Results 1 to 3 of 3

Thread: No change to property sales tax framework

  1. #1
    Any complaints please PM me

    User Info Menu

    Default No change to property sales tax framework

    [url]http://www.businesstimes.com.sg/sub/news/story/0,4574,347080,00.html?[/url]

    Published August 22, 2009

    [B][SIZE="5"]No change to property sales tax framework[/SIZE][/B]

    [B]MOF drops proposed change aimed at giving certainty after public consultation exercise[/B]

    By UMA SHANKARI


    THE government has decided not to change the current income tax framework with regard to individuals who sell their properties, a move that was welcomed by industry players including the Real Estate Developers' Association of Singapore (Redas).

    Under a proposal put up for public consultation, the Ministry of Finance (MOF) had suggested that individuals who sold their properties would be certain that the gains they made would not be subject to income tax if they had not sold any other properties in the preceding four years.

    But this was seen by the market as an anti-speculation measure, as it means that those who sell more than one property within four years will not be exempt.

    'We remain believers of the idea that the government may be sending out a signal through this proposal to cool property transactions, especially in the high-end,' said CIMB analyst Donald Chua in a note last month.

    Keen to quell rumours about an anti-speculation drive, MOF then clarified that the proposal is unlikely to lead to more individuals being taxed. Rather, it offers greater clarity on whether gains will be taxed as it proposes a condition that would guarantee no tax: an individual who sells a property on or after Jan 1, 2010 will not be taxed on the gains if he has not sold any other property in the previous four years.

    Currently, property sellers do not pay tax on gains unless the Inland Revenue Authority of Singapore (IRAS) sees them as traders and treats the gains as income. IRAS makes its decision on a case-by-case basis, considering factors such as why the properties were sold, how long the sellers owned them and how frequently the sellers transacted properties in the past.

    MOF decided not to implement the change following the recent public consultation exercise.

    The proposal was put up for feedback under the Income Tax Act public consultation exercise from June 22 to July 14. A total of 64 comments were received on the proposed relaxation of income tax treatment for individuals who sell their properties, and of these, 60 comments were not in support of the proposed change.

    Among other things, feedback said that the proposed change could bias property purchase decisions towards investing in one bigger property, rather than numerous smaller properties. This is because certainty of non-taxation would be provided for disposal of one property within any four years, regardless of the property's value.

    Concern was also raised that the proposed change could create inadvertent uncertainty for individuals who sell more than one property within any four years - even though there was no change to the current income tax treatment for such cases.

    'The Ministry of Finance sees merits in these points raised in the public feedback to the proposed change,' MOF said in a statement. It has therefore decided that it is, on balance, best to retain the current framework of income tax treatment for individuals who sell their properties.

    Industry players welcomed MOF's decision.

    'We welcome the Ministry of Finance's decision not to change the current income tax framework for individuals who sell their properties,' said a Redas spokeswoman. 'Redas appreciates the government's consultative approach and understanding of the industry's concern on the matter.'

    'We welcome the positive news that the Ministry of Finance has listened to public feedback,' said Owi Kek Hean, head of tax services at KPMG in Singapore. 'The decision not to change the current income tax framework for individuals who sell their properties clearly demonstrates how the government takes differing views on-board in its formulation and changes proposed to Singapore tax policy.'

    MOF also said that it has accepted for implementation 85 out of the 113 suggestions received on the draft Income Tax (Amendment) Bill 2009. The draft contains proposed legislation to put into effect the income tax changes announced in Budget 2009, as well as other changes arising from the periodic review of the income tax system.

  2. #2
    Any complaints please PM me

    User Info Menu

    Default Property sales gains: No tax law changes

    [url]http://www.straitstimes.com/Prime%2BNews/Story/STIStory_419762.html[/url]

    August 22, 2009 Saturday

    [B][SIZE="5"]Property sales gains: No tax law changes[/SIZE][/B]

    [B]Govt accepts feedback and leaves current framework alone[/B]

    By Goh Eng Yeow


    The Government has decided to back away from changes it had proposed to tax laws dealing with gains made from property sales.

    The public consultation process for the proposal attracted 64 responses with 60 opposing the change.

    The Finance Ministry (MOF) said yesterday that 'on balance, it [is] best to retain the current framework of income tax treatment for individuals who sell their properties'.

    It said that it had received 'salient public feedback' and saw merit in the points raised.

    Dr Steven Choo, chief executive of the Real Estate Developers' Association of Singapore (Redas), welcomed yesterday's move, adding that he appreciated the Government's 'consultative approach and understanding of the industry's concern on the matter'.

    Under the proposal, an individual who sells a property would not be taxed on the profit if he had not sold any other property in the preceding four years.

    The measure sparked considerable unease and a two-day slump in property shares when news of it broke last month. Investors initially viewed it as a back-door attempt to impose a capital gains tax or a pre-emptive strike against property speculators.

    The ministry's subsequent clarifications and reassurances about the proposals calmed much of those concerns but public feedback was mostly not in support of the move.

    In a statement yesterday, MOF said there was feedback that the proposed change 'could bias purchase decisions towards investing in one bigger property, rather than numerous smaller properties'.

    Respondents also noted that there were many other factors that should allow property sellers to escape tax on a gain other than considering the frequency of their sales.

    These include owners who might have held a property for a long time before selling it together with another property within the same four-year period. The circumstances that led to the sale could also be significant.

    'To cater to all such factors would not be straightforward, and would make the income tax treatment for property disposals complex,' said MOF.

    It said concerns had also been raised about the 'inadvertent uncertainty for individuals who sell more than one property within any four years, even though there was no change to the current income tax treatment for such cases'.

    Dr Choo of Redas pointed out that for most individuals, property is not so much a 'tradeable commodity but a long-term investment'.

    Mr Tan Tiong Cheng, chairman of property consultancy Knight Frank, added: 'The current tax treatment on treating property sales gains has worked well and there is no need to tweak it further.'

    KPMG's head of tax services, Mr Owi Kek Hean, noted that the Government had listened to public feedback in deciding not to go ahead with the proposed tax change.

    'This is a clear demonstration of how the Government takes differing views on board in its formulation and changes it proposed to tax policy,' he said.

    When, how or if to tax property gains is clearly a vexing issue.

    MOF said that it had also considered alternatives to give property sellers certainty on when they would not be taxed on the gains but it noted that these alternatives 'bring drawbacks and complexities of their own'.

    The scrapping of the proposed changes means the prevailing tax regime remains in place.

    Singapore has no capital gains tax but the Inland Revenue Authority of Singapore assesses a small number of individuals - those who regularly transact in property - each year. It uses yardsticks like the circumstances that led to the sale to determine if the profits should be taxed at the appropriate income tax rate.

    [email][email protected][/email]

  3. #3
    Newbie

    User Info Menu

    Default

    lppl...

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •