The Stamp Duties (Amendment) Bill (the “Bill”) was introduced in Parliament on 9 May 2022. The Bill introduced 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 will take effect on 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 or the beneficial ownership has not vested at the time of declaration of trust or when the equity interest is transferred into the trust (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, 819KB).

An illustration: How does ACDB work in a direct acquisition?

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 buyers’ 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

An illustration: How does ACDB work in a trust scenario where there is no beneficial owner of the equity interest?

Mr X, Mr Y and Mr Z each own a 10% equity interest in Company B that directly owns a prescribed immovable property valued at $8M, which they had acquired on 20 Mar 2017. Company B’s total tangible assets is $10M.

On 10 May 2022, Mr X purchased an additional 35% equity interest in Company B on trust for Mr Y and Mr Z, where the trustee (Mr X) retains the discretion to decide to whom the equity interest should be given to and in what proportion i.e. beneficial ownership has yet to vest when the 35% equity interest is transferred into the trust.

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

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

STEP 2: Determine the trustee’s associates
For such trusts where the beneficial ownership has yet to vest, the trustee i.e. Mr X (in his capacity as a trustee) will be looked to in determining if the significant owner threshold has been met. The trustee’s associates are the non-bare trust beneficiaries i.e. Mr Y and Mr Z.

STEP 3: Determine if the 50% significant ownership is met.

Mr X’s personal holding of 10% equity interest is not taken into consideration, as this is not held in his capacity as trustee of the trust.

The equity interest acquired by the trust will be added together with those of the non-bare trust beneficiaries as they are associates of the trustee. The trustee (with his associates) is a significant owner since 35% + 10% + 10% = 55% crosses the 50% significant owner 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:

  • Trustee: ACDB x 55% x $8M

An illustration: How does ACDB work where the trustee has distributed the PHE equity interest in the trust to the beneficiaries who previously did not have beneficial ownership?

Mr J, Mr K and Mr L each own 10% equity interest in Company C that directly owns a prescribed immovable property valued at $8M, which they had acquired on 20 Mar 2017. Company C’s total tangible assets is $10M. Mr K and Mr L are partners of the same LLP.

On 10 May 2022, Mr J purchased an additional 35% equity interest in Company C on trust for Mr K and Mr L, where the trustee (Mr J) retains the discretion to decide to whom the equity interest should be given to and in what proportion i.e. beneficial ownership has yet to vest when the equity interest is transferred into the trust. ACDB was paid on the equity interest acquired by the trust as the trustee (with his associates) is a significant owner. The total equity interest held by the trustee (and his associates) is 35% + 10% + 10% = 55%.  

On 10 May 2026, Mr J transferred the full 35% equity interest in Company C that he had been holding on trust to Mr K.

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

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

STEP 2: Determine Mr K’s associates

Mr K and Mr L are associates as they are partners of the same LLP.  

STEP 3: Determine if the 50% significant ownership is met.

Mr K is a significant owner since 35% + 10% + 10% crosses the 50% significant owner 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 K: ACDB x 55% x $8M