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Thread: Couple to pay tax on $16m profit from selling bungalows

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    Default Couple to pay tax on $16m profit from selling bungalows

    Couple to pay tax on $16m profit from selling bungalows

    Apr 4, 2018

    They fail in court appeal to have profit from three properties declared as capital gains

    K.C. Vijayan
    Senior Law Correspondent


    A wealthy couple who made some $16 million from buying and selling three good class bungalows (GCBs) within six years will have the profits taxed as income earned.

    The couple, whose names were redacted in court papers, had failed in their court appeal to have the profits declared as capital gains.

    While capital gains are generally not taxable, the Inland Revenue Authority of Singapore (Iras) will also determine if the sellers are in fact trading in properties by considering factors such as frequency of transactions and the holding period of the properties.

    The couple, who own a construction company specialising in infrastructure projects, had purchased three GCBs all within 2km of each other.

    In June 2005, they paid $5.4 million for one in Wilby Road and sold it nine months later for a gain of more than $580,000. They then bought a house in Brizay Park in October 2009 for $20.4 million and it was sold nine months later for a profit of more than $13.6 million.

    In October 2010, they bought a house in Garlick Avenue for $18.7 million and sold it in January 2011 for $21.8 million, netting a profit of about $1.85 million.

    The overall profits totalled $16,047,336. When they were hit with claims for income taxes owed, they took their case against the Comptroller of Income Tax to the Income Tax Board of Review, which last October rejected their appeal.

    The couple then appealed to the High Court. Their lawyer Ong Sim Ho argued it was wrong for the taxman to have deemed the profits as taxable income.

    He said the houses were initially bought as residential homes and the intention was not to make profits and use that as income. Therefore, any profits from resale should be seen as capital gain, and not income, said Mr Ong.

    He added it did not matter that they did it three times in less than six years.

    The Comptroller's counsel Lau Kai Lee countered that their conclusion was based on evidence provided by witnesses and each property transaction was considered on its own merits.

    Justice Choo Han Teck noted in judgment grounds last week that the couple actually bought five landed properties between 1997 and 2012. They were still living in a West Coast Road house, which they bought in 1997, with their four children when they purchased the three GCBs.

    They now live in Binjai Park.

    They had claimed they bought the properties for family use but found them unsuitable after the purchase.

    The judge said that of the five properties, the first was never sold while the three in dispute were turned over and never occupied by them.

    "They moved into the Binjai property which was bought in June 2012 - but that was after the Comptroller had started asking questions in February 2012 concerning the previous three properties.

    "All this while, and to date, the original home at West Coast remains theirs. This is the forest. The facts found by the Board are the trees," said Justice Choo in dismissing their case.


  2. #2
    Ultimate Underdog
    Join Date
    May 2012
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    Shiok leh... I wished I were in their shoes and taxed in this capacity.
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.


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