Topic 6 Rpgt

8/17/2019 Topic 6 Rpgt

1/41

RealPropertyGains Tax

(RPGT)


2/41

Introduction Real property gains tax (RPGT) imposes tax

on the disposal of real properties held forlong term investment.

RPGT is the limited form of capital gains taxused in Malaysia and is governed by the RealProperty Gains Tax Act !"#.

RPGT is imposed on territorial concept.

$ncome tax vs RPGT % mutually exclusive&hereby if a transaction is sub'ect to incometax RPGT &ill not apply


3/41

Real property ec * de+ned real property as any land

situated in Malaysia and any interestoption or right in or over such land.

,and is further de+ned to include-. The surface of the earth and all substances forming

that surface.

*. The earth belo& the surface and substances therein.

. /uildings on land and anything attached to land or

permanently fastened to any thing attached to land.0. tanding timber trees crops and other vegetation

gro&ing on land.

1. ,and covered by &ater.


4/41

Real property The property must be in Malaysia

territory.

A foreign property &ill not be sub'ect toRPGT.


5/41

Chargeable Persons (s6)

2very person &hether resident or non%resident in Malaysia is chargeable in respect

of any chargeable gain he3she has made onthe disposal of a chargeable asset.

Person includes individual companypartnerships incapacitated persons non%residents Rulers 4 Ruling 5hiefs 6indu

'oint family executors and trustees (ch RPGT)


6/41

Acquisition Price 5omponents of ac7uisition price-

. 5onsideration paid &holly and exclusively for theac7uisition of real property and

*. $ncidental cost incurred on the ac7uisition of realproperty.

Incidental cost includes stamp duty legal feestax agents fees remuneration paid to land surveyoror valuer for land valuation purposes and advertisingcost for see8ing a seller of re7uired property.

Legal ees on the loan agree!ent to +nance theac7uisition of real property is not an incidental cost.


7/41

Interest Cost As Incidental

Cost"#e# $%$%&'$' interest expense paid

on loan used to ac7uire the property(from a property developer on a &or8%in

progress basis) I *T part ofincidental cost of purchase.

$t does not form part of the componentof ac7uisition price of the real property.


8/41

Capital Receipts +ro! RealProperty

The ac7uisition price &ould be reduceddue to the follo&ing capital receipts-

. 5ompensation received for any 8ind ofdamages.

*. $nsurance recoveries for loss ordamages.

. 9eposit forfeited in connection &ithaborted disposal of real property.


9/41

$llustration A bungalo& &as ac7uired for a consideration of RM1::::.

The full sum &as paid on :.*.*::!. There &as no &rittenagreement for the purchase of the bungalo&. ;ther costsincurred are as follo&s-

RM

tamp duty on transfer 1::

5ost of extension to bungalo& 1::::

$nterest on mortgage loan #*:::

$n


10/41

$llustration % Ans&er

The computation of ac7uisition price for the

bungalo& &ouldbe as follo&s-

RM RM

5onsideration paid 1::::

tamp duty on transfer 1::

1 1::

,ess- 5ompensation received :#::

$nsurance recoveries *::

9eposit forfeited ::::

(1?::)

Ac7uisition price :"::


11/41

,isposal Price $t is a statutory de+ned concept &hich

comprises consideration received for thedisposal of real property.

The consideration received &ill be reduced by

the follo&ing components-. 5apital expenditure for the enhancement of

the real property.

*. ,egal fees in establishing preserving ordefending the title of the land.

. $ncidental cost of disposal of real property (i.e.bro8erage fees valuation fees legal fees andadvertisement cost to see8 a buyer of theproperty)


12/41

$llustration *

/ased on illustration the bungalo& &as sold for

RM1:::::. The consideration &as paid to him on.#.*:.

6e incurred the follo&ing expenditure in connection&ith the sale- RM

@aluation fee #"::

5ost of advertisement ::

/ro8erage fees *1::,egal fees for defending the title 0::

5alculate the disposal price of the bungalo&.


13/41

$llustration * The disposal price &ould be as follo&s-

R- R- R-

5onsideration received 1:::::

,ess- Permitted expenses

5ost of ext ofbungalo&

1::::

,egal fees titledefending

0:: 10::

,ess- $ncidental costs of

disposal

@aluation fees #"::

/ro8erage fees *1::

5ost of advertisement :: *:1:: ("0#::)

0*10::


14/41

$llustration * The ac7uirer is re7uired to &ithholdeither the &hole amount of cash or *of the total value of consideration

&hichever is lo&erBRemit the amount to $R/ &ithin #: daysB

$f not penalty of : &ill be imposed.

Refer to 5ontoh 0 Garis Panduan ,69C


15/41

,isposal Price ,ee!ed At

-ar.et /alue 5ircumstances &here disposal price is deemed at

mar8et value- A bargain not at armDs length or gift

A disposal of real property for a consideration thatcannot be valued

A disposal of real property in connection &ith loss ofemployment or gratuity payment

Transfer of real property for satisfaction of debt

,ump sum disposal of real property and other assets

$n circumstances &here anti avoidance under section*1(*) applies

$f M@ is higher


16/41

,isposal ,ate 0

Acquisition ,ate The disposal date of a seller &ould be

the ac7uisition date to the purchaser.

The disposal date &ill vary accordingly&ith the existence of a &rittenagreement.


17/41


18/41

Chargeable Gain RPGT is payable on chargeable gain

&hich is the di>erent bet&een thedisposal price and the ac7uisition price

of a real property. The RPGT rate applicable varies

bet&een the holding periods of the realproperty.


19/41

Rate o RPGT ($1%$'%213

4$%4%&''1)


20/41

PR$;R T; MAR56 *::"

Gains arising from disposal of any interestoption or other right in or over chargeable

assets &ould be sub'ected to RPGT E5hargeable assetsF properties such as land

building or shares in a real property company(RP5)

Rate of tax ranges from nil to : based on

the holding period of the chargeable assets RPGT return is re7uired to be furnished to $R/

&ithin one month of the date of disposal


21/41

PR$;R T; MAR56 *::" (5ont.)

=or individual no RPGT is imposed on the gain ondisposal if the holding period is more than 1 years. The individual is also eligible to claim an exemptionof RM1::: or : of the gain &hichever is greater.

,oss on disposal could be carried for&ard as a taxrelief against any tax assessed on gain arising fromdisposal of chargeable assets in the subse7uent HAuntil fully utiliIed.

Tax relief J allo&able loss K applicable rate of RPGT

The ac7uirer (or the la&yer) may retain the &holeamount of money received or 1 &hichever islesser and remit to $R/.


22/41


23/41

APR$, *::" 9252M/2R *::!

The Minister exempts all persons fromthe provisions of the RPGT Act !"# in

respect of disposal of chargeable assets. all disposal of landed properties and

RP5 shares are exempted from RPGT

Prior year loss cannot be set%o> during

these periods.


24/41

Rate o RPGT (5#e# $%$%&'$')

,IP*AL RAT *+ TA7 * ,IP*R

5ompany $ndividual $ndividual *

Lithin * years 1 1 1$n the rd year 1 1 1

$n the 0th year 1 1 1


2xceeding 1th year : : :

Note: 1- citizen & permanent resident (PR) 2 – non citizen & not PR


25/41

L$T6 2==25T =R;M


26/41

"IT8 ++CT +R*- $ 9A &'$'(cont#)

Tax relief b3f from disposal made prior to April *::" isallo&ed to be utiliIed for deduction from tax assessedfrom disposals made after 9ecember *::!.

The ac7uirer is re7uired to &ithhold either the &hole

amount of money received or * of the total value ofthe consideration &hichever is lo&er and remit the sumto $R/ &ithin #: days from the date of disposal. $f theac7uirer fails to do so a penalty e7ual to : of thatsum &ill be imposed.

The interest paid to +nance the ac7uisition of asset &ill

no longer be regarded as an incidental cost to theac7uisition price of the asset.

Taxpayers &ill be allo&ed to +le the RPGT returnselectronically.


27/41

Rate o RPGT (5#e#

$%$%&'$&),IP*AL RAT *+ TA7 * ,IP*R


Lithin * years : : :

$n the rd year 1 1 1





28/41

Rate o RPGT

(5#e# $%$%&'$4 and on5ards),IP*AL RAT *+ TA7 * ,IP*R


Lithin * years 1 1 1

$n the rd year : : :

$n the 0th year : : :

$n the 1th year : : :



29/41

5hange s in RPGT rates

Type of Disposal Company Person other thancompany

Company /Non-citizen or

non-PR

L2= st


30/41

xe!ption to indi:iduals(sch ; exe!ption)

$ndividual disposing real property &ould begiven an exemption under ch 0 i.e $'< o thechargeable gain or R-$'=''' (5hiche:eris higher) e>ecti:e ro! $%$%&'$'#

ch 0 exemption is available to any individual(Malaysian citiIens as &ell as foreigners) &hodispose of the &hole unit of real property.

Part disposals of a real property by an individual&ill not be granted ch 0 exemption.

The exemption does not apply to a partnershipor a company.

The amount exempted is deducted against thechargeable gain.


31/41

$llustration ay chargeable gain is RM*":: 4 disposal made &ithin *years after the ac7uisition date by an individual taxpayer in*:.

RM

5hargeable gain *"::

,ess- ch 0 2xemption (the higher of: or RM::::)

(*":)

:

Rate of RPGT (&ithin * years) 1

RPGT payable ##!!.1

:


32/41

$llustration 0 ay chargeable gain is RM*":: 4 disposal made &ithin *years after the ac7uisition date by an individual taxpayer in*::!.

RM


,ess- ch 0 2xemption (the higher of: or RM1:::)

(*":)

:

Rate of RPGT (&ithin * years) :

RPGT payable Cil


33/41

$llustration 1

ay chargeable gain is RM*":: 4 disposal made &ithin *years after the ac7uisition date by an individual taxpayer in*:: (formula is applied).

RM



(*":)

:

Rate of RPGT :

RPGT payable 11#"


34/41

$llustration 1

ay chargeable gain is RM*":: 4 disposal made &ithin *years after the ac7uisition date by an individual taxpayer in*:: (formula is applied).

RM



(*":)

:

Rate of RPGT :

RPGT payable 11#"


35/41

$llustration 1 (calculation) Refer to Garis Panduan ,69C

5hargeable gain :

Nsing formula-

2xempted chargeable gain J (A3/)x5

O(: x :) (: x 1) J A

(: x :) J /

: J 5

!*""

Taxable gain (.: !*"") ?11"

RPGT (?11" x :) ?=?61

Nsing 2>ective rate (: x 1) ?=?61


36/41

Allo5able loss

9isposal price Q Ac7uisition price Although there is no RPGT payable nevertheless

a RPGT tax return is re7uired from both disposeras in the case of a chargeable gain.

ubmission of RPGT tax return need to be made

&ithin one() month of the disposal as in thecase of a chargeable gain.

L.e.f 33*:: submission &ithin #: days (*months).

Penalty of : on the tax payable

This is to ensure the loss relie can be carriedor5ard to be set o> against future RPGTpayable.


37/41

Loss Relie ,oss relief J The allo&able loss &ill be

multiplied by the RPGT rate

This loss relief is given by &ay of adeduction against the total RPGT taxassessed for the HA in &hich thedisposal occurred.

$f there is no such RPGT tax payable forthat year it &ill be carried for&ard to

set o> against future RPGT payable.


38/41

;ther considerationConsiderati

on recei:ed

xplanation

Gift Gift of real property &ould be treated as a disposalof real property at mar8et value.Co gain no loss transaction applies to the transferof real property as gift among parent and childgrandparent and grandchild husband and &ife.

9onor The donor &ould not be liable to any RPGT sincethe disposal is deemed to be a no gain and no losstransactions.

/ene+ciary 9eemed to have ac7uired the real property at theAP any permitted expenses incurred by thedonor on the real property.

Co gain or no loss transaction only applies in the event the transfer of gift too8 place &ithin 1years after the date of ac7uisition of real property by the donor.

de+ned to mean capital expenditure for enhancement of the real property and also legal feesin establishing preserving or defending the title of the real property.


39/41

Pri:ate Residence xe!ption

RPGT exemption on disposal of * residentialproperty (once in a life time)

The follo&ing conditions must be ful+lled toen'oy the private residence exemption-

. The individual must be a citiIen3 permanentresident of Malaysia.

*. The real property must be a residential propertyor part of the building used for residence.

. The residential building is occupied3 rented3 +t foroccupation.

0. The disposer had not elected for the exemptionprior to this as the exemption is only availableonce in the life time and must be exercisedduring the submission of 5S6T return.


40/41

Transer bet5een

Co!panies (chedule & para $1) The transfer of property bet&een companies

&ill be treated as no gain no loss if-

. Prior approval of 9G is re7uired

*. Asset is transferred for greater eciency. 5onsideration is &holly of shares or

substantially for shares U"1

0. The transferee company is resident inMalaysia or

1. Asset is transferred in any scheme ofreorganisation reconstruction oramalgamation.


41/41

Transer bet5een

Co!panies (chedule & para $1) The exemption may be &ithdra&n if

&ithin three years- The purpose of transfer &as not as

provided for in the exemption. The transferee company ceases to be in

the same group.

The transferee company ceases to be

resident in Malaysia.

Topic 6 Rpgt

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