying acquisitions where the trustee distributes the equity interest to a beneficiary of the trust, who did not have beneficial ownership of the equity interest as at the time of the declaration of trust or when equity interest is transferred into a trust.

Additional Conveyance Duties for Buyers (ACDB) Rates

  (A) If the Target is a Type 1 PHE 

 

Market value of the underlying residential property own by the Target 
 
ACDB is the sum of (i) & (ii)
 Before 20 Feb 2018On or after 20 Feb 2018 
(i) On first $180,000On first $180,0001% x U/V x W
 On next $180,000On next $180,0002% x U/V x W
 Exceeding $360,000On next $640,0003% x U/V x W
  Exceeding $1,000,0004% x U/V x W
 
(ii)  Z%^ on the entire valueZ%^ x U/V x W
 
  (B) If the Target is a Type 2 PHE  (or both a Type 1 and Type 2 PHE)  

 

 Market value of the underlying residential property own by the Target ACDB is the sum of (i) & (ii)  
 Before 20 Feb 2017On or after 20 Feb 2018 
(i) On first $180,000On first $180,000

1% x U/V x W1 x X

+

1% x U/V x W2

 On next $180,000On next $180,000

2% x U/V x W1 x X

+

2% x U/V x W2

 Exceeding $360,000On next $640,000

3% x U/V x W1 x X

+

3% x U/V x W2

  Exceeding $1,000,000

4% x U/V x W1 x X

+

4% x U/V x W2

 
(ii)  Z%^ on the entire value  

Z%^ x U/V x W1 x X

+

Z%^ x U/V x W2

 ^Z% is: -

  • 15% if the instrument is executed on or after 11 Mar 2017 but before 6 Jul 2018; or
  • 30% if the instrument is executed on or after 6 Jul 2018 but before 16 Dec 2021; or
  • 40% if the instrument is executed on or after 16 Dec 2021.

Note: The above table is a simplified version. For the full version and the terms used, please refer to IRAS e-Tax Guide on Stamp Duty: Additional Conveyance Duties (ACD) On Residential Property-Holding Entities (PDF, 755KB).

Note: We are in the process of updating the e-Tax Guide to include the ACD treatment for trusts. The revised e-Tax Guide will be uploaded by mid-2022. 

An illustration: How does ACDB work?

On 20 Mar 2017, Mr and Mrs T acquire 30% and 40% equity interest in Company A that directly owns a prescribed immovable property valued at $8M. Company A’s total tangible assets is $10M.

STEP 1: Determine if the target is a PHE
Asset percentage = $8M/$10M = 80%

Company A is a Type 1 PHE as 80% of its total tangible assets is prescribed immovable property.

STEP 2: Determine the grantees’ associates
Mr and Mrs T are associated as they are husband and wife.

STEP 3: Determine if the 50% significant ownership is met
Mr and Mrs T’s equity interest acquired will be added together as they are associated and together, they are significant owners since 30% + 40% cross the 50% significant ownership threshold.

STEP 4: Compute the ACDB payable 
Assuming that the prescribed immovable property is a part of an entire building used for residential purposes and the value of it is $8M,

  • Mr T: ACDB x 30% x $8M
  • Mrs T: ACDB x 40% x $8M

More examples with scenarios involving non-bare trust beneficiaries will be updated in mid-2022.

Note: We are in the process of updating the e-Tax Guide to include the ACD treatment for trusts. The revised e-Tax Guide will be uploaded by mid-2022.