Ethics
Ethics Tip 2: Backdating Documents to Avoid Paying Taxes
Altering a document or backdating is generally not acceptable. It has been suggested in case law that backdating may be acceptable if done in the interests of commercial expediency and if the parties agree to the alteration or backdating, and there is no intention to deceive any authority or person (consider Raffles Town Club Pte Ltd v Lim Eng Hock Peter [2010] SGHC 163; Ho Yew Kong v Sakae Holdings Ltd etc CA [2018] 2 SLR 333).
Consider this scenario:
On 28th February, after 5pm, the Government announces that new ABSD rates are to be implemented on all sale and purchase transactions entered into from 1st March. A client, who has been contemplating buying a property, on learning of this news, rushes to contact the seller to conclude the sale purchase immediately. The seller is willing to but says he is abroad and will only arrive in Singapore at 12 noon on 1st March and can only sign it at 2 pm. The client asks the seller to agree to backdating the agreement to 28th February. The seller agrees as he feels it makes no difference to him. The client and seller sign the sale and purchase agreement on 1st March and backdate it to 28th February. The client presents the agreement to you, tells you what has transpired and instructs you to act for him in the purchase, including stamping the agreement.
What are your thoughts? You note that both parties agree to the backdating. You recognise that the only objective for backdating the document is to avoid paying the new ABSD rates. Is this a worthy objective? Can it be justified as no one other than the parties know about the backdating, and you can still arrange to stamp the document at the old ABSD rates?
What would be your reaction? You will recognise that good character will prioritise honesty and that you have a duty to be honest in all your dealings. You will recognise that that Government has a legitimate interest in receiving the revenue and you, as a lawyer, have a duty to assist in the implementation of the new ABSD rates. Your honesty will tell you to avoid devices designed to deceive. You will refuse to stamp the document at the old rates, and, if the client refuses to agree, refuse to act for him in this matter.
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