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Real Property Gain Taxes and Real Property Company: Topic 6
Real Property Gain Taxes and Real Property Company: Topic 6
TOPIC 6
Ability to:
• Compute Real Property Gain Tax (RPGT) for
individual.
• Identify the situations for No Gain No Loss
• Compute the RPGT for disposal of shares of Real
Property Company (RPC)
RPC
WHAT IS REAL PROPERTY COMPANY
(RPC)?
• RPC – a controlled company (one having < 50 shareholders and which is controlled
by < 5 members) which owns real property or RPC shares or both where the defined
value of such assets is ≥ 75% of the value of the company’s total tangible asset (TTA)
• Defined value – market value of real properties +/or AP of shares in other RPC (if any)
• TTA = aggregate of defined value of real property or shares or both + value of other
tangible assets
• Other tangible assets – P&M, bank and cash, prepayments, investment in shares
(non RPC company) (not include goodwill & patents – IA)
WHAT IS REAL PROPERTY COMPANY
(RPC)?
• Computations - A company would be termed as RPC if:
• Sch 34A (1) - Acquisition of shares in RPC is deemed to be an acquisition of chargeable asset.
Hence, the disposal of such shares – disposal of chargeable asset; notwithstanding that at the
time of disposal of such shares, the relevant company is not regarded as RPC anymore (apply
to existing S/H upon disposal of its shares)
EXAMPLE 1
Cheers SdnBhd is a controlled company and owns
real property, the defined value of which is 65% of
its total tangible assets. The company acquired
additional real property on 15 September 2017. The
DV of the new acquisition together with the existing
real property has increased to 78% of its TTA.
Does XYZ SdnBhd a real property company for year of assessment 2016?
Answer:
AP of shares in ABC SdnBhd:
50,000/500,000 x RM800,000 (DV of ABC SdnBhd) = RM80,000