ABSD (Trust) is a tax imposed by the Singaporean government on the transfer of residential properties into certain types of trusts. Here's a breakdown:
What is ABSD (Trust)?
Additional Buyer's Stamp Duty (ABSD): This is a tax levied on top of the basic Buyer's Stamp Duty (BSD) when purchasing property in Singapore.
ABSD (Trust): Specifically refers to the ABSD payable when a residential property is transferred into a living trust (a trust created during the lifetime of the settlor).
Key Points:
Flat Rate: ABSD (Trust) is charged at a flat rate of 65% of the property's value.
Purpose: The government introduced this tax to address potential loopholes and ensure fair taxation in property transactions involving trusts.
Remission: Under certain conditions, a portion or all of the ABSD (Trust) may be remitted (refunded).
Conditions for Remission:
Identifiable Beneficiaries: The trust must be for identifiable individual beneficiaries.
ABSD Chargeable: The ABSD payable based on the highest profile of the beneficial owners must be lower than the ABSD (Trust) paid.
Application: Remission applications must be made within 6 months after the date of executing the trust document.
Example:
If a Singapore Citizen with one other residential property transfers a property into a trust for their child (also a Singapore Citizen), they would initially pay the 65% ABSD (Trust). However, if the conditions for remission are met, they could potentially receive a refund, as the ABSD payable for a Singapore Citizen with two residential properties is 20%.
Remission of ABSD (Trust)
The remission of ABSD (Trust) in Singapore allows for a refund of part or all of the 65% ABSD (Trust) paid when certain conditions are met.
Key Points:
Eligibility: To be eligible for remission, the property must be purchased on trust for an identifiable individual beneficiary.
Refund Amount: The amount refunded is based on the difference between the ABSD (Trust) paid and the ABSD payable based on the highest profile of the beneficial owners.
Application: Applications for remission must be made within 6 months after the date of execution of the instrument.
Conditions: Specific conditions, such as the identity and profile of the beneficial owners, must be met to qualify for remission.
Example:
If a property is purchased on trust for a Singapore Citizen who already owns one other residential property, the ABSD (Trust) payable would be 65%. However, if the conditions for remission are met, the refund would be 45%, as the ABSD payable for a Singapore Citizen with one other residential property is 20%.
Specific Conditions for ABSD (Trust) Remission
Identifiable Beneficiaries: The trust must be created for clearly identifiable individual beneficiaries. This means the trust document must explicitly name the individuals who will ultimately benefit from the trust assets.
Beneficiary Profiles: The ABSD payable is determined based on the highest profile of the beneficial owners. For example, if a Singapore Citizen with one other residential property places a property in trust for their child (also a Singapore Citizen), the child's profile (one residential property) would be used to calculate the applicable ABSD.
Trust Purpose: The trust must be a "living trust," meaning it is created during the lifetime of the settlor (the person creating the trust).
No Circumvention: The trust must not be used to circumvent the intent of the ABSD rules. For example, the trust cannot be structured in a way that artificially reduces the amount of ABSD payable.
Application Process
Eligibility Check: Before applying, carefully review the eligibility criteria to ensure your situation qualifies for remission.
Gather Necessary Documents: Prepare all required documents, including:
Trust Instrument (the legal document creating the trust)
Option to Purchase or Sale and Purchase Agreement (if applicable)
Identification documents of the beneficial owners
Submit Application: Submit the application within 6 months after the date of execution of the trust instrument. Applications can typically be made through the IRAS e-Stamping Portal.
Review and Assessment: IRAS will review your application and supporting documents to determine eligibility and the amount of remission, if any.
Refund Issuance: If your application is successful, IRAS will issue a refund of the eligible amount.
Important Notes:
IRS Website: Refer to the official IRAS website for the most up-to-date information, application forms, and detailed guidelines on ABSD (Trust) and remission.
How Bestar can Help
Bestar can provide invaluable assistance with ABSD (Trust) remission by:
1. Expert Guidance and Assessment:
Eligibility Determination: We can thoroughly analyze your specific circumstances and determine if you are eligible for ABSD (Trust) remission based on the latest rules and regulations.
Risk Assessment: We can identify potential risks and complexities in your situation, ensuring you understand the potential implications of your actions.
2. Strategic Planning and Structuring:
Trust Design: We can help you structure the trust in a way that maximizes your chances of remission while minimizing potential tax liabilities.
Tax Planning: We can advise you on the most tax-efficient strategies for your specific situation, considering your overall financial goals and objectives.
3. Application Preparation and Submission:
Document Preparation: We can assist you in gathering and preparing all the necessary documents for the remission application, ensuring accuracy and completeness.
Application Filing: We can guide you through the application process, ensuring timely and accurate submission to the relevant authorities.
4. Representation and Advocacy:
Communication with IRAS: We can communicate with the Inland Revenue Authority of Singapore (IRAS) on your behalf, addressing any queries or concerns that may arise during the review process.
Dispute Resolution: If your application is denied or you encounter any issues, they can represent you and advocate for your interests.
5. Ongoing Support and Updates:
Monitoring Changes: We can keep you informed of any changes in tax laws or regulations that may affect your situation.
Regular Reviews: We can conduct periodic reviews of your trust structure and tax situation to ensure it remains aligned with your goals and complies with the latest regulations.
By engaging the expertise of Bestar, you can significantly increase your chances of a successful ABSD (Trust) remission application and ensure that your interests are protected.
Consult with Bestar to discuss your specific situation and obtain tailored advice.
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