ACCA Advanced Taxation (ATX) Practice Exam

Which type of arrangement is exempt from Stamp Duty, according to tax rules?

1. Sale of assets

2. Gifts

3. Settlement of debts

4. Your daily allowance

The correct answer is: Gifts

The sale of assets, settlement of debts, and daily allowances typically involve transactions or payments that would generally attract stamp duty based on the value and nature of the agreement. However, gifts are specifically recognized under tax rules as exempt from stamp duty. This exemption is in place because gifts do not constitute an exchange of value in the same manner as a sale or a contractual agreement that implies a transfer of wealth through a financially motivated transaction. The intent of gifting is to provide without monetary consideration, making it distinct from other types of transactions that incur tax liabilities. This special status often aims to encourage charitable giving and personal generosity without the burden of additional tax implications on the recipient.