{"id":2737,"date":"2021-12-08T11:45:00","date_gmt":"2021-12-08T03:45:00","guid":{"rendered":"https:\/\/www.boasecohencollins.com\/?p=2737"},"modified":"2021-12-09T11:49:52","modified_gmt":"2021-12-09T03:49:52","slug":"ruling-triggers-stamp-duty-adjustment","status":"publish","type":"post","link":"https:\/\/www.boasecohencollins.com\/zh-hant\/%e7%b6%b2%e8%aa%8c\/ruling-triggers-stamp-duty-adjustment\/","title":{"rendered":"Ruling triggers stamp duty adjustment"},"content":{"rendered":"\n

By Fiona Chan<\/strong><\/p>\n\n\n\n

Hong Kong, 8 December 2021:<\/strong> In a landmark judgment, the Court of Appeal has ordered the Inland Revenue Department to repay the stamp duty it charged two sisters who became owners of their late mother\u2019s flat by voluntary arrangement with their three siblings.<\/p>\n\n\n\n

The ruling \u2013 delivered in the case of Wong Suet Foon Shirly v Collector of Stamp Revenue<\/em> [2021] HKCA 1090<\/a> \u2013 is at odds with the IRD\u2019s long-standing practice with regard to the collection of stamp duty from beneficiaries of an estate.<\/p>\n\n\n\n

Case background<\/strong><\/p>\n\n\n\n

The appellant\u2019s mother died intestate in 2012. Under the Intestates\u2019 Estates Ordinance (\u201cIEO\u201d), the deceased\u2019s five surviving children were entitled to share her estate, which included a flat in Wong Tai Sin bought under the Tenants Purchase Scheme of the Hong Kong Housing Authority.<\/p>\n\n\n\n

The siblings were wrongly informed by the Housing Authority that only two of them could take over ownership. They therefore entered into a Deed of Family Arrangement (\u201cDeed\u201d) in which three of them renounced their rights to the property, leaving the appellant and her sister as joint tenants. The appellant, who was also administrator of the estate, then executed a Deed of Assent (\u201cAssent\u201d) to assign the property to herself and her sister.<\/p>\n\n\n\n

The IRD, in the form of the Collector of Stamp Revenue, considered the Deed and Assent to be voluntary dispositions \u2013 or gifts \u2013 inter vivos<\/em> (\u201cbetween living persons\u201d) which exceeded the sisters\u2019 entitlement under the IEO. The Deed and Assent were thus chargeable under section 27(1) of the Stamp Duty Ordinance (\u201cSDO\u201d).<\/p>\n\n\n\n

The Collector also decided the higher Scale 1 rate of ad valorem<\/em> (\u201caccording to the value\u201d) stamp duty should apply since the appellant had assigned the property as administrator \u2013 rather than in a personal capacity \u2013 so could not be considered a close relative, which would have allowed for Scale 2.<\/p>\n\n\n\n

Having paid HK$16,650 in stamp duty under protest, the appellant appealed to the District Court. There, the Collector changed his stance and conceded stamp duty was chargeable only on the Assent, not the Deed. The appeal was dismissed, causing the appellant to take the matter to the Court of Appeal.<\/p>\n\n\n\n

Court of Appeal judgment<\/strong><\/p>\n\n\n\n

The judges declared that the Deed was a disclaimer, not a conveyance or transfer, so was not subject to stamp duty. They further ruled that the Assent was not chargeable either. Counsel for the Collector had argued the sisters received 100% of the property rather than 40%, which was a deviation from their entitlement under the IEO and thus a disposition inter vivos<\/em>.<\/p>\n\n\n\n

In rejecting this submission, the Court of Appeal gave two reasons. First, the three siblings who renounced their rights had, at best, \u201conly an expectation\u201d they would receive 60% of the property after administration was completed. \u201cThe expectation could not be the subject matter of a disposition that would attract ad valorem<\/em> stamp duty,\u201d said the judges.<\/p>\n\n\n\n

Second, the Collector\u2019s position was incompatible with the general law regarding the effect of a disclaimer. \u201cIt is well established law that a beneficiary is free to refuse or renounce the gift to him, for the law cannot force a man to take an estate against his will.\u201d Simply put, if someone chooses not to accept an estate, then the estate was never with that person.<\/p>\n\n\n\n

In allowing the appeal and ruling the stamp duty should be repaid, the judges also ordered the IRD to pay the costs of the hearing.<\/p>\n\n\n\n

Conclusion<\/strong><\/p>\n\n\n\n

Previously, the IRD would charge stamp duty when \u201cbeneficiaries of the estate deviate from the will or the law of intestacy and agree among themselves to redistribute their entitlements to the property\u201d. In such cases, the excess distribution over the original entitlement would be subject to ad valorem<\/em> stamp duty \u201cas deed of gift\u201d at either Scale 1 or Scale 2 rates.<\/p>\n\n\n\n

Since the judgment, the IRD has adjusted its policies. Now, transfer of residential property under estate between beneficiaries who are close relatives and\/or sale of residential property under estate to a Hong Kong permanent resident and\/or close relative are no longer chargeable for ad valorem<\/em> stamp duty at Scale 1 rates or buyer\u2019s stamp duty if the buyer is a Hong Kong permanent resident.<\/p>\n\n\n\n

As a Partner in BC&C, Fiona Chan specialises in dispute resolution and is experienced in a wide range of civil litigation. Her core practice areas include conveyancing and property, Will drafting, estate administration and probate matters, while she is an appointed member of the Panel Solicitors for the Official Administrator. She can be contacted at <\/strong>fionachan@boasecohencollins.com<\/strong><\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

By Fiona Chan Hong Kong, 8 December 2021: In a landmark […]<\/p>\n","protected":false},"author":2,"featured_media":2733,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[53],"tags":[],"class_list":["post-2737","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-53"],"yoast_head":"\nRuling triggers stamp duty adjustment - \u5e03\u9ad8\u6c5f\u5f8b\u5e2b\u884c<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.boasecohencollins.com\/zh-hant\/%e7%b6%b2%e8%aa%8c\/ruling-triggers-stamp-duty-adjustment\/\" \/>\n<meta property=\"og:locale\" content=\"zh_TW\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Ruling triggers stamp duty adjustment - \u5e03\u9ad8\u6c5f\u5f8b\u5e2b\u884c\" \/>\n<meta property=\"og:description\" content=\"By Fiona Chan Hong Kong, 8 December 2021: In a landmark […]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.boasecohencollins.com\/zh-hant\/%e7%b6%b2%e8%aa%8c\/ruling-triggers-stamp-duty-adjustment\/\" \/>\n<meta property=\"og:site_name\" content=\"\u5e03\u9ad8\u6c5f\u5f8b\u5e2b\u884c\" \/>\n<meta property=\"article:published_time\" content=\"2021-12-08T03:45:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2021-12-09T03:49:52+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.boasecohencollins.com\/wp-content\/uploads\/StampDuty_PHOTO.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1761\" \/>\n\t<meta property=\"og:image:height\" content=\"850\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Niall Donnelly\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"\u4f5c\u8005:\" \/>\n\t<meta name=\"twitter:data1\" content=\"Niall Donnelly\" \/>\n\t<meta name=\"twitter:label2\" content=\"\u9810\u4f30\u95b1\u8b80\u6642\u9593\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 \u5206\u9418\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.boasecohencollins.com\/zh-hant\/%e7%b6%b2%e8%aa%8c\/ruling-triggers-stamp-duty-adjustment\/\",\"url\":\"https:\/\/www.boasecohencollins.com\/zh-hant\/%e7%b6%b2%e8%aa%8c\/ruling-triggers-stamp-duty-adjustment\/\",\"name\":\"Ruling triggers stamp duty adjustment - 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