NAME MATRIC

TOPIC 8 ABANG AMINUDDIN HAZIQ BIN

NUMBER

263758
ABANG ANDAM

REAL PROPERTY SHRELA PRABAGARAN 264452

SUVITRA MURUGAYAH 264514

GAIN TAX NUR ARINA BINTI AZLAN 265467

NUR MAISARAH BINTI OMAR 265674

GROUP B (5) SARMMILA VELUSAMY 272367

PRESENTED FOR:
DR IDAWATI BINTI IBRAHIM
8.0 RPGT
Real property gains tax
Real Property - building on land and anything
attached to land or permanently
fastened to anything attached to
“Real Property ” includes any landed land (whether on or below the
surface);
property in Malaysia.
- standing timber, trees, crops
and other vegetation growing on
Any interest, option or right in or over such land; and
land.
- land covered by water.

Section 2 of the RPGTA defines land as:-

 History
- suspended temporarily in April 2007 to December 2009 and reintroduced in 2010. In 2014,
the RPGT was increased for the fifth straight year since 2009. Fast forward to 2019, the
RPGT rates have been revised.
- no capital gains tax until the introduction of Land Speculation Tax Act. 1974 on 6th
December 1973.
- This tax was introduced to curb property speculation and the soaring prices of immovable
property especially residential houses during the years 1973 and 1974.
- The Land speculation Tax was replaced on 6th November 1975 by the introduction of Real
Property Gains Tax Act, which is effective from 7th November 1975. By Section 3 (1) of the
Act, a tax called Real Property Gains Tax is charged onchargeable gains accruing on the
disposal of any real property.
 8 .1 N T
ES S M E
A SS
& N
E C T IO
C OL L
RPGT
 Explanation
Tax levied by the (IRB) on
Property taxation when chargeable gains derived from the
real property is disposed. disposal of real property and
disposal of shares in real property
company (RPC)

To provide imposition,
The first legislation to tax gains
assessment and collection of tax
from the disposal of real property
on gain deriving from the disposal
was introduced via Land
of real property.
Speculation Tax Act (LSTA) (1974)

Year of assessment –
calendar year
 8.2ABLE
RG E
CHA NS &
GAI ABLE
ALL OW
SE S
LOS RPGT
CHARGEABLE GAINS

Holding perio
d is
Disposal Pri Tax is impose m easu r ed f r o m
ce > d at the
scale rates bas date of acquis
Acquisition ed on ition to
Price the holding pe the disposal d
riod. ate.

By companies NCE – trade

, non -
corporate enti associations,
ties
(NCE) and cooperative, u
nit
individuals. trust.
ALLOWABLE LOSSES

Qualify for re Tax loss relief

lief as a set is
Acquisition off against ch given a specia
Price > argeable l
Disposal Pri gain and could
ce be carried treatment.
forward indef
initely.

F r o m 1 st Jan u Differentiated
ar y in two
2010, there is categories:- w
a ithin 5
difference ass y e a r s a n d a f te
essing r5
the disposal. y ear s.
8.2.1
Acquisition Price Losses
Acquisition price of an asset is the purchase consideration plus any incidental costs
(or permitted) which include fees, commission or remuneration paid for the
professional services of any surveyor, valuer, accountant, agent and architect or legal
adviser, costs of transfer and other incidental costs. Costs of transfer can be stamp
duty whereas other incidental costs is advertising cost to find seller.

Definition
 Case Example: Pilkington v Wood (1953),

● The plaintiff purchased a house in Hampfire and his attorney

negligently failed to note that the house had a faulty title, resulting in
a breach of contract.
● The solicitor was held responsible for the sum that the house's value
had been reduced as a result of the bad title.
● The plaintiff soon found employment in Lancashire and suffered
further losses because the house was difficult to sell.

Court Held: The attorney, on the other hand, was not responsible for the
latter loss because he had no way of knowing that the complainant would
move soon.
 8.2.2
Disposal Price
Derivation
 Definition
*an asset is the amount of sale consideration - worth less the amount of any
expenditure - incurred on the asset at any time after its acquisition - purpose of
enhancing or preserving the value of the asset.

*The amount of any expenditure wholly and exclusively incurred on the asset at any
time after its acquisition in establishing,

* preserving or defending the owner’s title to or right over the asset and the incidental
costs to the person of making the disposal of the chargeable asset.
 Disposal Price
derivation
* must be for valuable consideration.

*The disposal or acquisition value of any property will be taken to be its ‘market
value’ - not the actual consideration paid.

‘Market Value’ is defined as the price the asset would fetch if it were sold in a
transaction between independent persons dealing at arm’s length at the time of
the disposal.(Para 11 Sch 2, RPGT 1976)
 Case Example: KSB vs DGIR

1. Whether the SCIT was correct in law in holding that the Defendant is correct in setting the market value
for the said Property based on Jabatan Penilaian dan Perkhidmatan Harta Tanah’s Valuation Report on
10.05.2015 (“JPPH’s Valuation Report”) pursuant to Paragraph 11(2)(c) of Schedule 2 of the Real Property
Gains Tax Act 1976 (“RPGTA 1976”) and s.25(2)(c) and (d) of the RPGTA 1976.

2. If the SCIT's conclusion that the Appellant engaged in tax evasion under s.25(2) of the RPGTA by
purchasing and disposing of the said Property at the same price of RM398,000.00, enabling the Respondent to
ignore the RM398,000.00 disposal price and value the disposal of the said Property at a market value of
RM600,000.00 pursuant to paragraphs 9(e), 11(1) and 11(2)(c) of Schedule 2 of the RPGTA, is right in law.
 Facts of case
On 28.6.2011, The acquisition price was RM398,000.00.

On 18.9.2014, the disposal price was RM398,000.00.

Based on the JPPH’s Valuation Report dated 10.7.2015, the market value of the said Property on 18.9.2014
was RM600,000.00.

The Respondent issued a notice of assessment dated 13.08.2015, for the amount of RM39,307.60, based on
chargeable gains of RM195,538.00, from the disposal of the Property.

No evidence given by the Appellant’s witness to justify that the market value of the Property on 18.9.2014
was RM398,000.00.

Based on terms of Mr. X’s and Ms H’s divorce property settlement (as stated in the decree nisi by the High
Court), Mr. X shall transfer the said property to Ms H with a market value between RM450,000.00 to
 Court Held
The property was transferred in accordance with the divorce
agreement between the husband and wife, which stipulated that
the property to be transferred to the wife would be worth between
RM450,000.00 and RM700,000.00.
8.2.3 & 8.2.4
Transaction
s at
market valu
e and
Market valu
e
 Definition
Transaction at Market Value
The Acquisition or disposal of an asset by a
person shall be deemed to be for a
consideration equal to the market value of
asset.
Market Value
The market value of an asset which is
acquired or disposed of is the price which it
would fetch if it were sold in a transaction
between independant persons dealing at
arm’s length at the time of the acquisition or
disposal.
 Case example: DGIR v LCW (1975)

★ 1953: TP acquired a piece of land & treated as fixed asset

★ TP initial intention is construction of flats for the purpose of
Fact:
rent as investment
★ 1967: TP change his intention from renting out to selling them
★ 1967: Land was transfer from the fixed asset to trading
account
 ★ Whether there is a trading in land that the respondent has
bought for $20,000. This was surrendered to the Government
by deed dated 21 May 1958 in exchange for another piece of
land now comprising Sandakan Town Lease No.607 and 608.

Issue:

★ Whether the land transfer be taken as cost or market value

when the land was transferred from the fixed asset account to
the trading account of the S apartment Building at $480,000.
 ★ Gains from trading of land be subjected to tax as business income. The
Special Commissioners has maintained his evidence was right to find as a
fact that the respondent was carrying on a concern in the nature of trade
when he sold 19 out of 24 flats. Therefore, the income was properly
assessable to tax under sec 4 (a) of the Income Tax Act 1967.

Held:

★ Land transfer be taken as market value through the Chief Justice’s

conclusion that the value to be put on this land should be $480,000 which
is their market value in 1963 not the $20,000 the price paid for it by the
taxpayer when he bought it in 1953. So, the respondent needs to pay the
taxed costs of this appeal and the appellant's deposit needs to be returned
to him.
 8.2.5
Disposal and
A c q u is it i o n D a t e s
 Disposal and Acquisiton Dates
Para 15 Schedule 2 RPGT Act
1976:
●Date of disposal or acquisition
is the date of agreement if there
is a transfer agreement else the
date is the date of completion of
the disposal.
Date of completion
●Date on which the ownership
of the asset disposed of its
transferred by the disposer
●Date on which the whole of the
amount or value of the
consideration for the transfer has
been received by the disposer
(whichever is earlier)
 Disposal and Acquisiton Dates

Conditional
contracts (P Disposal of d
Schedule 2, R ara 16 eceased perso
PGT Act 1976 (Para 15B Sc n’s asset
-The date of ) hedule 2, RP
the contract w GT Act
an d as made 1 97 6 )
-The date w -The date of d
hen the con eath of the de
dition is ceased
satisfied
 OBD V DGIR
FACTS

The taxpayer purchased two shop lots which were

paid out in full on 18 September 1984

Sold the shop lots on 13 August 1985, the same day on

which all the rights, title, interests and liabilities in the shop
lots were transferred to the taxpayer by way of a deed of
assignment.

The taxpayer was assessed to real property gains tax and

the IRB took 18 September 1984 as the acquisition date of
the property.
 OBD V DGIR

HELD

The ownership of property was effectively

transferred when the deed of assignment was
executed. The date of acquisition of the shop lots was
13 August 1985.
 Puan tso v kphdn
FACTS

The taxpayer purchased land from the vendors in her

capacity as trustee pursuant to an agreement dated 16
November 1973.

The purchase agreement provided for the purchase price

to be paid in instalments. The taxpayer sold the land
before the last instalment was paid and before the
property was ever vested in her.

The purchaser paid the final instalment to the vendors

on behalf of the taxpayer, and the vendors transferred
the property directly to the purchaser on 1 December
1981.
 Puan tso v kphdn

HELD

The acquisition date was the date when the

ownership of the “right in or over” land was deemed
to be transferred from the vendors to the taxpayer.
 Yong MF v kphdn
FACTS

The taxpayer owned a piece of land which was acquired on 7 November

1970. On 30 December 1993, the taxpayer entered into a joint-venture
agreement with a developer to develop the land into a residential housing
estate in return for 6 units of houses. Subsequently, the taxpayer disposed
of the houses in 1995 and 1996.

The market value of the land on 30 December 1993 was RM 343,000.

The taxpayer contended that he was not liable to RPGT on the sale of
houses in 1995 and 1996 as the land concerned was acquired in 1970 an
such, the disposal of houses took place more than six years after the
purchase. Further, the taxpayer sold the houses at the developer’s prices
and therefore contended that there was no gain.
 Yong mf v kphdn

HELD

The acquisition date of the houses was therefore 30

December 1993. The disposal of the houses was in
1995 and 1996.
 8.2.6
D e d u c t i o n s A l lo w a b le
On ly On e
 REAL PROPERTY GAINS TAX ACT 1976 SCHEDULE 2
CHARGEABLE GAINS AND ALLOWABLE LOSSES
(Para.32)

The RPGT Act 1976 allows certain

“No amount given by way of a
incidental costs of the acquisition of
deduction shall be allowable on the
the property and disposal of the
disposal of an asset by any person in a
property to be taken into account,
computation under this Schedule
such as legal fees for the acquisition
more than once.”
and disposal of the property and
estate agency fees.
8.3
Chargeable Person
 Definition
Section 6,
RPGT 1976

Chargeable Person is defined as “a person chargeable with tax”.

Person includes a company, a partnership, a body of persons and a
corporate sole.
 Categories of Chargeable Person

Ruler and
Body of Persons Incapacitated Ruling Chiefs
and Partnership Persons

Companies
Co-
proprietorship Non-resident
Persons
 Categories of Chargeable Person

Trustees Joint and

Hindu Joint
Family Several
Liability of
Trustees and
Executors
Director’s
Executor Liability
 8.4
RPGT TAX
RATE
 8.5
RPGT
EXEMPTIONS
 PRIVATE
RESIDENCE

Malaysian citizen or Under

Disposal of one PENJANA.Disposal
permanent resident who
residential property limited to the 3 units
sells property in
once in a lifetime of residential property
Malaysia
for each disposer

Schedule 4
Exemption

Exemption on the 10% of Applicable for all individuals Companies, LLPs, trust
the chargeable gain or (Malaysia citizen, non- and others are not
Rm10,000 whichever is resident, non-citizen and non-
eligible for this
higher, on the disposal of a permanent residents
individuals are eligible) exemption benefit
residential property
 EXEMPTION UNDER PENJANA

Conditions to fulfilled to get exemptions under PENJANA stimulate

1. The individual must be a citizen of Malaysia who is the sole or joint owner of the property being disposed.

2. The property disposed must be a residential property

3. The residential property must be disposed on or after 1 June 2020 until 31 December 2021 by a way of a
transfer between spouses or by way of gift between spouses, parent and child or grandparent and grandchildren
where the donor must be a citizen in Malaysia.
 Transfer as Gifts
● Transfer between family
members
● Between husband and wife,
parent and child, grandparent
and grandchild
● Exemptions not applicable for
transfer between siblings
Disposal Low cost house
● There is no more exemption
for the disposal made after ● Earlier 2021, the government once
5 years from the date of again revised RPGT rates, giving tax
acquisition of the property
exemptions to low-cost and budget
● The rate have been reduced
as mention in Schedule 5 of homes below RM200,000.
RPGT tax rate
 Kenny Heights Development Sdn Bhd v Ketua Pengarah Hasil Dalam
Negeri (KPHDN)

1 3
2 agreements for the sale of land Preconditions had been satisfied by
by Kenny Heights Development 27 April 2007. The notices both
Sdn. Bhd to Mycom Bhd, and dated 31 December 2008 were
Olympia Industries were date 14 issued in respect of the disposal of
August 2000 lands

Decision
● Allowing the taxpayer’s appeal since the
2 disposal date was 27 April 2007, the taxpayer
was entitled to the exemption because
Subject to “preconditions” which effective on 1 April 2007, the Government
included obtaining necessary approvals has exempted all persons from the provisions
by the Securities Commission and of the RPGT on assets disposed after 31
various other approvals from the March 2007. All disposals occurring from 1
relevant authorities April 2007 will be exempted from the real
property gains tax.
 Hamdan Abdul Hamid v Ketua Pengarah Hasil Dalam Negeri
Before 1 January 1970:Singaporean
citizen, had acquired a property in
Johor
On 2 April 1997:Disposed a share in
the property to his daughter on
consideration of love and affection
Whether the taxpayer liable to
be taxed under Part 3
Schedule 5 of RPGT or is
exempted
Court of Appeal allowed the tax
payer’s appeal. The disposal of
property by way of gift from father
(who is a non-resident) to his daughter
is exempt from tax under the
exemptions of gifts
The disposal was made within five years
after the date of acquisition of the asset
THANK
YOU