LETTERS: Anyone can renounce his share under an estate.
The issue, however, is when the collector of stamp duty (CSD) gets involved, and disregards the law when renunciation is done over immovable assets.
The CSD often reminds me of that "friend" we had in university who came empty-handed to potluck parties but ate nearly everything.
The CSD treats every immoveable asset renounced by one heir in favour of another (under the same estate) as an inter vivos gift (gift between the living) and subject to costly ad valorem stamp duty, as per item 32(a), First Schedule, Stamp Duty Act 1949.
Thankfully, that position has been successfully challenged on two occasions up to the Court of Appeal:
1. Ch'ng Cheng Siew v CSD [2016] 1 CLJ 724
2. CSD v Lee Koy Eng [Civil Appeal No. B-01(A)-335-07/2022]
In both cases, the CSD did not appeal the court's decision.
In both cases as well, the children of the deceased renounced their entitlement to an immoveable asset under the estate in favour of their mother, who was also the widow.
For the part renounced (from children to mother), the CSD levied ad valorem stamp duty as per item 32(a).
For the part transferred from the estate to the widow, the CSD levied a RM10 stamp duty as per item 32(i).
There were therefore two parts to that calculation under the same estate, according to the CSD. The court held that such a calculation method is wrong in law.
The court said there should only be a single calculation method in the circumstances, and it should be based on item 32(i).
The court also held that once an heir renounces, he no longer has any rights in the interest renounced and therefore cannot make a gift arising therefrom.
And whatever interest renounced, that very interest will devolve back to the estate by the operation of law and from that, the transfer to the heir or heirs over same shall be subject to a RM10 stamp duty as per item 32(i).
Regrettably, in spite of the clarity articulated by the court, the CSD remains defiant and chose to confine the principles as established to the said cases that they were made a party to.
Thus, for any new similar adjudication, the CSD will revert to its erroneous calculation method. That is indeed egregious and causes hardship.
Affected parties can however appeal to the High Court, though not before paying for the full ad valorem stamp duty first. This is, therefore, not an ideal situation.
On a personal level, there is a positive side to this bureaucratic aberration. In addition to hoping for change, it has also brought me closer to God.
After all, the CSD is one obstinate federal agency that can mentally drain you if not for your faith in a higher authority.
MEGAT SHAHARUDDIN MERICAN
Kelana Jaya, Selangor