RES exam question on Taxes & Duties: A buyer paid Buyer's Stamp Duty (BSD) of $24,600 on a private property S&P Agreement
A buyer paid Buyer's Stamp Duty (BSD) of $24,600 on a private property S&P Agreement. Five months later, both parties mutually rescind the S&P Agreement before legal completion because the seller cannot resolve a title encumbrance. What is the buyer's position regarding the BSD already paid?
- ABSD, once paid and received by IRAS, is non-refundable under all circumstances regardless of whether the transaction completes
- BThe buyer can only recover the BSD as part of a breach-of-contract damages claim against the seller, as the rescission was caused by the seller's failure
- CBSD is automatically refunded by IRAS within 30 days of receiving a copy of the rescission agreement, without any formal application
- DThe buyer may apply to IRAS for a BSD refund if the S&P is rescinded/annulled, within the prescribed period (generally 6 months)
Show answer & explanation
Answer
D. The buyer may apply to IRAS for a BSD refund if the S&P is rescinded/annulled, within the prescribed period (generally 6 months)
Explanation
Under the Stamp Duties Act, stamp duty may be refunded where the instrument (e.g., the S&P Agreement) is rescinded, annulled, or where the transaction does not proceed to completion due to specified grounds. The buyer (as the stamped party) must submit a formal written application to IRAS, supported by evidence of rescission (e.g., a mutual rescission deed or letter), generally within 6 months of the date of rescission. IRAS reviews the application and has discretion — the refund is not automatic. Where the rescission results from the seller's default, BSD recovery may also form part of a damages claim, but the stamp duty refund route via IRAS is the primary mechanism.
Study the concept behind this question: Stamp Duties Explained: BSD, ABSD & SSD (Singapore, 2026)
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