Amendment to Act allows more relatives exemption from stamp duty
AN ACT WHICH was passed in Parliament on July 8 allows for more categories of persons to receive exemption from paying stamp duties.
The Stamp (Amendment 2021 ) bill was tabled by Finance Minister Camillo Gonsalves, who said it seeks to insert additional categories including grandchildren, brothers and sisters, spouses and ex-spouses, to receive exemptions from stamp duties under the Stamp Act.
Gonsalves said it is believed that the inclusion of the additional categories will ease in the transfer of property between and among family members.
But Dr Godwin Friday, the opposition leader said the recent amendments made were not new, but ones that were initially removed by the current government in 2011.
“The insertion…is in fact a reversal in policy of the government because if you look at the language of the new stamp act, it essentially mirrors the language of what was there before 2011,” Friday said in Parliament last week when he stood to give his contribution to the debate.
“This was what was in the Act before the 2011 amendment so we are going back to what was there and what had done so much good to enhance property ownership amongst our people, to give people a start.”
The opposition leader said owning a home is the first real basis of wealth creation for most people as property accumulates value and has potential to provide opportunities for persons to send their children to school.
He noted that the government, in 2011 said the amendments were being made then because “scampish lawyers were essentially passing off transactions that were not really deeds of gift as such to avoid stamp duty”.
“Mechanisms must be in place to ensure abuses don’t occur but if they do occur, that they are detected and the persons responsible are dealt with, not that the entire thing is saying that you have to throw out the baby with the bathwater,” Friday said.
He expressed the view that the current amendments will help with economic activity as it allows young families to be able to flourish if they are gifted property by grandparents, as opposed to before when they would have had to accumulate funds to pay the 10 per cent stamp duty.
Prime Minister Dr Ralph Gonsalves contributing to debate on the bill said however, that new circumstances have given rise to the particular provisions proposed in the 2021 amendment.
He also argued that the change in 2011 only really affected the giving between brothers and sisters without stamp duty.
Gonsalves further stated that the government found through a study, that the change did not really affect transfers to grandchildren.
“It didn’t affect in any significant way, changes between a grandparent and a grandchild because all that happened…you do the same…checks for the root of title. So, there’s a mother who under the change can give to a daughter but she wants to give to her grandchild. All they did, they just make a deed of gift to the daughter and you just change the names and the mother gives now to her child, who is the grandchild of the original donor,” the Prime Minister explained.
He said the amendments in 2011 were due to issues of equity and fairness, genuine transfers were taking place between siblings who were utilising the deed of gift mechanism in circumstances of a sale, in order to cheat the system.
Sales were also being passed off as a deed of gift between two persons who had no blood relations, but were being vouched for by lawyers as in fact being related.
“That can’t be fair. It can’t be fair. The officials in the Ministry of Finance and Economic Planning argued. What you are doing in that way, you’re consolidating property among families that already have property. What about poor people?…” Gonsalves said.
He added that “Though this helped in individual cases, and we have done the research, that didn’t really add to what you may call home ownership or land ownership in any significant way…” Following the volcanic eruptions of April 2021, several houses in the northern parts of the island both on the leeward and windward side of the mainland sustained significant damage.
Gonsalves said the amendments will allow for a seamless transfer from one relative to another, who wish to assist in these cases.