Introduction

Recent court decisions have examined the use of 99:1 ownership structures with increased scrutiny, seeking to differentiate genuine property arrangements—where resulting trust principles may validly apply to reflect the parties’ true intentions—from artificial constructs primarily aimed at circumventing stamp duty obligations.

Under this structure, two individuals (Person A and Person B) may acquire property in Singapore as tenants-in-common, with A holding a 99% interest and B holding the remaining 1%. After a minimum holding period (typically four years, otherwise Seller’s Stamp Duty is payable), B may transfer his 1% share to A, who then becomes the sole legal owner of the property. This allows B to purchase a second property in his sole name, thereby avoiding the Additional Buyer’s Stamp Duty (ABSD), while A only incurs Buyer’s Stamp Duty (BSD) on the 1% transfer.

While such an arrangement is not inherently unlawful—since parties are legally permitted to determine their ownership proportions—the courts and tax authorities will examine the underlying substance of the transaction. Where the arrangement is found to be a sham or primarily structured for the purpose of avoiding tax, it may be set aside, potentially triggering retrospective duties, substantial penalties, and protracted legal disputes.

In the recent case of Ngor Shing Rong Jake v Wong Mei Lee Millie [2025] SGHC 119, the learned Judge had to decide on whether a 1% co-owner in a 99:1 arrangement should be precluded by illegality from claiming a bigger share by way of a resulting trust. He said that the crux of the potential illegality was at the decoupling stage where the parties may represent to IRAS that the former 1% owner had divested himself of all interests in the first property when he, in fact, retains an undisclosed beneficial interest in the property.

Brief Summary of Case

Jake and Millie were co-owners of a three-bedroom condominium unit in Hillcrest Arcadia (the “Property”) holding 1% (Jake) and 99% (Millie) shares in the Property respectively. After the parties broke up, Millie insisted that she owned 99% of the Property. Jake claimed a beneficial interest of 70% under a resulting trust, corresponding to his alleged financial contributions towards the Property.

It was an undisputed fact that one of the reasons the parties deliberately registered the Property in the ownership ratio of 99:1 was to avoid paying ABSD if and when they were to purchase a second property.

The Judge was satisfied based on the evidence that Jake did not intend to immediately and unconditionally benefit Millie with his financial contributions to the Property.  Therefore, there was a resulting trust in favour of Jake. The Judge awarded Jake’s share as 55.22% and Millie’s share as 44.78%, based on the parties’ direct contributions at the time the property was purchased. Thus, Millie held 54.22% of the Property on resulting trust for Jake.

Under section 4 of the Stamp Duties Act, understamping was a strict liability. The learned Judge then went on to decide that it would be disproportionate to completely deny Jake of his beneficial interest of 54.22% in the Property arising under a resulting trust.

This case is interesting because on the facts, the evidence clearly showed an illegal purpose. From the case, it appears that the following were material evidence and considerations in favour of Jake (the 1% owner):

• The 99:1 ratio in favour of Millie was to provide her with security in case Jake cheated on her and not an outright unconditional gift.
• The primary objective of the parties registering the 99:1 ownership ratio was to quell Millie’s insecurity. The contemplation of purchasing a second property was a secondary consideration.
• The extent of the parties’ beneficial interests under a resulting trust must be determined at the time the property is purchased.
• The finding that the parties did not even know that their actions would constitute unlawful understamping.
• The fact that no tax liability was actually avoided and the unlawful purpose would never be executed as the parties have separated.
• Jake did not deliberately choose the 99:1 ratio to conceal his beneficial interests.
• To deny Jake of a substantial 54.22% interest in the Property was an excessive penalty that outweighed the gravity of any intended illegality.
• The law on resulting trusts would be applied to arrive at a just outcome.

The learned Judge in Ngor Shing Rong Jake v Wong Mei Lee Millie [2025] SGHC 119  also made it clear that not all 99:1 ownership structure will inevitably have the same finding by the court that the 1% owner has a bigger share in the property by virtue of a resulting trust, proportionate to the financial contribution of the 1% owner.

Each case must be determined on its own facts, and the court will closely examine the parties’ intentions, the source of the funds, and the overall conduct of the parties in assessing the existence and extent of any resulting or constructive trust.

This means that the individual holding a 1% registered interest in the property may be confined to that proportionate share, and the court may accordingly dismiss any claim asserting entitlement to a greater interest than the 1% reflected in the legal title.

Accordingly, in circumstances where parties—particularly individuals with experience and sophistication in property investment—enter into a 99:1 ownership arrangement, and where it can be shown that such structure was deliberately adopted to misrepresent the true beneficial ownership or to obscure the parties’ financial interests in the property, with the purpose or effect of evading or avoiding tax liabilities, such parties may be exposed to investigation and prosecution under the relevant provisions of the Stamp Duties Act 1929.

On IRAS website at FAQs, it was stated “IRAS takes a stern view of any arrangements for the purpose of reducing or avoiding tax. This includes the scenario where buyers purchase properties under a contrived or artificial arrangement in order to reduce or avoid the Stamp Duties they have to pay.

In cases of tax avoidance, the Commissioner of Stamp Duties will disregard or vary any tax avoidance arrangement, claw back the rightful amount of stamp duty and impose a 50% surcharge on the additional duty payable. Further penalties of up to 4 times the outstanding amount may be imposed if the stamp duty and surcharge are not paid by the deadline.”

https://www.iras.gov.sg/taxes/stamp-duty/for-property/buying-or-acquiring-property/additional-buyer’s-stamp-duty-(absd)

In light of the foregoing, it is prudent and advisable for co-purchasers of property to exercise full transparency in their property transactions and to ensure that the manner of holding the property as tenants in common in the registered shares also accurately reflect the beneficial ownership and intentions of the parties involved.