REAL PROPERTY

GAIN TAX
(RPGT)
LEARNING OBJECTIVES
• Introduction
• Chargeable Persons and Assets
• Chargeable Gains on Disposal of a Real Property
• Exemptions
• Transaction of No Gain No Loss
• Loss Relief

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Introduction
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 RPGT
Disposal OR (Mutually exclusive with
Chargeable Chargeable Chargeable income tax which is
Deemed
Person Assets Gains revenue gain:gain for
Disposal
property developer
company)
Chargeable Persons and Assets
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Chargeable Persons: every person whether or not resident in Malaysia for a year of assessment
shall be chargeable to RPGT in respect of chargeable gain on disposal of chargeable assets

Non-Resident Companies
✔ Chargeable to tax ✔ Manager, principal officer in
Malaysia, directors, secretary
✔ Directly or in the name of his
attorney, factor, agent, receiver or ✔ Liquidator of the company
manager in Malaysia
✔ Director (own >20% control)
Acquirer of chargeable asset may be
✔ Associates (in relation to a person)
assessed on the RPGT where:
• Husband and wife, parent,
✔ The consideration on the disposal of child, brother, sister and
a chargeable asset is another assets partner
✔ Failure by both parties to submit a • Trustee of a settlement(related
return to DG person or relative)
✔ Consideration = below market value • That person is interested in the
assets

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 Chargeable Assets

Chargeable assets include Real Property

❑ Land situated in Malaysia and any interest, option or other right in or over
❑ Real property such land
Land is to include:
❑ Shares acquired in exchange of a real ❑ Surface of the earth & all substances forming that surface
property under no gain no loss transfer* ❑ Earth below the surface & substance therein
❑ Shares in a real property company* ❑ Buildings on land & anything attached to land permanently fastened to any
❑ Transfer of a lease* thing attached to land on or below surface
❑ Standing timber, trees, crops and other vegetation growing on land
*excluded from the syllabus ❑ Land covered by water

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Disposal and Deemed Disposal of Chargeable
Asset

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Disposal
• sell, convey, transfer, assign, alienate
• By agreement or by force of law
Deemed disposal
• Subsequently transferred by the person to its
stock-in-trade

How to calculate chargeable gain:

Market Value MV
Less: Acquisition price of the asset (AP)
Chargeable Gains CG

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 Returns (Form CKHT)
Disposal of a chargeable asset
⮚ Within 60 days from the date of disposal make a CKHT tax return
⮚ Stating acquisition price, disposal price & gain or loss on disposal
⮚ Furnishing all information necessary to determine the acquisition price and disposal price
⮚ If use market value : submit written valuation of the asset by valuer

Deemed disposal of a chargeable asset

⮚ Chargeable asset acquired – transferred to its trading stock
⮚ Within 60 days after the transfer make a CKHT tax return
⮚ Giving particulars of asset transferred

RPGT to be withheld
⮚ Acquirer is required to withhold sum of money to be LOWER of:
⮚ Whole amount of the money consideration
⮚ 3% (resident)or 7% (not a citizen, not permanent resident, company
not incorporated in Malaysia)of the total value of the consideration
⮚ Within 60days submitted to IRB (with Form CKHT 2A)

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 Returns (Form CKHT) cont’

CKHT Tax Return

Chargeable Assets Disposer Acquirer
Real property Form CKHT 1A Form CKHT 2A

To include with the return the following:

⮚ Election for private residence exemption, if relevant; or
⮚ Form CKHT 3 issued by the diposer to the acquirer. The acquirer would not be required to withhold
3% or 7% of the total consideration or the whole money consideration, whichever is lower

Penalty for wrong information and non-compliance

⮚ Where a disposal of the chargeable asset is not subject to RPGT or is exempted : disposer serve
notification (Form CKHT 3) to the acquirer 60 days from disposal
⮚ An acquirer is not required to retain and remit and amount to the Director General if the notification in
the immediate preceding paragraph is served on the acquirer.
⮚ Where an acquirer failed to retain and remit the amount required under Section 21B due to
incorrect/wrong information provided by the disposer (10%)
 Date of Disposal and Acquisition

Where there is an agreement:

- Date of such agreement

Where there is no agreement (Date completion of the disposal of the asset) ,

which ever is earlier:
- Date asset disposed/transferred
- Date whole amount/value of the consideration for the transfer has been
received by the disposer

Date to coincide:
- Date of disposer of acquirer coincide with the date of disposal of that asset
by the disposer to that acquirer

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Mutually Exclusive

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Chargeable Gain on Disposal of a Real Property

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Disposal Price (-) Acquisition Price = Chargeable Gains
Disposal Price is the value of the consideration for the disposal of the
asset, LESS: Incidental costs:
✔ Fees, commission or remuneration fro
Permitted expenses/ Enhancement professional services (surveyor, valuer,
accountant, agent, or legal advisor)
cost
✔ Costs of transfer including stamp duty
✔ Expenditure wholly and
exclusively incurred after ✔ Advertising, reasonable cost for valuation
acquisition for: or ascertaining market value
• Enhancing/preserving the ✔ Any amount paid for GST (input tax)
value of asset (reflect in the ✔ No liable to register (GST Act
state or nature of assets at the 2014)
time of disposal) ✔ Registered but not entitled to claim
• Establishing preserving or input tax
defending his title or right ✔ Input tax subject to adjustment:
over the asset include total input tax made in YA
of the disposal or YA in which
period of adjustment relates to asset
end (which ever earlier)

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Consideration Permitted expenses /
(-) (-) Incidental cost = Disposal Price
received Enhancement cost
 Acquisition Price
Consideration given (money / money’s worth) wholly and exclusively for the acquisition of the
asset

Add: incidental cost

- Fees, commission or remuneration for professional services (surveyor, valuer, accountant,
agent, or legal advisor)
- Costs of transfer including stamp duty
- Advertising to find a seller
- Any amount paid for GST (input tax)
- No liable to register (GST Act 2014)
- Registered but not entitled to claim input tax
- Input tax subject to adjustment: include total input tax made in YA of the disposal or YA
in which period of adjustment relates to asset end (which ever earlier)

Less: Recoveries (any sum received)

- By way of compensation for damages to the asset
- Under an insurance policy
- Forfeited as a disposal made in connection with an intended transfer of the asset

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 Consideration
(+) Incidental cost (-) Recoveries = Acquisition Price
transferred/ paid
 Others Acquisition and disposal generally
⮚ Every method, scheme or arrangement
⮚ Ownership of an asset is transferred from one person to another
⮚ Constitute an acquisition (transferee) and disposal (transferor)

Acquisition by individual before 1 January 2013

⮚ Acquisition cost of a real property acquired before 1 Jan 2013, shall be replace by the
market value of the real property as at 1 Jan 2013

Excluded expenditure
⮚ Any outgoing and expenses
• normally allowable as a deduction in computing any adjusted income
• Have been allowable for income tax purposes (either as exemption or insufficiency of gross income)
• Incurred on assets : been held or use as part of fixed capital of a business
⮚ Any amount paid for GST (input tax)
• No liable to register (GST Act 2014)
• Registered but not entitled to claim input tax
⮚ any amount of output tax paid or to be paid which is to be borne by the disposer (he is registered or liable
to register GST)
⮚ Input tax subject to adjustment: include total input tax made in YA of the disposal or YA in which period of
adjustment relates to asset end (which ever earlier)

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 RPGT rate
# Individual and executors # Companies All others :
(non-citizen and non-resident) incorporated in Permanent citizen/
Companies (not incorporated Malaysia; Trustee Resident Individual
in Malaysia) of a Trust
(%) (%) (%)
Disposal within 3 years after 30 30 30
acquisition date
Disposal in the fourth year 30 20 20
after the acquisition date
Disposal in the fifth year after 30 15 15
the acquisition date
Disposal in the sixth year after 10 10 5
the acquisition date

# this is NOT examinable in FTX

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Exemptions
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 Schedule 4 exemptions (Which ever is greater)

If partly disposed:
Fully disposed:
- Area disposed/Total area of chargeable
RM10,000
asset X RM10,000
Or
Or
10% from Chargeable gain
10% from chargeable gain

Example:
Philip own 10 acres of land and sold 2 acres of land resulting RM
with a chargeable gain of RM180,000, therefore the Schedule
4 exemption is: Chargeable gain 180,000
1. 2/10 X RM10,000 = RM2,000 (-) Scgedule 4 exemption (18,000)
2. 10% of RM180,000 (chargeable gain) = RM18,000 Gain subject to RPGT 162,000
# Schedule 4 exemption is RM18,000
Schedule 3 exemptions (Private Residence: building or part of a building in Malaysia
owned by an individual and occupied or certified fit for occupation as a place of
residence)

Before 1 October 2005 From 1 October 2005

- Only given to citizen and permanent resident of Malaysia. - Only given to citizen and permanent
- Once in a lifetime for husband and wife. resident of Malaysia.
- If he is not citizen or permanent resident even his wife is a - Both husband and wife entitle for 1
citizen or permanent resident = not entitle to exemption exemption each

Transitional provision: To qualify for exemption:

Before 1 Oct 2005 Transitional Provision 1. Individual must elect for such exemption
Husband elected wife’s 1. Husband eligible for 2. The election must be in writing and is
property for exemption exemption on his own irrevocable
property 3. No further exemption once the election is
2. No further exemption for made
wife. 4. No exemption has been elected by that
Husband elected on co- No further exemption to individual under the Land Speculation Act
owned property husband nor wife 1974
 Other Exemptions

Minister exempts any individual

1. Individual Citizen of Malaysia
2. Payment of tax on chargeable gain accruing on the disposal of a chargeable asset (other than shares)
3. On or after 1 Jan 2019
4. On the following condition:
• The disposal made in the sixth year after the date of acquisition of such chargeable asset or any year thereafter
• Consideration for the disposal is not more than RM200,000
Transaction of no gain no loss
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Paragraph 3 of Schedule 2: cases where disposal price shall be deemed to
be equal to the acquisition price

Asset of a deceased person: through his executor or legatee under a will or intestacy

- Between spouse (asset owned by a citizen husband or wife)

- Transfer to a company controlled by the transferor and connected person (consideration substantially in
shares :>75%)

Transfer to/from nominee/trustee

Transfer by way of security

Gifts made to Government, a state Government, a local authority or a charity exempt from income tax

Compulsory acquisition

Disposal to Bank under scheme of financing where that person is financed by such bank in accordance with
the Syariah
 Paragraph 12 of Schedule 2: disposal of an asset by way of gift

Let say, wife sell to others on

1.2.2017 at RM600,000,
The donor: deemed to Computation of chargeable gain to
The recipient: deemed to
have received no gains Wife:
acquire the asset at
and suffer no loss (if deemed acquisition price Date acquired: 14.3.2015
citizen)
- paid by donor Date disposal : 1.2.2017
- No gain no loss
- (+) permitted expenses RM
situation on the diaposal
incurred by donor Disposal price 600,000
# let say husband
acquired: # let say wife received: (-) Acquisition (100,000)
- Date : 1.4.2010 - Date : 14.3.2015 Chargeable gain 500,000
- Cost : RM100,000 - MV : RM500,000 (-) exemption (50,000)
Gain (RPGT) 450,000
RPGT payable (30%) 135,000
Loss relief
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 Loss relief : disposal price less than the acquisition price

Loss that shall not be allowed for set off suffered from
the following disposal of chargeable asset :
1. Made before 7 Nov 1975
To be set off against chargeable gain on disposal of
2. That is exempted from RPGT
another chargeable asset in the same year assessment
3. Not included in a CKHT return made under Section
13(1) or (2)
4. Of a real property company (RPC) share
Summary
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 How to calculate Chargeable Gain
DISPOSAL PRICE (DP)
Consideration received XX Money or money’s worth
Less : Permitted expenses (XX) Enhancement cost, legal fees for defending title
Incidental cost (XX) Legal fees, stamp duty, advertisement, prof fees, commission, valuation fees
during disposal
DP
LESS : ACQUISITION PRICE (AP)
Consideration paid XX Money or money’s worth
Add: Incidental cost XX Legal fees, stamp duty, advertisement, prof fees, commission, valuation fees
during acquisition
Less: Recoveries (XX) Compensation: damage of real property, for insurance claim on the damges and
deposit forfeited from intended buyer
CHARGEABLE GAIN (CG) (AP)
CG
Less: Schedule 4 exemption (XX) RM10,000 or 10% of CG (WI Hihger)
XXX
Less: Allowable loss (XX) RPGT loss on disposal during the current YA and loss carried forward
GAINS SUBJECT TO RPGT XXX X RPGT%

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Thank You

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