full assignment tax rpgt

REAL PROPERTY GAIN TAX CHAPTER 6

1 © Hak Milik Sant Sahabat dan Kawan-Kawan. Dibenarkan untuk tujuan pembelajaran sahaja

IMPORTANCE NOTE OF CHARGEABLE ASSETS

1. Land include

a. The surface of the earth and all substances forming that surface.

b. The earth below the surface and substances therein.

c. Building or structures attached to land.

d. Standing timber, crops and other vegetation growing on land

e. Land covered by water.

2. Who is chargeable:

a. Every person whether resident or non-resident in Malaysia.

b. Partnership

c. Incapacitated person

d. Non resident

e. Rulers and ruling chiefs

f. Companies

g. A Hindu Joint Family

h. Executors

i. Trustees

3. Computation of RPGT

CALCULATION DISPOSAL PRICE

Receive from disposal xx

Less:

Paragraph 5(1)(a) Expenses wholly and inclusively incurred, in enhancing or preserving the value of the assets, such as alterations, improvements and extensions.

xx

Paragraph 5(1)(b) Expenses incurred in defending the title of the asset.

xx

Paragraph 5(1)(c) Incidental expenses such as fees, commissions, professional fees to accountants, lawyers, surveyors architect and cost of transfer (including stamp duties), advertising costs to find purchasers and cost of any valuation or market value.

xx

DISPOSAL PRICE xxx



CALCULATION ACQUISITION PRICE

Payment for acquisition xx

Plus: Incident Expenses

Lawyer’s fees, commission, remuneration for professional service of accounting, surveyors, valuer architects

xx

Expenses of transfer (including stamp duty) xx

Cost of advertising xx

Interest paid on capital employed to acquire the assets [cannot reduce y/a 2010

-

Less:

Paragraph 4(1)(a) Compensation or receipts for any damage or injury, destruction, dissipation, depreciation or risk of depreciation of the chargeable asset.

(xx)

Paragraph 4(1)(b) Insurance policy receipt for any damage or injury

(xx)

Paragraph 4(1)(c) Deposits forfeited, if any in respect of an aborted sale of an asset

(xx)

ACQUISITION PRICE xxx

CALCULATION CHARGEABLE GAIN

CHARGEABLE GAINS (Disposal price – Accumulated price) A

(-) Exemption RM10,000 @ 10% -- choose higher (xx)

CHARGEABLE GAIN B

CALCULATION EXEMPTION

Companies 𝐴 𝑥 𝑅𝑃𝐺𝑇 𝑇𝑎𝑥 𝑅𝑎𝑡𝑒 − (𝐴 𝑥 5%)

(𝐴 𝑥 𝑅𝑃𝐺𝑇 𝑇𝑎𝑥 𝑅𝑎𝑡𝑒) 𝑥 𝐶ℎ𝑎𝑟𝑔𝑒𝑎𝑏𝑙𝑒 𝐺𝑎𝑖𝑛 (𝐴)

Individual 𝐵 𝑥 𝑅𝑃𝐺𝑇 𝑇𝑎𝑥 𝑅𝑎𝑡𝑒 − (𝐵 𝑥 5%)

(𝐵 𝑥 𝑅𝑃𝐺𝑇 𝑇𝑎𝑥 𝑅𝑎𝑡𝑒) 𝑥 𝐶ℎ𝑎𝑟𝑔𝑒𝑎𝑏𝑙𝑒 𝐺𝑎𝑖𝑛 (𝐵)

CALCULATION NET CHARGEABLE GAIN

Chargeable Gain (net) = Chargeable Gain (A or B) – Exemption (C)

CALCULATION RPGT

RPGT = Chargeable gain (net) x RPGT Tax Rate @ = Chargeable gain x 5%



4. Disposal price

The disposal price of an asset is the consideration receives less any of the following expenses:

a. Expenses wholly and exclusively incurred in enhancing or preserving the value of the

asset such as alterations, improvement or extensions.

b. Expenses incurred, after acquiring the asset, in respect of preserving or defending the

title to the asset

c. Incidental expenses relating to the disposal of the asset (fees, commissions, lawyers,

surveyors, etc).

d. Advertising cost to find buyer

5. Acquisition price

The acquisition price of an asset is the consideration paid plus any incidental cost of expenses

that are relevant such as:

a. Fees, commissions, remuneration paid for professional service e.g. accountants,

lawyers, surveyors, architects

b. Cost of transfer e.g. stamp duty

c. Cost of advertising to find sellers

Any revenue expenses that can be claimed under ITA 1967 will not rank for deduction in arriving

at the acquisition price, such as interest on money borrowed to buy the property. The following

must be deducted:

a. Compensation or similar receipts for any damage, injury or destruction to the asset

b. Receipts under an insurance policy for any damage, injury to the asset

c. Any deposits forfeited in respect of the asset

6. Chargeable gain

Chargeable gains disposal price > acquisition price

Real property gains tax is computed on a scale rate depending on the length of

ownership of the chargeable asset.

7. Allowable loss and loss relief

Allowable loss disposal price < acquisition price

No chargeable gain and no RPGT payable from the disposal.

An allowable loss in respect of a disposal, a tax relief shall be allowed.

The relief given as a deduction from the total tax assessed on the chargeable gains of a

taxpayer for y/a in which of the loss arises if disposal in 5 years.



8. Exemption to individual

Every individual (included non-resident) will given exemption on RPGT

Exemption RM10,000 @ 10% of the chargeable gain

1/4/2007 – 31/12/2009 all disposal of landed properties are is exemption tax

9. Date of disposal and date of acquisition

The disposal of an asset shall be deemed to take place:

a. Where there is an agreement for disposal or acquisition, on the date of such agreement

b. Where there is no agreement on the date of completion of the disposal of the asset

c. In the case of conditioned contracts, the disposal date is the date of the contract. In the

case where are a contract is revoked but subsequently renewed, the date of the

disposal is the date when the contract was renewed.

d. The acquisition of an asset by an acquisition

10. Tax rate

Category of Disposal

Company (starting from

27/10/95)

Other excluded company

(starting from 1/1/2010)

Non Resident or non citizen

(disposal since 17/10/97)

Where the chargeable is disposed of within 2 years of acquisition

30% 30% 30%

If disposed of in the 3rd year after acquisition date

20% 20% 30%

If disposed of in the 4th year after acquisition date

15% 15% 30%

If disposed of in the 5th year after acquisition date

5% 5% 30%

If disposal of in the 6th year after acquisition and there after

5% 5% (w.e.f y/a 2010)

5%



EXAMPLE AND SOLUTION

1. DISPOSAL PRICE

Example 6-1

Hello sdn. Bhd. Disposed of a chargeable asset on 3.3.2010 for a consideration of RM1,250,000.

The disposal price is arrived at as follows :

RM RM

Consideration received (3.3.2010) 1,250,000

(-) Para 5(1)(a) Alterations and extensions 90,000

Para 5(1)(b) Legal expenses for protection of title of asset 35,000

Para 5(1)(c) Incidental expense 16,000 (141,000)

Disposal price of asset 1,109,000

When a transaction is not at arm’s length (related parties), for example a sale from a husband to

his wife, the disposal value of the land will be taken to be its market value and not the actual

consideration paid.

2. ACQUISITION PRICE

Example 6-2

Al Quyum Sdn. Bhd. Acquired a chargeable asset in 2010 for a consideration of RM600,000. The

acquisition price, taking into consideration incidental costs and deductions, is computed as

follow:

RM RM

Total consideration paid 600,000

(+) Incidental Costs :

Professional fees (valuer, lawyer) 44,000

Stamp duty 34,000

Other costs-advertising 35,000

713,000

(-) Capital Receipts :

Compensation for damage to asset by third property 82,500

Insurance recovery 243,000

Deposits forfeited by potential buyer 60,000 (385,500)

Acquisition price of asset 327,500

Where land is held more than one owner and one of the co-owner diposes of his share in the

land (which was vested in him as a result of portioning), he is deemed to have acquired the land

at the acquisition price paid by him for this undivided share.



3. CHARGEABLE GAINS

Example 6-3

Encik Jay and Encik Why jointly acquired a three-arce piece of agricultural land on 7.8.2007 for

RM90,000. The payment made by them were RM50,000 and RM40,000 respectively. The title to

the land was jointly held by them. On 13.1.2010, the land was sub-dividend and the title for a

two-acre piece was given to Encik Jay and the balance one acre was given to Encik Why. On

15.3.2010, Encik Jay sold the two-acre piece of land held in his name for RM70,000. Comment

on the events that took place.

Solution :

The sub-division of the land on 13.1.2010 would not be considered a disposal and acquisition of

land by Encik Jay and Encik Why. Encik Jay is deemed to have acquired the two-acre of land on

7.8.2007 for RM50,000. RPGT payable by Encik Jay (on the disposal of the land on 15.3.2010) will

be calculated as follows :

7.8.2007 - 6.8.2008

7.8.2008 - 6.8.2009

7.8.2009 - 15.3.2010 (considered 3 years)

RM

Disposal price (15.3.2010) 70,000

Acquisition price (7.8.2007) (50,000)

Chargeable gain 20,000

(-) Exemption Sch 4 :

10,000 or (10% x 20,000 = 2,000) (10,000)

Net chargeable gain 5,000



4. ALLOWABLE LOSS AND LOSS RELIEF

Example 6-4 (disposed within 5th years)

In 15.4.2007, Puan ABA had purchased a piece of land in Seremban for RM1,000,000 with

transferred cost amounted to RM 24,000. She disposed a land in 10.2.2010 for RM1,000,000.

Cost of renovation RM250,000 and incidental cost during disposal is RM11,400. Apart from that

she also obtained fire insurance fund amounted to RM62,600.

y/a 2010 RM

Received amount 1,000,000

(+) renovation cost 250,000

Disposal price 750,000

Paid amount 1,000,000

(+) transferred cost 24,000

1,024,000

(-) Fire insurance (62,600)

Acquisition price 961,400

Allowable loss (211,400)

Puan ABA disposed a land at Jitra for RM200,000 in year 2011. She bought a land on

year 2008 for RM150,000.

y/a 2011 RM

Disposal price 200,000

(-) acquisition price (150,000)


(-) exemption (10%x50,000=5000@10,000) higher (10,000)


(-) allowable loss for y/a 2010 (disposed in 5th years)

(40,000) *(211,400-40,000=171,400

transfer to y/a 2012

Chargeable gain NIL

*any unabsorbed tax relief for losses may be carried forward to future year indefinitely.

(disposed asset within 5th years)



5. TAX RATE

Example 6-5 (Disposal within 5th years)

ZZ Sdn BHd membeli rumah kedai pad a24.02.2007 dengan harga RM240,000 dan menjual

rumah kedai tersebut pada 04.02.2010 pada harga RM300,000. Tempoh pegangan harta tanah

adalah 3 tahun, maka pelupusan tersebut tertakluk kepada kadar cukai 20%.

RM NIlai balasan 300,000 Tolak: Harga perolehan (240,000) Keuntungan daripada pelupusan 60,000 Keuntungan yang dikecualikan (60,000 x 20%) – (60,000 x 5%) x 60,000 = 45,000 (60,000 x 20%) Keuntungan yang diperoleh dikenakan cukai: (60,000 – 45,000) = 15,000 Cukai yang dikenakan: 15,000 x 20% = 3,000

Example 6.6 (Disposed after 5 years)

Zz Sdn Bhd to buy houses with shops on 24.02.2005 at RM 240,000 and sold the shop on

04.02.2010 at RM 300,000. The real estate holdings is 5 years, the sale was subject to a tax rate

of 5%. The income is taxed using the following formula:

Value of Consideration 300,000

Less: Cost (240,000)

Gain on disposal 60,000

Tax charged: 60.000 x 5% = 3,000



Example 6.7 (disposed within 5 years)

Mr.Ahmad acquired a piece of land amounted RM 250,000 on 3.1.2007.He sold the land to

Mr.Salih for RM 450,000 on 16.3.2010

What were Mr.Ahmad chargeable gain on the disposal of the land?

Disposal price RM450,000

Acquisition Price (RM250,000)

Chargeable Gain RM200,000

Solution:

Date of disposal : 16.3.2010

Date of acquisition : 3.1.2007

Period of ownership is more than 3 years (considered 4 year)

3.1.2007-2.1.2008 (1 yr)

3.1.2008-2.1.2009 (1 yr)

3.1.2009-2.1.2010 (1 yr)

3.1.2010-16.3.2010 (2+month)

Disposal took place in the 4 year thus the rate applicable is 15%.Since Mr.Ahmad is an individual

he is entitled to claim excemption under sch 4 the higher of 100% of chargeable gains or

RM10,000.

Chargeable gain RM200,000

(-)sch 4 excemption (RM 10,000 or 10% x 200,000= 20,000) higher (RM20,000)

Net Chargeable Gain RM180,000

Excemption =(180,000x 15%) – (180,000 x 5 %) x 180,000

180,000 x 15 %

=RM120,000

Chargeable Gain (net) = 180,000 -120,000 = RM 60,000

RPGT payable= RM 60,000 x 15% = RM9,000 @ RM 180,000 x 5% = RM 9,000



EXAMPLE 6-8 (Disposal after 5th years)

Mr Ahmad acquired a piece of land amounted RM250,000 on 3.1.2004. He sold the land to Mr

Salih for RM450,000 on 16.3.2010.

What were Mr Ahmad’s chargeable gains on the disposal of the land?

SOLUTION

Disposal Price RM450,000

Acquisition Price (RM250,000)

Chargeable Gain RM200,000

Chargeable Gain RM 200,000

(-) Sch 4 exemption (RM10,000 or 10% x 200,000 = 20,000) higher (RM20,000)


RPGT = 180,000 x 5% = RM9,000

6. TREATMENT OF GIFTS

Example 6-9

On 4.3.2010, Encik Halim gave his daughter, Cik Amy one his houses which he purchased on

1.8.2007 for RM190,000. The permitted expenses amounted to RM4,000. The market value of

the house on 4.3.2010 was RM210,000. Since it was a gift from the parent to his child, there is

no chargeable gain or allowable loss from the transfer of the above property.

SOLUTION

RM RM

Disposal price deemed to be (RM190,000 + RM4,000) 194,000

Less : Acquisition price 190,000

Add : Permitted expenses 4,000 (194,000)

CHARGEABLE GAIN/ALLOWANCES LOSS Nil

The acquisition price to Cik Amy is therefore RM194,000, which is the disposal price to Encik

Halim. If Cik Amy obtained the property as a gift to the death for her father, the acquisition

price to her would be the market value on the date transfer of ownership of the property to her,

that is RM 210,000.



Example 6-10

On the occasion of her daughter’s ACCA graduation on 31.3.2010, Mr Kim gave her a flat which

the purchased on 2.8.1998 for RM215,000. The market value on 31.3.2010 was RM430,000.

For the weeding on 2.4.2010, Mr Kim gave her an apartment which he purchased in 2006 for

RM380,000. Explain the RPGT treatment of the above transaction from the positions of both

the parties, i.e Mr. Kim and his daughter.

SOLUTION

The graduation gift (i.e the flat) is deemed to be a disposal (after 5 years) and Mr Kim is deemed

to have disposed of the flat at market value. Mr. Kim would not be liable for RPGT as the rate of

RPGT after 5 years is nil. Hia daughter is deemed to have acquired the flat at market value (i.e

RM430,000).

The weeding gift (i.e the apartment) falls within the proviso as it was a gift from parent to child

made within 5 years after acquisition. Therefore, Mr Kim is deemed to be in a “no gain no loss”

situation in respect of the apartment. She is deemed to have acquired the apartment at the

acquisition price paid by her father (RM380,000).



ASSIGNMENT AND SOLUTION

ASSIGNMENT 6-1

Al Qawi Sdn Bhd sold the following properties over the years:\

House

This properties was sold for RM150,000 on 4.7.2004. it was purchase for RM43,000 on 9.3.1985. Legal

fees of RM500 were incurred in connection with the purchase. Stamp duty on purchase was RM4,000. In

1969 an extension to the house was built at a cost of RM15,000. On 5.4.2003 the company received the

sum of RM80,000 as compensation for damages caused to the house. The market value of the house as

at 1.1.1995 was RM60,000.

Shophouse

This properties was sold for RM340,000 on 14.8.2010. The company incurred expenses as follows:

Cost of purchase on 7.8.2005 RM400,800

Stamp duty on purchase RM6,000

Advertising for buyer RM200

Quit rent and assessment 2006 and 2007 RM2,500

Land

This properties was sold for RM200,000 on 10.3.2010. it was purchase for RM130,000 on 5.6.2007 and

the construction of building cost RM38,000 was incurred on 5.10.2007

REQUIRED

a. Compute the RPGT by Al Qawi Sdn Bhd for all the relavant y/a’s.

b. State the situation that loss relief can be carried forward to future y/a’s.



ASSIGNMENT 6-4

Encik Al Salam had been informed that he would be transferred overseas for five years commencing

from 1.4.2010. in sorting out his affairs, he was considering disposing of his real properties, details of

which are as follow:

a. Land in Gurun, Kedah

This has been acquired on 12.3.2006 for RM230,000. He received a firm’s offer of RM280,000

for the land.

b. House in Kelana Jaya, Selangor

The house was acquired on 5.5.2002 at a cost of RM370,000 and co-owned with his wife; this

had been and was still the family residence. The current market value was RM520,000.

c. 5-acre agriculture land in Segamat, Johor

This was an oil palm smallholding which Encik Al Salam acquired on 15.8.2007 at a cost of

RM310,000. Other acquisition expenses were:

Legal fees RM1,800

Stamp duty RM4,200

Estate agent’s commission RM5,200

RM11,200

Encik Al Salam had incurred a further RM60,000 on improvement to the land, e.g. roads and drains since

it was purchase. In December 2007, a prospective buyer, Encik Al Malik placed RM20,000 with Enncik Al

Salam as a non-refundable deposit but subsequently failed to raise the funds to complete the

acquisition. Encik Al Salam has forfeited the said deposit. Recently, the owner of the neighboring lot

offered RM400,000 to take over the land from Encik Al Salam. He was thinking of signing the sale and

purchase agreement on 10.2.2010.

REQUIRED

For each transaction, state, giving reason, whether RPGT would be payable on the disposal of the

properties.



ASSIGNMENT 6-8

Marini is the owner of four private residences. Due to final problems, she sold three of the house in

2010. The information relating to the disposal made in 2010 as follow:

House 1 House 2

Acquisition Date 7.3.2005 10.5.2006

Acquisition Price RM195,000 RM195,500

Disposal Date 30.10.2010 25.11.2010

Disposal Price RM274,000 RM172,000

On 15.3.2010, a house in Puchong was disposal of for RM301,000. 20% of the consideration amount was

received on 1.2.2010. Other expenses incurred in respect of the disposal are as follow:

Legal fee and stamp duty RM 9,000

Valuation fee RM 3,500

The house was bought on 1.8.2006 with the cash consideration of RM199,500 and the legal transferred

was completed on 15.9.2006. The relevant information of the house is as follows:

Year Item RM

2006 Legal fee 4,900

2007 House repair 14,700

2008 Deposit forfeited 7,410

2009 Compensation received on fire insurance 21,000

On the acquisition date, Marini paid stamp duty on the acquisition price amounting to 1% on the first

RM100,000 and 2% on the balance.

REQUIRED

Compute the RPGT for Marini



ASSIGNMENT 6-9

Afnan is the owner for two bungalows in Jitra. He disposal for his assets in 2010 and provides you with

the following information:

Bungalows 1 Bungalow 2

Date of acuisition 1.1.2006 1.3.2007

Date of disposal 1.10,2010 1.9.2010

Cost RM200,000 RM300,000

Deposit by buyer forfeited in 2005 RM10,000

Incidential costs:

- On acquisition RM20,000 RM30,000

- On disposal RM15,000 RM20,000

Selling price RM360,000 RM450,000

REQUIRED

a. Compute the RPGT by Afnan.

b. Outline the tax consequences of the above transactions if the bungalows are by a company.



ANSWER ASSIGNMENT 6-1

House

Shophouse


(-) Advertising (RM200)

Quit rent (RM2,500)

RM337,000

(-) Acquisition RM400,800

Stamp duty RM6,000

(RM406800)

Chargeable loss RM69,500

:. No tax is imposed for losses

Land

Selling price RM200,000

(-) Construction of building (RM38,000)


(-) Acquisition price (RM130,000)

Chargeable gain RM32,000

Exemption

= RM 32,000 x 20% − (RM 32,000 x 5%)

(RM 32,000 x 20%) x RM32,000

= RM24,000

Chargeable gain

= RM32,000 – RM24,000

= RM8,000

RPGT payable

= RM8,000 x 20%

= RM1,600

@

= RM2,000 x 5%

= RM1,600




a. Land in Gurun

Disposal RM280,000

(-) Acquisition (RM230,000)

RM50,000

(-) Exemption (RM10,000) (10,000 @ 50,000 x 10% = 5,000)


RPGT = RM40,000 x 5% = RM2,000

b. House in Kelana Jaya

Disposal RM520,000


RM150,000

(-) Exemption (RM15,000) (10,000 @ 150,000 x 10% = 15,000)

RM135,000

RPGT = RM135,000 x 5% = RM6,750

c. 5-acre agriculture land

Disposal RM400,000 Chargeable gain (net)

(-) Paragraph 5(1)(a) (RM60,000) = RM28,800 – RM21,600

RM340,000 = RM7,200

Acquisition RM310,000 RPGT = RM7,200 x 20%

(-) Paragraph 4(1)(c) (RM29,000) = RM1,440

(+) Legal fee RM1,800 @

Stamp duty RM4,200 = RM28,800 x 5%

Estate agent’s commission RM5,200 = RM1,440

RM301,200

Disposal RM340,000


RM38,800

(-) Exemption (RM10,000)

RM28,800

Exemption Individual

= RM 28,800 x 20% − RM 28,800 x 5%

RM 28,800 x 20% X RM28,800

= RM21,600



ANSWER ASSIGNMENT 6.8

House 1 House 2

Disposal price RM274,000 Disposal price RM172,000

(-) Acquisition price (RM195,000) (-) Acquisition price (RM195,500)

Chargeable gain RM79,000 Net Chargeable Gain (RM23,500)

(-) Exemption (RM10,000)


House in Puchong

Selling price RM301,000 Acquisition price RM199,500

(-) Legal fee & stamp duty (RM9,000) (+) Legal fee RM4,900

Valuation fee (RM3,500) Stamp duty RM2,990

RM288,500 (-) Paragraph 4(1)(a) (RM21,000)

(-) Paragraph 5(1) (RM14,700) Paragraph 4(1)(c) (RM7,410)

Disposal price RM273,800 Acquisition price RM178,980


(-) Acquisition price (RM178,980)

RM94,820

(-) Exemption (RM10,000) (10,000 @ 94,820 x 10% = 9482)

RM84,820

(-) Loss on house 2 (RM23,500)


Exemption Individual

= RM61,320 x15% − (RM 61,320 x 5%)

(RM 61,320 x 15%) xRM61,320

= RM40,880

Chargeable gain (net) = Chargeable gain – Exemption

= RM61,320 – RM40,880

= RM20,440

RPGT = RM20,440 x 15% @ = RM61,320 x 5%

= RM3,066 = RM3,066




BUNGLOWS 1 BUNGLOWS 2

Selling price RM360,000 Selling price RM450,000

(-) Paragraph 5(1)(c) (RM150,000) (-) Paragraph 5(1)(c) (RM20,000)

Disposal price RM245,000 Disposal price RM430,000

Acquisition price RM200,000 Acquisition price RM300,000

(+) Incidental cost RM20,000 (+) Incidental cost RM30,000

(-) Paragraph 4(1)(c) (RM10,000) Acquisition price RM330,000

Acquisition price RM210,000


Disposal price RM345,000 (-) Acquisition price (RM330,000)

(-) Acquisition price (RM210,000) Chargeable gain RM100,000

Chargeable gain RM135,000 (-)Exemption (RM10,000)

(-)Exemption (RM13,500) Net Chargeable Gain RM90,000


Exemption individual

Exemption individual = 𝑅𝑀90,000 𝑥 15% − (𝑅𝑀90,000 𝑥 5%)

(𝑅𝑀90,000 𝑥 15%) 𝑥 𝑅𝑀90,000

= RM 121,500 x 5% −(RM 121,500 x 5%)

(RM 121,500 x 5%) x RM121,500 = RM60,000

= RM0

Chargeable gain

Chargeable gain = RM90,000 – RM60,000

=RM121,500 x 0 = RM30,000

= RM121,500

RPGT = RM30,000 x 15%

RPGT = RM121,500 x 5% = RM4,500

= RM6,075 @

@ = RM90,000 x 5%

= RM121,000 x 5% =RM4,500

= RM6,075

full assignment tax rpgt

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