Singapore imposes 35% ABSD on residential property transferred into a living trust

Additional Buyer's Stamp Duty of 35% was imposed on any transfer of residential property into a living trust, charged on the trustee as a new ABSD (Trust) profile.

A new profile, not a raised rate, so no before-value is stored and none is invented, including 0%. The release's table gives the column before 9 May 2022 as "Based on profile of beneficial owner(s) of the residential property transferred into the trust". Applies to instruments executed on or after 9 May 2022. Excludes trustees for collective investment schemes, trustee-managers of business trusts and trustees for housing developers. Raised to 65% from 27 April 2023, together with the entity rate.

A trustee claiming a refund of ABSD (Trust) must apply to IRAS within six months after the instrument is executed.

A new provision, so no before-value exists. The remission rules add two things the release does not say: the duty must first have been paid, and the Commissioner may allow a longer period in a particular case. The rules as published on 8 May 2022 are held; their amendment by S 245/2023 from 27 April 2023 has not been read.

Trustees for housing developers continued to be subject to ABSD of 40%, made up of 5% non-remittable and 35% remitted upfront subject to conditions.

A statement of continuity, and not a trust rate. It is the housing developer rate, and the 5% non-remittable part applies to housing developers and their trustees, not to trusts generally. The release says the rate continues; S 366/2022 still inserts trustees for housing developers into the housing developer sub-paragraph expressly for instruments executed on or after 9 May 2022.

Every other ABSD rate in the release's table was unchanged on 9 May 2022, including the 35% rate for entities.

The stored value is the entity rate, set on 16 December 2021. The table shows citizens at 0%, 17% and 25%, permanent residents at 5%, 25% and 30%, foreigners at 30% and housing developers at 35% remittable plus 5% non-remittable in both columns. The release does not say the trust rate is set by reference to the entity rate; it shows them equal. The current IRAS page states that a transfer into a living trust from 9 May 2022 bears the same rate as entities.

The remission rules require the ABSD to have been paid before a refund, and a claim made within six months after execution or any longer period the Commissioner allows in a particular case.

The rules as published on 8 May 2022, in operation from 9 May 2022. They also allow a second claim within six months of a later disposal where a spouse remission would have enlarged the refund. Amended by S 245/2023 from 27 April 2023; the amended text has not been read, so nothing here says whether the window or the conditions changed.

Before the change, a transfer of residential property into a living trust bore Buyer's Stamp Duty and, depending on the beneficial owners' profile, ABSD; where no beneficial owner was identifiable at the time of transfer, ABSD did not apply.

The release states the earlier position in general terms. It gives no count of trusts without an identifiable beneficial owner, no value of property placed in them and no estimate of duty forgone. "Trusts paid no ABSD" is too broad: a trust with identifiable beneficial owners could already attract ABSD at their rates.

ABSD (Trust) is payable upfront, and a trustee may apply to IRAS for a refund only where all beneficial owners are identifiable individuals, beneficial ownership has vested in all of them at the time of transfer, and it cannot be varied, revoked or made subject to any condition subsequent.

The conditions are cumulative and the refund follows payment. The release calls it a concession. The remission rules also require the Commissioner to be satisfied that the instrument meets them. A trust for named family members is not exempt: it pays in full and recovers the difference on application if every condition holds.

The refund is the difference between the ABSD (Trust) rate and the ABSD rate for the profile of the beneficial owner with the highest applicable rate.

A formula, not a figure, so no value is stored. The rules state it as the duty charged less what would have been charged had the beneficiaries taken the property directly, less any other remission they would have had. Where the highest-rated beneficiary would have paid no ABSD, the whole duty is refunded.

The release defines a living trust as one created by a person, the settlor, during his or her lifetime.

The definition is the release's. S 366/2022 does not use the phrase "living trust": it charges a "trustee", meaning a trustee for any trust acting in that capacity, subject to three exclusions.

IRAS states that ABSD (Trust) does not apply to a testamentary trust, meaning a trust made by will that takes effect after the settlor's death.

Stated on the current IRAS page, not in the 8 May 2022 release, which gives only the lifetime definition and does not mention wills. The surrounding page quotes the 65% rate in force from 27 April 2023; the statement about wills carries no rate. S 366/2022 separately describes a declaration of trust "not being a will".

ABSD (Trust) is payable by a trustee of any trust acting in that capacity, except a trustee for a collective investment scheme, a trustee-manager for a business trust and a trustee for a housing developer, which were already subject to the entity rate and the housing developer rate respectively.

S 366/2022 also redefines "entity" to exclude a trustee, so a trustee is charged as a trustee and not as an entity, although the rate is the same.

The Gazette instrument charges a trustee in the same sub-paragraph and at the same 35% as an entity other than a housing developer, for instruments executed on or after 9 May 2022, and redefines an entity to exclude a trustee.

The legal mechanism behind claims 1 and 11. The sub-paragraph also governs a joint purchase in which any grantee is an entity or a trustee and none is a housing developer or a trustee for one. S 366/2022 was made by the Minister for Finance under section 78(1) of the Stamp Duties Act 1929 on 4 May 2022, and also replaces Article 4, declaration of trust, and Article 11, settlement, so that both bear the same duty as a conveyance.

An identifiable individual beneficiary must be named in the declaration of trust and hold beneficial ownership that is not revocable, variable or subject to any condition subsequent; an unborn individual, an income-only beneficiary and the holder of a contingent or discretionary interest do not qualify.

Paragraph (1A) also excludes an individual entitled in remainder or reversion. A trust for a named child whose interest vests at a later age, or depends on a future event, does not qualify for the refund, because the interest is not vested at the time of transfer.

For instruments executed on or after 9 May 2022, an identifiable individual beneficiary is treated as beneficially owning residential property held on trust for him or her, for the purpose of the buyer-profile definitions.

The instrument does not itself state the practical consequence. The current IRAS page states that property placed in trust counts towards the property count of any identifiable beneficial owner, whether or not the refund is granted.

ABSD (Trust) is not retrospective and applies only to a transfer or settlement into a trust, new or existing, executed on or after 9 May 2022; where more than one instrument effects the transfer, it is charged by the date of execution of the first.

Execution, not completion or registration. The release's opening sentence says "where the transfer occurs on or after 9 May 2022"; the FAQ and the instrument key the charge to execution, which is the operative test. The first instrument may be the acceptance of an Option to Purchase, the Sale and Purchase Agreement, the declaration of trust or the settlement agreement. S 366/2022 came into operation on 9 May 2022 and was made on 4 May 2022.

The Ministry of Finance said the change arose from a periodic policy review and that, because ABSD aims to promote a stable and sustainable residential property market, it should apply to transfers into all living trusts whether or not they have identifiable beneficial owners.

The stated reason is a gap, not a market condition. The release cites no price, volume or instance of use, so describing this as a cooling measure overstates its stated purpose. Verified as a statement the Ministry made, not as a finding about the market.

The duty's lasting weight falls on trusts whose beneficiaries are not identifiable individuals with vested, irrevocable interests, such as discretionary and contingent trusts; for a trust that meets every refund condition the cost is mainly the cash paid at the full rate and held until the refund arrives.

Prevo's reading of the rules, not a Government statement. Each component is primary: the upfront charge, the three refund conditions, and the exclusion of contingent and discretionary interests. The inference that the lasting burden concentrates on trusts that cannot meet them is Prevo's. No data held shows how many trusts of either kind existed, how much duty was refunded, or how long refunds took in practice. A qualifying trust whose highest-rated beneficiary owns other property still bears that beneficiary's own rate, which is not a cost of the trust.