The revocation of gifts under Wills or intestacy is not merely an emotional or procedural decision — it comes with significant legal and financial ramifications, particularly concerning stamp duty. While estate planning is typically focused on the distribution of assets, understanding the stamp duty implications when a gift is revoked is equally important.
In this article, we explore the current legal framework governing stamp duty in cases of revoked gifts and what this means for those involved in the administration of estates.
1. The 2020 Case: Lee Koy Eng v Pemungut Duti Setem (and Another Appeal) [2020] 7 AMR 296
In this instance, a deceased who died intestate left several immovable properties to three beneficiaries (i.e. two children and his spouse). Both his children renounced their rights over the deceased’s properties through a deed of family arrangement.
Question: Will the renunciation of rights by both children over the deceased’s properties be treated as a ‘gift’ to the remaining beneficiary?
The answer is no. The High Court held that the renunciation could not be interpreted as a ‘gift’ to the other beneficiary entitled under the same estate (i.e. deceased’s spouse) on grounds that the deceased’s children have no vested interest in the immovable properties given that the renunciation occurred prior to the completion of the estate administration.
Hence, renunciation by way of ‘gift’ as stipulated under Item 66(c) in the First Schedule of the Stamp Act 1949 cannot be applied in this case and the stamp duty on the transfer is valued at nominal RM10.
2. Amendments to the Stamp Act 1949 (“the Act”)
On 1st January 2024, the amendments to Item 32(h) in the First Schedule of the Act came into effect, imposing a nominal stamp duty of RM10 for transfer of immovable property from a deceased’s estate to another beneficiary entitled under the same estate. This applies regardless of whether the transfer occurs through a release or renunciation by the beneficiaries.
However, in the recent case of Tan Nyok Chin v Pemungut Duti Setem [2024] 7 CLJ 486 the Court adopted a different approach concerning testate deceased (passed on leaving a will).
Here, the deceased died testate, leaving a Will stating that a land is to be distributed to his wife and five children upon his demise. The deceased’s children all renounced their rights through a Deed of Settlement and Renunciation (“the Deed”), leaving the deceased’s wife as the sole beneficiary to the said land.
The High Court took the view that the deceased’s wife and her five children possessed beneficial interests in the land even prior to the execution of the Deed as the deceased’s property had already been administered upon the Will being proved. Consequently, it was held that the renunciation was a conveyance that operates as a voluntary disposition by way of ‘gift’ leading to the transfer being subject to ad valorem stamp duty under Item 66(c) in the First Schedule of the Act.
3. Conclusion
It can be deduced that the primary distinguishing factor influencing the interpretation of the Court is whether the deceased died testate or intestate. This distinction determines whether the beneficiary renouncing their rights had an interest in the deceased's property prior to the renunciation.
Vesting of Rights and Interest | Stamp Duty Implications | |
Deceased Died Intestate (Without Will) | The rights and interests of the deceased’s estate is only vested on the beneficiary upon completion of the estate administration. | Nominal RM10 |
Deceased Died Testate (With Will) | The rights and interests of the deceased’s estate is only vested on the beneficiary upon the Will being proved. | Ad Valorem |
The recent amendments on the Act sought to clarify the application of stamp duty on renunciation of gifts by beneficiary. However, the Courts have taken a further approach by drawing a distinction between testacy and intestacy. While the amendments have provided a framework, the judicial interpretation has layered an additional complexity. This duality reinforces the importance of understanding both the legislative changes and the courts’ evolving stance on the matter.
Disclaimer: This article is intended to provide general information and does not constitute legal advice. Readers are advised to consult with a legal professional for advice on specific matters.
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