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Nominal Consideration

transfer, duty and revenue

NOMINAL CONSIDERATION. Where shares are transferred without any money being paid for them, as where a holder transfers them to a bank or to the nominees of a bank as security for an overdraft or a loan, a nominal consideration, generally five shillings or ten shillings, is inserted in the document of transfer.

Such a transfer is subject to a stamp duty of ten shillings.

A conveyance or transfer operating as a voluntary disposition inter vivos is charge able with the same stamp duty as if it were a conveyance or transfer on sale, with the sub stitution in each case of the value of the property conveyed or transferred for the amount or value of the consideration for the sale. (See Section 74 of the Finance (1909 10) Act, 1910, under heading CONVEYANCE.) But a conveyance or transfer made for nominal consideration for the purpose of securing the repayment of an advance or loan is not chargeable with the duty imposed by that section (see s.s. 6 of Section 74), the duty remaining at 10s.

In the case of transfers, for nominal con sideration, to or from banks or their nomi nees, the Board of Inland Revenue are of opinion (see the Board's circular of Sep tember 5,1910, under TRANSFER OF SHARES) that the interests of the Revenue would, as a general rule, be adequately protected if registering officers were furnished with a certificate by the bank to the effect that the transfer is excepted from Section 74 of the Finance (1909-10) Act, 1910, and is duly stamped.

Section 17 of the Stamp Act, 1891, imposes on all registering officers the duty of satis fying themselves that all instruments of transfer are adequately stamped before they admit them for registration. In a circular in April, 1910, the Board of Inland Revenue point out to all registering officers, who may have to deal with instruments purporting to be properly stamped with the fixed duty of 10s., the necessity of satisfying themselves that the provisions of the law have been complied with in each case before they admit the instrument to registration.

A form, supplied by the Inland Revenue, on which to supply the required explana tion, is as follows : Copies of the circulars issued by the Board of Inland Revenue, regarding nominal considerations, will be found under TRANSFER OF SHARES.