mr funny
12-08-11, 01:21
http://www.straitstimes.com/Singapore/Story/STIStory_700829.html
Investor gets $442,680 cut in stamp duty
Lower stamp duty on separate contracts
Judge says block buy should be treated as 83 separate ones
Published on Aug 11, 2011
AN INVESTOR who paid about $226 million for a whole tower block at Keppel Bay has been given a $442,680 discount on her stamp duty following a landmark High Court judgment.
Madam Lily Lai, in her 50s, had appealed against her $6,788,775 bill, arguing that her purchase should be treated not as a single contract but as 83 separate ones. This worked out cheaper because the rate of stamp duty is lower on the first $360,000 of every purchase, meaning she saved $5,400 each time.
Justice Choo Han Teck reversed the taxman's ruling in what industry players see as a test case which could set a precedent for other buyers.
Madam Lai was born in Taiwan but is now a Singapore citizen. She is said to be a low-profile real estate investor who is interested in long-term developments.
It is understood that she first caught sight of the development, called Reflections at Keppel Bay, while she was returning from a trip to Batam. She decided to invest in an entire tower block because a Buddhist shifu, or master, told her that the condo, which is 'backed by a mountain and faces water', has good fengshui, said a close friend of Madam Lai. The friend, who did not want to be named, told The Straits Times: 'We had just driven past a banner advertising the property and decided to take a look. After bringing shifu there, we decided that it was a good investment.'
Madam Lai paid $226,472,460 for all 83 units of Tower 1A in 2007, but took the case to court after receiving the bill from the Commissioner of Stamp Duties.
The Inland Revenue Authority of Singapore's (Iras) lawyers Foo Hui Min and Patrick Nai argued that correspondence between Madam Lai and the developers before the sale pointed to a single contract on which the stamp duty bill should be based. But Madam Lai, represented by lawyers Ong Sim Ho and Amolat Singh, said there was no understanding that there would be a single contract.
Justice Choo found that Madam Lai had 'offered persuasive and bona fide commercial reasons for structuring the bargain in that manner'.
Madam Lai also confirmed in court documents that she would not have accepted a single sale and purchase agreement to buy all the units 'as a collective interest'.
'A single agreement would have constrained her ability to obtain financing from more than one financial institution,' said Justice Choo.
'She would also face difficulties in the event of the sub-sale of one or more of the units because the developer would have to cancel the sale and purchase agreement and re-issue her with fresh sale and purchase agreements.'
Justice Choo also rejected the Commissioner's reliance on a circular issued by the Iras on March 13, 2008.
This said that when it came to stamp duty, block property purchases should be treated as having a single purchase price. This would prevent block buyers taking advantage of the tax scheme by treating the purchase as single units.
But Justice Choo said that the circular was irrelevant as it was published after the case had arisen. The judge held that there 'cannot be uniform treatment of all block purchases'. He said the taxman must treat each case separately.
Mr Ong said the move could have important implications. He added: 'The official Iras circular insisting on stamping 'block purchases' as a single block appears now not to be valid as the court rightly ruled that each case must be looked at based on its own facts.'
An Iras spokesman said yesterday: 'We are reviewing the grounds of decision by Judge Choo Han Teck before deciding on the next course of action.'
Madam Lai's friend said the units will be marketed and sold by Leadway Property, which also operates from and owns an 18th-floor office space at The Central Mall. According to the friend, Madam Lai spends most of her time overseas.
When The Straits Times visited a four-room flat in Clementi - Madam Lai's last known registered address - a woman who answered the door said there is no such person living there.
[email protected]
[email protected]
Lower stamp duty on separate contracts
$226,472,460
Purchase price for all 83 units of Tower 1A at Reflections at Keppel Bay
$6,788,775
Stamp duty bill for the purchase, based on a single contract
Madam Lily Lai said her purchase should be treated as 83 separate contracts and not just one.
The rate of stamp duty is lower on the first $360,000 of every purchase, meaning she would save $5,400 on each one.
Investor gets $442,680 cut in stamp duty
Lower stamp duty on separate contracts
Judge says block buy should be treated as 83 separate ones
Published on Aug 11, 2011
AN INVESTOR who paid about $226 million for a whole tower block at Keppel Bay has been given a $442,680 discount on her stamp duty following a landmark High Court judgment.
Madam Lily Lai, in her 50s, had appealed against her $6,788,775 bill, arguing that her purchase should be treated not as a single contract but as 83 separate ones. This worked out cheaper because the rate of stamp duty is lower on the first $360,000 of every purchase, meaning she saved $5,400 each time.
Justice Choo Han Teck reversed the taxman's ruling in what industry players see as a test case which could set a precedent for other buyers.
Madam Lai was born in Taiwan but is now a Singapore citizen. She is said to be a low-profile real estate investor who is interested in long-term developments.
It is understood that she first caught sight of the development, called Reflections at Keppel Bay, while she was returning from a trip to Batam. She decided to invest in an entire tower block because a Buddhist shifu, or master, told her that the condo, which is 'backed by a mountain and faces water', has good fengshui, said a close friend of Madam Lai. The friend, who did not want to be named, told The Straits Times: 'We had just driven past a banner advertising the property and decided to take a look. After bringing shifu there, we decided that it was a good investment.'
Madam Lai paid $226,472,460 for all 83 units of Tower 1A in 2007, but took the case to court after receiving the bill from the Commissioner of Stamp Duties.
The Inland Revenue Authority of Singapore's (Iras) lawyers Foo Hui Min and Patrick Nai argued that correspondence between Madam Lai and the developers before the sale pointed to a single contract on which the stamp duty bill should be based. But Madam Lai, represented by lawyers Ong Sim Ho and Amolat Singh, said there was no understanding that there would be a single contract.
Justice Choo found that Madam Lai had 'offered persuasive and bona fide commercial reasons for structuring the bargain in that manner'.
Madam Lai also confirmed in court documents that she would not have accepted a single sale and purchase agreement to buy all the units 'as a collective interest'.
'A single agreement would have constrained her ability to obtain financing from more than one financial institution,' said Justice Choo.
'She would also face difficulties in the event of the sub-sale of one or more of the units because the developer would have to cancel the sale and purchase agreement and re-issue her with fresh sale and purchase agreements.'
Justice Choo also rejected the Commissioner's reliance on a circular issued by the Iras on March 13, 2008.
This said that when it came to stamp duty, block property purchases should be treated as having a single purchase price. This would prevent block buyers taking advantage of the tax scheme by treating the purchase as single units.
But Justice Choo said that the circular was irrelevant as it was published after the case had arisen. The judge held that there 'cannot be uniform treatment of all block purchases'. He said the taxman must treat each case separately.
Mr Ong said the move could have important implications. He added: 'The official Iras circular insisting on stamping 'block purchases' as a single block appears now not to be valid as the court rightly ruled that each case must be looked at based on its own facts.'
An Iras spokesman said yesterday: 'We are reviewing the grounds of decision by Judge Choo Han Teck before deciding on the next course of action.'
Madam Lai's friend said the units will be marketed and sold by Leadway Property, which also operates from and owns an 18th-floor office space at The Central Mall. According to the friend, Madam Lai spends most of her time overseas.
When The Straits Times visited a four-room flat in Clementi - Madam Lai's last known registered address - a woman who answered the door said there is no such person living there.
[email protected]
[email protected]
Lower stamp duty on separate contracts
$226,472,460
Purchase price for all 83 units of Tower 1A at Reflections at Keppel Bay
$6,788,775
Stamp duty bill for the purchase, based on a single contract
Madam Lily Lai said her purchase should be treated as 83 separate contracts and not just one.
The rate of stamp duty is lower on the first $360,000 of every purchase, meaning she would save $5,400 on each one.