Stamp duty – buyer’s stamp duty – purchase of residential property by trustee for Hong Kong permanent resident and minor – whether chargeable with buyer’s stamp duty
In July 2013, P, as trustee for and on behalf of his daughter (“W”) then a minor, purchased a flat from V under a preliminary sale and purchase agreement (“PASP”). Its terms were incorporated into a sale and purchase agreement (the “Agreement”), in which the parties acknowledged the Government’s announcement on 26 October 2012 that it would amend the Stamp Duty Ordinance (Cap. 117) by introducing with effect from 27 October 2012 a buyer’s stamp duty (“BSD”) of 15 percent levied on residential properties acquired by any person (including a company) except permanent residents. The Agreement was stamped with ad valorem stamp duty. The Government subsequently gazetted a bill which included an exemption for a purchaser who acted as a trustee or guardian for a permanent resident who was a minor (the “Minor Exemption”). As recommended by the Bills Committee, the Government removed the Minor Exemption and the bill was enacted on 28 February 2014 as the Stamp Duty (Amendment) Ordinance 2014 (the “Amendment Ordinance”), but with retrospective effect from 27 October 2012. After W turned 18, V assigned the flat directly to her at P’s request as confirmor. W’s application for an exemption from BSD was rejected by the Collector of Stamp Revenue (the “Collector”) and P appealed.
Held, dismissing the appeal, that:
- The Agreement was chargeable with BSD.
- There was no prohibition against retrospective legislation, especially in the tax context. Where the wording was clear, the court must give effect to it.
- P’s argument that the Amendment Ordinance which was enacted without the Minor Exemption violated Art. 6 of the Basic Law (“BL”) was misconceived. It was well established that Arts. 105 and 6 of the BL had no application to tax legislation. Taxation was governed by Art. 108. Further, tax legislation was not subject to a requirement of proportionality imposed by Art. 105. Accordingly here, Arts. 6 and 105 were not engaged and there was no need for the Amendment Ordinance to satisfy any test of “proportionality”. In any event, even assuming there was a proportionality requirement, P had failed entirely to show why it was not satisfied.