S'porean mum, 56, & son, 26, jailed 2 weeks each for lying to IRAS about 99-to-1 property purchase, 1st such prosecution in S'pore

A Singaporean woman and her son were sentenced to two weeks' jail on Feb. 28 after they were found guilty of lying to authorities in 2023 to avoid paying additional stamp duty.

Ng Chiew Yen, 56, and her son Tan Kai Wen Keith, 26, had conspired to mislead IRAS by deleting messages in WhatsApp to avoid paying a higher additional buyer's stamp duty (ABSD) on their joint property, according to a media release by the Inland Revenue Authority of Singapore (IRAS).

The offences occurred during an audit of a two-step "99-to-1" property purchase arrangement in 2023.

This is the first such conviction involving taxpayers in Singapore.

The duo had bought a condominium unit in Canberra.

Charge sheets obtained by Mothership showed that the property is located at 49 Canberra Drive, which is the address of The Watergardens at Canberra.

Became joint owners in a "99-to-1" property purchase arrangement to avoid paying more tax

On Sep. 24, 2021, Tan had purchased a S$1 million home using only his name while he was unemployed.

He and his mother knew that he would not be eligible for a mortgage loan due to his employment status.

And as he did not own another residential property prior to the purchase, he did not pay the ABSD.

Tan later sold 1 per cent or S$11,130 worth of his home's share to his mother on Sep. 27, 2021, according to court documents.

As she had already owned another property at the time, Ng paid ABSD on only 1 per cent of the share, and they became joint owners of the home in a "99-to-1" property purchase arrangement.

According to IRAS, the two-step arrangement involves individuals without any prior property count buying residential properties in their name initially, and selling a small share of the property to another individual who has a higher ABSD profile within a very short period of time.

By doing so, Ng only had to pay stamp duty on the 1 per cent share she owned, instead of taxes based on the full value of the home if Tan had initially bought the property together with her.

Provided false statements and deleted evidence from WhatsApp chats

In January 2023, IRAS launched an investigation into the matter as part of their regular audits to uncover arrangements to deliberately reduce or avoid paying stamp duty.

In email exchanges between Tan and IRAS from Mar. 23 and Apr. 4, 2023, he had told the authority that he had not jointly bought the property with Ng initially as he had made a "hasty decision" believing that his family would financially support him, but later failed to do so, and that Ng had to be added as a joint owner to take a loan for the home.

IRAS deemed Tan's response false as he and his mother had drafted different versions of the email reply and discussed the drafts before he replied the authority.

Tan later attempted to mislead IRAS by providing tailored WhatsApp messages between Ng and the banker, in the form of a file labelled "[Ng's] WhatsApp chat correspondence with her banker".

The messages were misleading as they were incomplete, with some messages which contradicted their earlier statements having been deleted.

IRAS later issued warnings to Tan between May 29 to Jun. 18 requesting him to provide full correspondences, to which he did not comply.

When asked how the purchase was carried out without relevant discussions within the chat, Tan said his property agent would liaise with him over phone calls.

Investigations revealed that a total of 109 messages had been deleted between May and December 2021.

Authorities subsequently assessed the pair to be liable to S$130,779 in ABSD, and a further 50 per cent surcharge of S$65,389.

Penalties

The matter was later referred to the Investigations and Forensics Division for further investigation.

As a result of their offences, authorities raided the home, seized mobile phones and collected statements from the banker and their property agent.

Tan and Ng were handed two charges each for conspiring to provide the misleading information and responses to IRAS.

Three other charges were taken into consideration for the purposes of sentencing.

Any person convicted of providing false and misleading information to IRAS the Stamp Duties Act may be fined up to S$10,000, or jailed for up to two years, or both.

In such cases, IRAS will also recover the rightful amount of stamp duty from buyers, and may impose a surcharge of 50 per cent of the additional duty payable.

Top photos via Google Maps & Unsplash