Gazettes of PENJANA Initiative: P.U.(A) 216/2020, 217/2020 & 218/2020

MWKA ONLINE TALKS

SpeakerSARAH KAMBALIPartner

SpeakerMARCUS LEONGAssociate

ModeratorPHUI KAR LINGPupil in Chambers

Mon 17 August 20203:00pm (GMT +8)

mwka.com/talks

2

Gazettes of PENJANA Initiative: P.U.(A) 216/2020, 217/2020 and 218/2020

MWKA ONLINE TALKS

SpeakerSARAH KAMBALIPartner

SpeakerMARCUS LEONGAssociate

ModeratorPHUI KAR LINGPupil in Chambers

Mon 17 August 20203:00pm (GMT +8)

mwka.com/talks

About Us

● Welcome to MahWengKwai & Associates!

● Trusted by small medium enterprises (SMEs), family businesses and individuals.

● Established in 1985 by Dato’ Mah Weng Kwai, now a consultant with the firm.

● Medium-sized law firm with 22 lawyers and 19 staff.

4

Our Services

● Full-service law firm with 4 Departments:

○ Corporate

○ Dispute Resolution

○ Employment

○ Individuals & Families

5

Our Practice Groups

● 5 Practice Groups:

○ ASEAN-China Desk

○ Construction

○ Foreign Direct Investment

○ Real Estate

○ Sports & eSports

6

MWKA Online Talks

● To share knowledge, raise awareness, encourage networking

● For clients, potential clients, in-house counsel

● Recent MWKA Online Talk:

○ 12.8.2020: Does the Non-Renewal of Fixed Term Employment Contracts Amount to Unfair Dismissal?

● Upcoming MWKA Online Talk:

○ 19.8.2020: How to Make a Pact in the Arena of Sports

○ 26.8.2020: Understanding Performance Bonds

7

Sarah Kambali● Partner in our Real Estate Practice Group and Syariah Estate

Planning.

● Bachelor of Laws LLB (Hons) from the International Islamic University of Malaysia and Postgraduate Diploma in Syariah Law and Practice from the Universiti Technology MARA (UiTM).

● Admitted to the Malaysian Bar in 2007.

● Involved in Real Estate transactions and Syariah Estate Planning advice.

● Real Estate transactions include: drafting Sale and Purchase Agreement, transfer of property during lifetime and death, drafting tenancy agreement, reassignment or discharge of property.

● Syariah Estate Planning advice includes: advising on and drafting of Wasiat, preparation and execution of Hibah, understanding of Faraid.

● Member of the Selangor Bar Conveyancing Practice Committee.

Marcus Leong

● Associate in our Real Estate department

● Bachelor of Laws (Hons) from University of the West of England

● Called to the Bar of Malaya in 2018

● Master of Commercial Law in University of Malaya

● Conveyancing matters, drafting and preparing Sale and Purchase Agreements, Loan Documentation, Transfer of Properties

Ask Questions on Slido

Please scan this QR Code to access Q&A and polling platform for this talk.

Post the questions that you would like to ask.

Upvote/Like the questions you like. Most liked / popular questions will be discussed and answered by the speaker(s) during the Q&A session.

Or visit https://www.sli.do and enter #38191

Talk Points

● Introduction of the Gazettes issued.

● Real Property Gains Tax (“RPGT”) - the relief for residential sellers.

● Home Ownership Campaign (“HOC”) - its re-introduction and mechanics for stamp duty of transfer and loan.

11

Introduction of the Gazettes Issued.

BY SARAH KAMBALIPartner, Real Estate Practice Group 17 August 2020

Introduction of Gazettes.

● On 28 July 2020, the Gazettes for the PENJANA Short-Term Economic Recovery Plan (ERP) on Home Ownership Campaign (“HOC”) and Real Property Gains Tax (“RPGT”) were issued by the Government.

● These Gazettes have stated the terms and conditions as well as the mechanics of the tax reliefs for HOC and RPGT.

● Today, we shall dive into the Gazettes to understand further on the application.

13

Real Property Gains Tax

BY SARAH KAMBALIPartner, Real Estate Practice Group 17 August 2020

- The Relief for Residential Sellers

Real Property Gains Tax (“RPGT”)

● Real Property Gains Tax (“RPGT”) is an imposition of tax on chargeable gains for the disposal of real property on property owners or business owners.

● The Act the governs RPGT is the Real Property Gains Tax Act 1976.

● RPGT is one of the government’s tool to curb market speculation of buying and selling real estate property or shares of a real estate company.

● In our previous talk in July 2020, we had presented the tables of RPGT from previous years to the current 2020.

15

Real Property Gains Tax (“RPGT”)

RPGT Rates from 2019 onwards.

16

Gazette P.U.(A) 218/2020- RPGT

17

Key points of P.U. (A) 218/2020

18

- Citizens ONLY- 3 “residential” properties- 1.6.2020 - 31.12.2021

More than 3 Properties?- Vendor can choose which to

be exempted.- Choice is irrevocable.

CANNOT apply exemption if:-- disposer acquire property

through transfer of love and affection within 1.6.2020 - 31.12.2021.

Item 3, P.U.(A) 218/2020 Item 3(3), P.U.(A) 218/2020

Item 3(2)(b), P.U.(A) 218/2020

Residential Property

19

- house- condominium unit- apartment / flat

Includes:- SOHO- for dwelling house

Item 2, P.U.(A) 218/2020

Execution and Stamping Timeline

20

Sale and Purchase Agreement- execute: 1.6.2020 -

31.12.2021.- stamping: not later than

31.1.2022

No Sale and Purchase Agreement- executed: 1.6.2020 -

31.12.2021.- stamped: not later than

31.1.2022

Item 3(2)(c), P.U.(A) 218/2020

Approval of Federal/State Government

- Obtained: on / after 1.6.2020.

Conditional Contract

21

Item 4, P.U.(A) 218/2020

Sale and Purchase Agreement- execute: 1.6.2020 -

31.12.2021.- stamping: not later than

31.1.2022

Submission Return / Information RPGT

22

Item 5, P.U.(A) 218/2020➔ CKHT 1A➔ CKHT 3

◆ To include CF/CCC OR electric/water bil

◆ To fill in “P.U.(A) 218/2020”.

Do Purchaser’s Solicitors retain 3% Retention Sum?➔ Yes.

When to release Retention Sum?➔ CKHT 3 copy given.Section 13(6), (7) & 21B(5), RPGT Act

Section 21B(1), RPGT Act

Home Ownership Campaign

(“HOC”)BY MARCUS LEONGAssociate, Real Estate Practice Group 17 August 2020

- The Re-Introduction &

Mechanics.

Home Ownership Campaign (“HOC”)

24

● Current Stamp Duty Rates:

Consideration / Purchase Price Stamp Duty (% of Purchase Price)

RM1 - RM100,000 1%

RM100,001 - RM500,000 2%

RM500,001 - RM1,000,000 3%

More than RM1,000,000 4%

Gazette P.U.(A) 217/2020 - SPA & HOC

25

Key Elements of Gazette: 217/2020

● Residential Property under Home Ownership Campaign 2020/2021 (“HOC”).

● Sale and Purchase Agreement signed between 1.6.2020 - 31.5.2021

● Property is priced between RM300,000 to RM2.5 Million.

● The Property Developer grants at least 10% discount on the original Purchase Price of the property.

● The HOC transaction is between Individuals (Citizens of Malaysia) AND Property Developer (registered with the relevant body).

26

Relevant Body:-- REHDA- SHAREDA- SHEDA

Application of Stamp Duty Exemption -

Transfer● Full Exemption of stamp duty for transfer of property priced between RM300,000 to RM1 Million.

● Stamp Duty chargeable at 3% after RM1 Million to RM2.5 Million

● Certification HOC 2020/2021 by relevant bodies is to be submitted to Inland Revenue Board for the purpose to obtain the exemptions.

27

Relevant Body:-- REHDA- SHAREDA- SHEDA

Stamp Duty Exemption for P.U.(A) 217/2020

● Property at the Purchase Price of RM1,200,000

28

Consideration / Purchase Price Without Exemption With Exemption

RM1 - RM100,000 (1%) RM1,000 -

RM100,001 - RM500,000 (2%) RM8,000 -

RM500,001 - RM1,000,000 (3%) RM15,000 -

More than RM1,000,000 (4%) RM8,000 RM6,000 (3%)

Total RM32,000 RM6,000

Gazette P.U.(A) 216/2020- Loan & HOC

29

Key Elements of Gazette: 216/2020

● Loan Facility granted by list of financier in the Gazette [Item 2(1)(a) to (i)]

● Loan granted for the purchase of residential property under Home Ownership Campaign 2020/2021 (“HOC”).

● Property purchased priced between RM300,000 to RM2.5 Million.

● The Property Developer grants at least 10% discount on the original Purchase Price of the property.

● The Sale and Purchase Agreement signed between 1.6.2020 to 31.5.2021.

30

Application of Stamp Duty Exemption -

Loan● Full Exemption of stamp duty for loan granted to finance the purchase of property priced between RM300,000 to RM2.5 Million.

● Certification HOC 2020/2021 by relevant bodies is to be submitted to Inland Revenue Board for the purpose to obtain the exemptions.

31

Relevant Body:-- REHDA- SHAREDA- SHEDA

Questions?

Upcoming Talks

Date Topic Speakers

19 August 2020 (Wednesday)

How to Make a Pact in the Arena of Sports

Lesley Lim

26 August 2020 (Wednesday)

Understanding Performance Bonds Christine TohWong Sue Ann

Sign Up Now

Sign up for more MWKA Online Talks at

https://mahwengkwai.com/talks-signup/

Complimentary Consultation

Schedule a complimentary 30 minute video-consultation with our lawyers by filling up the form at

https://mahwengkwai.com/schedule-a-meeting/

Thank you!

Notice: This presentation does not constitute legal advice and its contents should not

be relied upon as such. The facts and circumstances of each and every case will differ

and therefore will require specific legal advice. Feel free to contact us for

complimentary legal consultation.

Gazettes of PENJANA Initiative: P.U.(A) 216/2020, 217/2020 & 218/2020

MWKA ONLINE TALKS

SpeakerSARAH KAMBALIPartner

SpeakerMARCUS LEONGAssociate

ModeratorPHUI KAR LINGPupil in Chambers

Mon 17 August 20203:00pm (GMT +8)

mwka.com/talks