Q.
a) The Stamp Duty Act 1949 provides the imposition of duty or tax according to the value of the property from every transaction of property. Explain what a stamp duty is and clarify the two types of stamp duty including the respective instruments related to both type of duty. (15 marks)
b) The date for determining the market value of any property being transferred, settled or gifted is clearly stipulated under Section 12A of the Stamp Duty Act 1949. Explain. (10 marks)
(25 marks, 2012 Q3)
A.
a) See earlier post on Stamp Duty 1 for simplified versions of Stamp Duty from JPPH Website.
Explain what a Stamp Duty is - A Stamp Duty is imposed when there is a transfer of real property.
As provided for under the FIRST SCHEDULE of the Stamp Duty Act 1949, stamp duty is based on the money value of the consideration or the market value of the property, whichever is greater.
Two types of Stamp Duties - Fixed Duty and Ad Valorem Duty. Ad valorem is 'according to the value'. Thus, stamp duty for property transaction is ad valorem duty.
Refer to earlier post - past year 2011 Q6 on the two types of Stamp Duties and types of instruments.
b) Date of transfer
Section 12A of Stamp Duty Act 1949 specifies that:
Where an instrument is chargeable with duty under Item 32(a) of the FIRST SCHEDULE, the date for determining the market value of any property being transferred, settled or gifted shall be -
(a) in the case of a settlement or gift, the date of execution of the instrument of trust or settlement or gift;
(b) in the case of a transfer implementing a sale under a duly stamped agreement of sale and purchase, the date of execution of that agreement;
(c) in the case of a transfer of any property granted by a statutory body, a local authority or any co-operative society registered under any laws relating to co-operative societies, the date when the final terms of transfer had been communicated to the transferee, and in the case of subsequent resale of that property, the date of consent by the statutory body or local authority or the board of the co-operative society for that resale;
(d) in the case of a transfer under a duly stamped sale and purchase agreement where financial arrangements have been made in accordance with the Syariah, the date of execution of agreement; or
(e) in any other case, the date of execution of the instrument of transfer.
Ref:
Section 12A of Stamp Duty Act, 1949 available at,
http://www.agc.gov.my/Akta/Vol.%208/Act%20378.pdf