Buyer's Stamp Duty (BSD) and Seller's Stamp Duty (SSD)
Buyer's Stamp Duty (BSD) and Seller's Stamp Duty (SSD) are two property taxes levied by the Singaporean government on property transactions. They serve different purposes:
Buyer's Stamp Duty (BSD):
Paid by: The buyer of a property (residential or non-residential) in Singapore.
Purpose: To cool the property market and generate tax revenue.
Calculation: Based on the higher of the purchase price or the property's market value.
Current Rates (as of July 11, 2024):
Residential Properties:
Up to $1.5 million: Rates vary depending on the purchase price.
Between $1.5 million and $3 million: 5% on the portion exceeding $1.5 million.
Above $3 million: 6% on the portion exceeding $3 million.
Non-residential Properties: Up to 5% (depending on the purchase price).
Seller's Stamp Duty (SSD):
Paid by: The seller of a residential property in Singapore. There's no SSD for non-residential properties.
Purpose: To discourage short-term property speculation and encourage long-term ownership.
Calculation: Based on the higher of the selling price or the property's market value at the date of sale.
Rates (as of July 11, 2024):
Holding Period:
Within 1 year of purchase: 12%
Between 1 year and 3 years of purchase: Graduated scale between 8% and 0%
More than 3 years of purchase: Exempt from SSD
Key Differences:
Who pays: BSD by buyer, SSD by seller (residential only).
Purpose: BSD for market cooling and revenue, SSD for discouraging speculation.
Property type: Applies to both residential and non-residential for BSD, residential only for SSD.
Calculation: Based on higher of purchase price or market value for both.
Claiming Stamp Duty Reliefs on Conversion of Firm to Limited Liability Partnership
You can claim relief from Buyer's Stamp Duty (BSD) and Seller's Stamp Duty (SSD) when converting a firm to a Limited Liability Partnership (LLP) in Singapore, but there are conditions to meet.
Here's a summary:
Relief applies to: Transfer of assets during the firm's conversion to an LLP.
Conditions for relief:
The amount of capital each partner contributes remains the same in the LLP as it was in the firm.
Within 2 years of conversion, no partner disposes of more than 25% of their total partnership interest.
How to Apply: Submit a claim via the IRAS e-Stamping Portal under "Request" > "Apply for Section 15 Relief". You'll need your SingPass to log in.
List of Supporting Documents Required for Application
The Inland Revenue Authority of Singapore (IRAS) requires the following supporting documents for your application of stamp duty relief on conversion of a firm to an LLP:
Copy of the notice of registration issued to the LLP by the Registrar of Limited Liability Partnerships.
Copies of the business profiles from the Accounting and Corporate Regulatory Authority (ACRA) of both the firm and the LLP. You'll need these profiles for:
The date immediately before the conversion.
The conversion date itself.
Original Statutory Declaration by an advocate and solicitor or a partner of the LLP. This declaration needs to contain:
Details on how each of the relief conditions have been met (or will be met).
Names and NRIC numbers/ Unique Entity Numbers (UEN) of both:
The shareholders of the firm (if applicable).
The partners of the LLP. (as at the date of conversion)
Amount of capital each partner in the firm had contributed (as at the date of conversion).
Amount of capital each partner of the LLP is entitled to (as at the date of conversion).
Whether there is any intention for any partner(s) to dispose of more than 25% of the total partnership interest within 2 years of conversion.
Fee
An adjudication fee is payable regardless of whether your claim is approved.
Additional Notes:
There are exemptions and reliefs available for both BSD and SSD under specific circumstances.
It's recommended to refer to the IRAS website ( https://www.iras.gov.sg/taxes/stamp-duty/for-property) for the latest rates and detailed information.
For further details and the full legislation, you can refer to the following resources from the Inland Revenue Authority of Singapore (IRAS):
Stamp Duties (Relief from Stamp Duties Upon Conversion of Firm to Limited Liability Partnership) Rules 2013: https://sso.agc.gov.sg/SL/SDA1929-S35-2013
How Bestar can Help
Claiming Stamp Duty Reliefs on Conversion of Firm to Limited Liability Partnership
Bestar can be a valuable asset when claiming stamp duty relief on the conversion of your firm to an LLP in Singapore. Here's how we can help:
Understanding Eligibility:
Bestar is well-versed in the intricacies of stamp duty regulations, particularly the Stamp Duties (Relief from Stamp Duties Upon Conversion of Firm to Limited Liability Partnership) Rules 2013. We can assess your specific situation and confirm if you meet all the eligibility criteria for relief.
Ensuring Proper Documentation:
The application for relief requires specific supporting documents depending on your conversion date. Bestar can ensure you have the correct documents and that they are completed accurately to avoid delays or rejections.
Optimizing Relief Potential:
There might be nuances in the regulations you may miss. Bestar can identify any opportunities to maximize your relief claim based on your firm's structure and capital contributions.
Mitigating Risks:
There's an adjudication fee associated with the application, regardless of the outcome. Bestar can help you navigate the process and minimize the risk of a rejected claim, saving you from unnecessary fees.
Additional Support:
Bestar can also provide ongoing guidance regarding the 2-year lock-in period where no partner can dispose of more than 25% of their interest. We can advise on potential tax implications if this condition is not met.
Overall, Bestar can streamline the process, increase your chances of a successful claim, and ensure you take advantage of all available relief opportunities.
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