STAMP (AMENDMENT) BILL

Order for Second Reading read.

7.10 p.m.

The Minister for Finance (Mr Hon Sui Sen): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The purpose of this Stamp (Amendment) Bill is to rectify anomalies and improve administration.

The present title of the Act, the Stamp Act, is somewhat of a misnomer. It could, for example, be mistaken for an Act dealing with postage stamps. Clauses 2 and 3 accordingly propose to change the title of the Act from the "Stamp Act" to the "Stamp Duties Act" to reflect more accurately the nature of the provisions of the Act.

At present, payment of consolidated stamp duty on cheques by banks has to be made on 1st January and 1st July. In practice, this requirement is difficult to comply with because banks close accounts at the end of the preceding months and cannot always be ready to pay duty on the 1st of the following months. Clause 4 proposes to extend the date of payment of consolidated stamp duty on cheques issued by banks by 6 days. The new dates for payment of duty will, therefore, be 7th January and 7th July in each year.

I am also aware of the inconvenience encountered by statutory boards in paying stamp duty individually on a large number of receipts issued by them. Therefore, I propose, in clause 5 of the Bill, to extend the facility of consolidated payment of stamp duties to statutory boards. As in the case of banks, the dates for consolidated payment of stamp duty by statutory boards will be 7th January and 7th July in each year.

At present, a conveyance or transfer on sale of property is subject to ad valorem stamp duty. However, it is possible for arrangements to be made whereby this duty can be avoided. It is an established principle that the stamp duty liability of a conveyance or transfer must be determined at the time when it is executed. Except for a voluntary disposition, if at the time of execution there is no sale, then the conveyance or transfer is not a "conveyance or transfer on sale" and therefore not subject to ad valorem stamp duty.

An example of successful avoidance of duty based on the recognition of this principle was in the case of William Cory & Sons Ltd v Inland Revenue Commissioner, United Kingdom, where an option agreement was made for the purchase of shares and at the same time, transfers were made "pursuant to the option agreement to protect purchasers' rights" but not to "pass any beneficial interest in the shares". The shares were held in trust for the vendors until the option was subsequently exercised. In this way, the transfers were not subject to ad valorem stamp duty because, technically, they were not "conveyances or transfers on sale". In Singapore, under a similar arrangement, the option agreement would attract only a nominal stamp duty of $1 while the transfers or conveyances so executed would be stamped at $10 each.

Clause 6 proposes an amendment to close this loophole and provide for payment of ad valorem stamp duty on an option agreement involving conveyance or transfer of property in contemplation of a sale. The ad valorem stamp duty would be refunded if, not later than one year after the making or execution of such an option agreement, the option is not exercised and the sale not completed. It also provides for refund of excess duty paid if, within this validity period, the sale has been completed for a consideration lower than the value on which duty has been paid in the first instance.

At present, a fee of $25 is charged when any instrument is brought before the Commissioner of Stamps for his judgment as to whether any duty is chargeable on that instrument. However, it is felt that an adjudication fee of $25 is too high, as in many cases the duty payable may be only $10 or less. Clause 7 reduces the adjudication fees from $25 to $10 for any instrument not involving immovable property. Adjudication fees for any instrument involving immovable property remain at $25.

The Act presently provides that all instruments chargeable with duty and executed by any person shall be stamped before being executed. However, in the past, the Ministry of Finance had administratively allowed share certificates to be stamped within two weeks after execution because companies encountered difficulties in complying with the provision. Clause 8 of the Bill regularises the position and also extends the practice of stamping within two weeks after execution, to marketable securities.

As a step to promote the development of a money market in Singapore, stamp duty on bills of exchange was abolished in March 1972. Clause 10 proposes to delete a number of references in the Act to "bills of exchange".

The remaining amendments are either consequential in nature or are meant to tidy up procedural matters.

Sir, I beg to move.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill-[Mr Hon Sui Sen]

Bill considered in Committee; reported without amendment; read a Third time and passed.