Property agents, buyers jailed for evading $69,000 in stamp duty by backdating option to purchase

Lee Liu Ying (left) and Daniel Halim (centre) were sentenced to six weeks' jail each, and also ordered to pay a penalty of $276,000. Mu Shen (right) and another agent were each given eight weeks' jail. PHOTOS: KELVIN CHNG

SINGAPORE - In the first case of its kind, two property agents and the buyers of a condominium unit were sentenced to jail on Friday (Sept 24) for backdating an option to purchase (OTP) to avoid paying higher additional buyer's stamp duty (ABSD).

The buyers - Daniel Halim and Lee Liu Ying, both aged 44 - were sentenced to six weeks' jail each. The married couple was also ordered to pay a penalty of $276,000 - four times the amount of ABSD evaded.

Their property agent Mu Shen, 50 and the seller's agent Loy Thye Wei, 44, were each handed eight weeks' jail.

All four pleaded guilty to their offences earlier this year.

In sentencing them, district judge Lorraine Ho said: "This is the first case, whether reported or otherwise, where an accused has been charged for intentionally evading the payment of stamp duty."

The property involved is a fourth-storey unit at 163 Jalan Loyang Besar. The address corresponds with that of Sandy Palm, a 99-year leasehold condominium in Pasir Ris.

The offences took place in July 2018, after the Government announced a round of cooling measures for the property market.

For Singaporeans buying their third and subsequent residential property, the ABSD rate was 10 per cent until July 5, 2018, but this rose to 15 per cent from July 6, 2018.

The ABSD is a tax paid on top of the existing buyer's stamp duty (BSD). ABSD and BSD are computed on the purchase price or the market value of the property, whichever is higher.

As Daniel and Lee already owned two properties, and their OTP had not been granted on or before July 5, they had to pay 15 per cent in ABSD for the Jalan Loyang Besar unit.

The couple first viewed the property on July 7 and proposed to Loy, through their agent Mu Shen, the scheme of backdating the OTP to July 4.

A search on the Council for Estate Agencies' public register showed that Loy has been with ERA Realty Network since 2017, while Mu was previously with PropNex Realty.

During the buyers' second viewing on July 8, they agreed on a purchase price of $1.38 million and told Mu that they would only proceed with the transaction if the OTP was backdated.

Mu instigated Loy to go ahead with the plan despite concerns raised by the property's seller.

The buyers executed the OTP on July 24 and evaded $69,000 in ABSD by paying 10 per cent of duty instead of 15 per cent.

The property involved is a fourth-storey unit at 163 Jalan Loyang Besar, which corresponds with leasehold condominium Sandy Palm. SCREENGRAB: GOOGLE MAPS

The cheque issued by Daniel for the option fee - a 1 per cent deposit of $13,800 - was also illegally backdated to July 4 to lend credibility to the scheme.

For successfully closing the deal, Loy had her commission raised from 1 per cent to 1.5 per cent. Her ill-gotten gains were shared with Mu.

Court documents did not state how the offences came to light, only that the Inland Revenue Authority of Singapore received information on the case.

During sentencing, judge Ho said that while the scheme was not sophisticated, it was difficult to detect.

She added that Mu and Loy had breached their professional duty as agents for their own financial gain.

"Even if it was the buyers' instructions to (Mu) to backdate the OTP... he must not do anything that infringes his duty to comply with the law, or worse, lead to the buyers infringing the law.

"As for (Loy), she must not act against the interest of her own client, the seller, or collaborate with others to engage in an illegal transaction," said the judge.

The maximum penalty for each offence of omitting information in the OTP with intent to evade duty is a $10,000 fine and a jail term of three years.

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