STAMP DUTIES (AMENDMENT) BILL

[Mr Speaker in the Chair]

Debate resumed.

Dr Richard Hu Tsu Tau: Dr Ow has asked whether the new stamp duties should not be applied to new projects only. The answer is no, because speculation can take place on both new and existing completed properties. If we confine the new stamp duties to new projects only, I think the effect of curbing speculation would be diminished.

He has also asked whether first-time property buyers should be exempted from paying stamp duty upfront. Again, I have to say no, because it is very difficult to define whether a first-time property buyer is or is not a speculator. Someone who has not owned a property before can quite easily also become a speculator, if he finds that after he buys a property, he can make a profit quickly. He will buy a second property and sell off the first property. He is still a first-time buyer. So the definition of a "first-time" buyer, whether he is a speculator or not, will be very difficult to define. So I think the answer has to be no.

He has asked whether a first-time buyer can use his CPF funds to pay for the stamp duty. The answer is no. This is because the restriction on the total credit of 80% is imposed in order to reduce the ability to finance new purchases. So we should not allow this to be eroded by any use of CPF funds for this purpose.

He has asked whether there should be more flexibility in the refund of stamp duty in situations where the sale cannot proceed because of circumstances beyond the seller's control. There is some flexibility in this area. We will deal with it on a case-by-case basis depending on the circumstances. The Minister has the power in the Stamp Duties Act to grant exemptions, and I have done so in some cases.

Finally, on the question raised by Dr Ow, I would like to say that the whole purpose of introducing this package of measures was to curb speculation. Any attempt to try and change it by softening some parts of it will reduce the effectiveness of these measures. It does not really benefit the genuine buyer either, because the effect of these measures is already visible in the market. Whether you say prices have softened by 5% or 10%, the fact is that it has, in fact, stopped price rises, and actual prices may have softened 5% or 10%. This is already advantageous to the genuine buyer. These reductions in prices more than offset the 3% duty levied. An indication of this is that some developers have actually volunteered to pay for the duty, or by other means to absorb these extra measures.

Mr Leong Horn Kee has suggested some variations on the payment period for the new duties. Again, the answer is no, for the same reasons I have explained that any attempt to do so will merely make the measures less effective. I can assure him that it is not the Government's intention to over-kill the market or cause it to crash because, as he says, this is in no one's interest. Events have in fact proved that this is not the case. The market, although softened, remains fundamentally sound, as seen from some recent sales of new properties in the market. We will, of course, keep a very close eye to ensure that nothing drastic happens. But I think the package of measures has achieved, at least for the time being, the desired effect.

Dr Soin has posed a series of questions. I hope I have got the questions correctly. In the case of a mortgagee forced sale, she asked whether the sale is subject to stamp duty. The answer is yes, unless specific hardship can be proven. Any waiver would be on a case-by-case basis, because we want to avoid a blanket exemption. Otherwise, a mortgagee may voluntarily force a sale in order to benefit from any property gains. But on a case-by-case basis where genuine hardship can be proven, we will consider it.

She wants to know whether the Commissioner has power to grant a waiver, the answer is no. The power rests with the Minister. Applications can be put to him and he can implement it, if the Minister agrees.

She has said that the scope for refunds is limited at the present time. There is scope for extension of the relief mechanism. This, again, will be on a case-by-case basis, eg, in cases where properties were acquired compulsorily by Government, or where genuine hardship is provable. We have some flexibility in this area because the Minister is empowered in the Stamp Duties Act to make exemptions.

She has asked whether a letter of authority is subject to stamp duty. The answer is yes, and is payable within 14 days of the date of the letter of authority. Like Dr Ow and Mr Leong Horn Kee, she has also asked whether there can be an extension of the date of completion and also to reduce the cash flow problems of genuine buyers. I have already explained the reasons why not. In fact, the measures have already caused a fall in prices which is beneficial to genuine buyers.

She has also asked whether the renewal of leases should be subject to stamp duty, the answer is yes. Stamp duties have always been payable upon renewal of leases.

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. -- [Dr Richard Hu Tsu Tau].

Bill considered in Committee.

[Mr Speaker in the Chair]

Clauses 1 to 3 inclusive ordered to stand part of the Bill.

Clause 4 --

The Chairman: There is one amendment. Dr Hu.

Dr Richard Hu Tsu Tau: Sir, I beg to move,

In page 2, line 33, after "10(a)", to insert ",(aa)".

Section 15 presently allows for relief from stamp duty in cases of reconstruction or amalgamation of companies. The amendment seeks to extend these concessions to section 15 with respect to the new seller's stamp duty.

Amendment agreed to.

Clause 4, as amended, ordered to stand part of the Bill.

Clause 5 ordered to stand part of the Bill.

Clause 6 --

The Chairman: There are 24 amendments. Amendment No. (1), Dr Hu.

Dr Richard Hu Tsu Tau: Sir, I beg to move,

In page 3, to leave out line 37 to line 18 in page 4 and insert --

"(4) Where a person, having contracted jointly or otherwise for the purchase of any property but not having obtained a conveyance thereof, directs the vendor of the property in writing to convey or transfer the property or any share therein --

(a) to another person; or

(b) where the person contracted for the purchase ofthe property jointly with another, to the joint purchasers in shares other than as specified in the contract for the purchase of the property, the direction shall, for the purpose of this Act, be treated as a contract or an agreement for the sale of that property or share therein for a consideration equal to the value of that property or share therein and shall be chargeable with duty as if it were an actual conveyance on sale of that property or share therein.".

The amendment serves to require stamp duty to be made payable at the time of execution of the direction instead of the time of conveyance.

Amendment agreed to.

The Chairman: Amendment No. (2), Dr Hu.

Dr Richard Hu Tsu Tau: Sir, I beg to move,

In page 4, line 35, to leave out "the" and insert "a".

Sir, this is a drafting amendment.

Amendment agreed to.

The Chairman: Amendment No. (3).

Dr Richard Hu Tsu Tau: Sir, I beg to move,

In page 4, after line 38, to insert --

"(c) the property is acquired or is proposed for acquisition by any public authority pursuant to the provisions of any written law authorising or empowering the public authority to acquire land compulsorily.".

This is to allow for refund of stamp duty where a contract is rescinded because of compulsory acquisition.

Amendment agreed to.

The Chairman: Amendment No. (4).

Dr Richard Hu Tsu Tau: Sir, I beg to move,

In page 5, to leave out lines 28 to 30 and insert --

"(8) Subject to the provisions of this Act, this section shall apply to instruments made on or after 15th May 1996.".

This is an amendment consequential upon the introduction of new section 22B.

Amendment agreed to.

The Chairman: Amendment No. (5).

Dr Richard Hu Tsu Tau: Sir, may I have your approval to move amendment Nos. (5) to (7) together as they are drafting amendments?

The Chairman: Yes. Please proceed.

Dr Richard Hu Tsu Tau: Sir, I beg to move,

In page 5, line 33, to leave out "residential".

In page 5, line 34, to leave out "under section 22" and insert "pursuant to section 22 (including any instrument chargeable in like manner)".

In page 5, line 38, after "sale", to insert "as if it were an actual conveyance on sale of residential property".

Sir, these are drafting amendments.

Amendments agreed to.

The Chairman: Amendment No. (8), Dr Hu.

Dr Richard Hu Tsu Tau: Sir, may I have your approval to move amendment Nos. 8 and 9 together?

The Chairman: Yes.

Dr Richard Hu Tsu Tau: Sir, I beg to move,

In page 6, line 1, to leave out "the residential property" and insert "residential property or any part thereof".

In page 6, line 5, after "property" where it secondly occurs, to insert "or any part thereof".

Sir, the reason for these amendments is to make clear that an instrument is chargeable if a residential property is being disposed of, whether it has been sub-divided or amalgamated previously.

Amendments agreed to.

The Chairman: Amendment No. (10).

Dr Richard Hu Tsu Tau: Sir, may I have your approval to move amendment Nos. 10 to 12 together as they are drafting amendments?

The Chairman: Yes.

Dr Richard Hu Tsu Tau: Sir, I beg to move,

In page 6, lines 10, 14 and 21, to leave out "residential" in each case.

In page 6, to leave out line 24 and insert "a conveyance on sale of".

In page 6, line 29, to leave out "residential".

Sir, these are drafting amendments.

Amendments agreed to.

The Chairman: Amendment No. (13), Dr Hu.

Dr Richard Hu Tsu Tau: Sir, may I have your approval to move amendment Nos. 13 and 14 together?

The Chairman: Yes.

Dr Richard Hu Tsu Tau: Sir, I beg to move,

In page 6, line 32, to leave out "the residential property" and insert "residential property or any part thereof".

In page 6, line 36, after "that property", to insert "or any part thereof".

Sir, this is to make clear that an instrument is chargeable if a residential property is being disposed of, whether it has been subdivided or amalgamated previously.

Amendments agreed to.

The Chairman: Amendment No. (15), Dr Hu.

Dr Richard Hu Tsu Tau: Sir, I beg to move,

In page 6, after line 36, to insert --

"(3) Subject to the provisions of this Act, any instrument made on or after 15th May 1996 whereby an exchange of any property is effected shall be treated for the purpose of this section as a conveyance on sale of residential property if residential property or any part thereof is being disposed of under the instrument by any party thereto before the expiration of 3 years from the date on which the party acquired the residential property or any part thereof; and that instrument shall be charged with additional ad valorem duty under subsection (1) as if it were an actual conveyance on sale of residential property by the party who acquired his property later for a consideration equal to the value of the property of greater value.".

Sir, the reason for this amendment is to deal with instruments of exchange. Duty will be imposed on the higher of the value of the property that is exchanged.

Amendment agreed to.

The Chairman: Amendment No. (16).

Dr Richard Hu Tsu Tau: Sir, I beg to move,

In page 7, line 7, to leave out from "a" to "residential" in line 8 and insert "conveyance on sale of".

Sir, this is a drafting amendment.

Amendment agreed to.

The Chairman: Amendment No. (17).

Dr Richard Hu Tsu Tau: Sir, I beg to move,

In page 7, to leave out lines 15 to 33 and insert --

"conveyance or transfer, residential property or shares in one or more relevant investment companies, or both such property and shares, constitute in the aggregate at least 75% of the market value of the total tangible assets of the private company as at the end of the accounting period of that private company immediately before the date of the conveyance or transfer.".

Sir, the reason for this amendment is to make the provision consistent with the Income Tax (Amendment) Bill 1996, which is that the disposal of shares in a private company will be subject to stamp duties if the company holds at least 75% of its assets in real property and shares in another private company of which not less than 75% of the market value of its total tangible assets comprises real property.

Amendment agreed to.

The Chairman: Amendment No. (18).

Dr Richard Hu Tsu Tau: Sir, I beg to move,

In page 7, line 34, to leave out from "Where" to "the" in line 39 and insert "in any conveyance on sale of residential property (including any instrument which is chargeable in like manner)".

Sir, this is a drafting amendment.

Amendment agreed to.

The Chairman: Amendment No. (19), Dr Hu.

Dr Richard Hu Tsu Tau: Sir, I beg to move,

In page 8, line 6, to leave out from "upon" to the end of line 17 and insert --

"a conveyance on sale of residential property (including any instrument which is chargeable in like manner) --

(a) the consideration for the sale or the value of the property, whichever is applicable, shall be reduced by such amount as the Commissioner considers to be attributable to such part of the property which is lawfully used for purposes other than residential purposes; and

(b) where parts of the property were acquired by the vendor or transferor at different times, the duty shall be reduced by such amount as the Commissioner determines to be in excess of the duty which would have been chargeable under this section if the property had been conveyed in separate parts,

and the decisions of the Commissioner under paragraphs (a) and (b), respectively, shall be final.".

Sir, the reason for this amendment is to allow for reduction in the new stamp duty by taking into account any part of the residential property acquired more than three years ago.

Amendment agreed to.

The Chairman: Amendment No. (20).

Dr Richard Hu Tsu Tau: Sir, I beg to move,

In page 9, line 12, to leave out "by transmission on death or".

Sir, this is a drafting amendment.

Amendment agreed to.

The Chairman: Amendment No. (21).

Dr Richard Hu Tsu Tau: Sir, I beg to move,

In page 9, after line 24, to insert --

"(b) a reference to a relevant investment company is a reference to any private company which has residential property the value of which comprises at least 75% of the market value of its total tangible assets as at the end of the accounting period of the company immediately before the date of the conveyance or transfer of shares referred to in subsection (4);".

Sir, the reason for this amendment is to clarify the definition of investment company in this context.

Amendment agreed to.

The Chairman: Amendment No. (22).

Dr Richard Hu Tsu Tau: Sir, I beg to move,

In page 9, after line 31, to insert --

"(d) where a person entitled to any property by way of security or to the benefit of a charge or incumbrance on any property deals with the property for the purposes of enforcing or giving effect to the security, charge or incumbrance, his dealings with it shall be treated as if they were done through him as nominee by the person entitled to it subject to the security, charge or incumbrance;".

Sir, the reason for this amendment is to allow the mortgagee to sell foreclosed properties in the capacity of a nominee. This means that no stamp duty is payable if the property has been owned by the mortgagor for more than three years.

Amendment agreed to.

The Chairman: Amendment No. (23).

Dr Richard Hu Tsu Tau: Sir, I beg to move,

In page 10, after line 25, to insert --

"(b) any person disposing of residential property in accordance with any of the provisions of the Residential Property Act (Cap.274) or any notice or direction issued thereunder; or".

Sir, this is to exempt involuntary disposals acquired under the Residential Property Act.

Amendment agreed to.

The Chairman: Amendment No. (24).

Dr Richard Hu Tsu Tau: Sir, I beg to move,

In page 10, after line 29, to insert -- "Exempted 22B.-(1) Notwithstanding any other provision instruments in this Act,where -- made on or after 15th (a) any contract or agreement for the sale May 1996 of an HDB flat is made before 15th May 1996 subject to the approval of the Housing and Development Board; (b) the owner of the HDB flat has immediately before that date occupied the HDB flat for not less than the period specified by the Board in relation to that owner; and (c) the application for the approval of the Board is made to the Board before 15th June 1996, the contract or agreement shall be chargeable with duty under this Act as if it had not been amended by the Stamp Duties (Amendment) Act 1996. (2) Notwithstanding any other provision in this Act, where -- (a) an option is granted in favour of the Board before 15th May 1996 in respect of an HDB flat or an option is granted before that date in respect of any other immovable property; (b) the option is exercised at any time after that date but before 15th June 1996; and (c) the contract or agreement resulting from the exercise of the option is presented at any stamp office before 15th June 1996 for the purpose of being stamped, that contract or agreement shall bec chargeable with duty under this Act as if it had not been amended by the Stamp Duties (Amendment) Act 1996. (3) For the purpose of determining any penalty under section 46, any contract or agreement which is chargeable with duty under this Act as amended by the Stamp Duties (Amendment) Act 1996 by reason only of any failure to comply with subsection (1)(c) or (2)(c) shall be deemed to have been first executed in Singapore or, if first executed outside Singapore, to have been first received in Singapore on the following dates: (a) in the case of a contract or agreement for the sale of an HDB flat -- on the date of the first appointment with the Board in relation to the sale; or (b) in the case of a contract or agreement resulting from an option referred to in subsection (2)(a) -- on 14th June 1996 or the actual date of its first execution or first receipt in Singapore, whichever date is later. (4) In this section -- "Board" and "Housing and Development Board" mean the Housing and Development Board constituted under the Housing and Development Act (Cap.129); "HDB flat" means any flat sold by the Board subject to the provisions of Part IV of the Housing and Development Act; "option" means an option where the grantor binds himself to sell; "owner", in relation to any flat, means a purchaser of a leasehold interest in the flat, including a purchaser under an agreement for a lease.".

Sir, the reason for this amendment is to exempt instruments where sales and purchase agreements for HDB flats were signed where options of purchase were granted before 15th May 1996.

Amendment agreed to.

The Chairman: The following 13 consequential amendments will be made:

(1) In page 4, line 27, to leave out "(8)" and insert "(7)".

(2) In page 4, line 34, to leave out "or".

(3) In page 4, line 38, to leave out the full-stop and insert "; or".

(4) In page 4, line 39, to leave out "(7)" and insert "(6)".

(5) In pages 4 and 5, to renumber subsections (6), (7) and (8) as subsections (5), (6) and (7), respectively.

(6) In page 5, to leave out the marginal note and insert --

"Contracts and instruments chargeable as conveyances on sale of residential property.".

(7) In page 8, line 18, to leave out "(6)" where it secondly occurs and insert "(5)".

(8) In page 8, line 35 to leave out "(8) and (9)" and insert "(9) and (10)".

(9) In page 9, to re-letter paragraphs (b), (c) and (d) of subsection (8) as paragraphs (c), (e) and (f), respectively.

(10) In page 10, line 25, to leave out "or".

(11) In page 10, line 29, to leave out " "."."

(12) In page 10, to re-letter paragraph (b) of subsection (10) as paragraph (c).

(13) To re-number subsections (3), (4), (5), (6), (7), (8), (9) and (10) as subsections (4), (5), (6), (7), (8), (9), (10) and (11), respectively.

Clause 6, as amended, ordered to stand part of the Bill.

Clauses 7 to 17 inclusive ordered to stand part of the Bill.

Clause 18 --

The Chairman: Clause 18. There are two amendments. Amendment No. (1), Dr Richard Hu.

Dr Richard Hu Tsu Tau: Sir, I beg to move,

In page 15, to leave out lines 19 to 36 and insert -- "In addition to duty under paragraph (a) or (b), where the property, or any share in a private company referred to in section 22A(4), is disposed of in the following periods from the date of its acquisition: Amount of Exceeding Exceeding consideration or one year 2 years value of property, but not but not whichever Within exceeding exceeding is applicable one year 2 years 3 years (i) for every $1 $0.67 $0.33 $100 or any part thereof of the first $180,000 (ii) for every $2 $1.33 $0.67 $100 or any part thereof of the next $180,000 (iii) thereafter $3 $2 $1.". for every $100 or any part thereof

Sir, this is to enable the new seller's stamp duty to be computed on the basis of a rate. Buyers under en bloc sales will have their duty computed on the global price.

Amendment agreed to.

The Chairman: Amendment No. (2).

Dr Richard Hu Tsu Tau: Sir, I beg to move,

In page 15, after line 36, to insert -- "(2) The First Schedule to the principal Act is amended by deleting Article 31 and substituting the following Article: 31. SURRENDER OF LEASE (a) for consideration The same duty as for a conveyance on sale for a consideration equal to the amount of such consideration (b) in any other case $10".

Sir, this is to make clear that the surrender can be stamped as a conveyance on sale if there is a consideration.

Amendment agreed to.

The Chairman: The following consequential amendment will be made:

In page 15, line 15, to renumber existing clause 18 as sub-clause (1).

Clause 18, as amended, ordered to stand part of the Bill.

Clause 19 --

The Chairman: Clause 19. There is one amendment. Dr Hu.

Dr Richard Hu Tsu Tau: Sir, I beg to move,

In page 16, to leave out lines 6 to 10 and insert -- "(a) Paragraphs (a), (b) to (g) The grantee or transferee. (b) Paragraph (aa) (i) instrument effecting The parties in equal exchange shares unless only one party is disposing of his property under the instrument before the expiration of 3 years from the date on which it was acquired, whereupon duty shall be paid only by that party. (ii) in any other case. The grantor, transferor or lessor."; and".

This is to provide that the new duty on instruments of exchange will be paid by the parties in equal portions unless only one is disposing of his property within the three-year period, in which case only he bears the duty.

Amendment agreed to.

Clause 19, as amended, ordered to stand part of the Bill.

Clause 20 ordered to stand part of the Bill.

Bill reported with amendments, read a Third time and passed.