I had explained some aspects of deeds of gift some time ago and since the deed of gift has recently come under public attention, I will engage you in this discussion for your understanding.

No tax break for those outside the Act

A deed of gift is one of the methods of transferring lands. First, I must say that any one can transfer lands by way of a deed of gift, and that includes transfers to relatives and strangers. With a deed of gift, there is no monetary consideration.{{more}} The consideration is for love and affection, and this is stated in the document. The recipient does not have to pay the donor for the land. In other words, there is no money transaction. However, like other conveyances, stamp duties have to be paid. So the value of the land has to be assessed, and whereas the vendor and the purchaser would each pay 5% stamp duty in the regular conveyance by sale, the recipient (donee /grantee) of the land pays 10% stamp duty. In this type of Deed of Gift, where stamp duty is paid, there is no exemption as that given under section 24 of the Stamp Act.

Helping families

When the Stamp Act was passed, the legislator saw it fit to help families. This represents the benevolence of the lawmakers in giving families tax breaks. This perhaps was the same rationale for removing the strangulating death dues on family homes in 1992. The legislators saw a way of helping families and they decided to help them by exempting them from certain stamp duties. This exemption is given under Section 24, Cap 318 of the Stamp Act.

Section 24

Section 24 is captioned Conveyance or transfer operating as a voluntary Disposition inter vivos or any transaction where the sale price is not the open market price.

ss. (1) states that no stamp duty shall be payable in respect of any conveyance or transfer operating as a voluntary disposition inter vivos without consideration in money or money’s worth between;

(a) parents and children ( including grand-children , great grand children , great-great grand children and great-great -great grand children) ;

(b) brothers and sisters (either of the whole blood or half blood)

(c) spouses, including transfers made within three years of a decree absolute, whether such transfers are voluntary or made pursuant to an order of the High Court in connection with a property settlement.

Provided that the status of Children’s Act shall apply for the purpose of establishing the relationships mentioned in paragraphs’ (a) and (b).

I will simplify further (c) above. A husband who has divorced his wife or vice versa can get the exemption within 3 years of the divorce. A child whose father was recognized through the Status of Children’s Act could obtain the exemption.

It was this generosity of the legislator that was intended to come to an end under the tax man’s axe. Some parts would be jettisoned because the state needs money and this benevolence towards its people will come to an end. It will, however, remain for spouses, parents and children.

The legislator carefully crafted the Act so that there could be no abuse. If there is any abuse, then the provisions under the Act could be invoked. A declaration must be made by the lawyer and signed before the Registrar in which he declares that to the best of his own personal knowledge information and belief after all due and diligent and proper inquiries, the transaction is a bona fide transfer of property. It goes on to provide punishment for any reckless statement and for persons who set out to deceive. I will expand on this last part later. Enjoy.

Ada Johnson is a solicitor and barrister-at-law.
E-mail address is: exploringthelaw@yahoo.com