ACCA Advanced Taxation (ATX) Practice Exam

What is NOT an exempt transfer in relation to Stamp Duty?

1. Variation of a will

2. Divorce arrangements

3. Business transfer with no consideration

4. Gift of property to a friend

The correct answer is: Gift of property to a friend

The concept of exempt transfers in Stamp Duty revolves around certain transactions that do not incur the typical tax liability associated with the transfer of property ownership. Each of the scenarios presented involves different considerations under tax law. When looking at the choice regarding the gift of property to a friend, this does not qualify as an exempt transfer for Stamp Duty purposes. The primary reason is that Stamp Duty is generally charged on property transfers that occur without exemptions, such as sales or gifts of property. In cases involving gifts, particularly to non-family members like friends, the transaction is often treated as a taxable event. This means that the transfer is typically subject to Stamp Duty, as it represents a real transfer of assets without consideration or payment, which is a taxable situation. In contrast, other choices indicate transactions or situations that traditionally have exemptions. For example, variations of wills typically do not incur Stamp Duty as they are administrative rather than transactional changes. Similarly, divorce arrangements may involve transfers of assets that are exempt from Stamp Duty due to their legal nature. Business transfers that occur with no consideration can also qualify for exemption under Stamp Duty law, provided certain criteria are met. Understanding these distinctions is crucial in the interpretation of tax liability concerning property transactions and planning to minimize potential tax exposure.