Q.
Mr Sunny, a Malaysian citizen purchased a double storey bungalow located at an elite area of Bukit Damansara for RM3.5million in 2013. The owner, also a Malaysian citizen however, currently lived in Dundee, Scotland, United Kingdom and requested Mr Sunny to bring all the necessary documents to UK for the execution of the relevant document.
The Sales and Purchase Agreement (SPA) was duly signed on 21st April, 2013 but Mr Sunny decided to stay in Dundee for two (2) months before going back to Kuala Lumpur. He kept the documents with him and forgot to contact his lawyer to proceed to undertake the transfer of the property.
When he returned to Malaysia after the holiday, he contacted his lawyer to proceed with the transfer and was advised that he has to pay penalty for not duly adhere to the provisions stipulated under the Stamp Duty Act 1949.
Advise Mr Sunny as to what are the actions that he is supposed to undertake once he has executed the document of transfer. Your advice should include until the payment of stamp duty upon hearing by relevant court.
(25 marks, 2014 Q4)
A.
For a good write up, refer below article from Malaysian Bar Council by Bernard Kok Yin Fook.
The instrument was executed overseas, and brought in to Malaysia way later. Mr Sunny needs to registered with the Stamp Collector within 30 days of returning to Malaysia the SPA and pay a penalty of 5% of the outstanding Stamp Duty or RM25 whichever is greater, for late stamping.
Sale and Purchase Agreement, Loan or Facility Agreement and Charge executed in Malaysia are to be stamped within 30 days of their execution. If the Sale and Purchase Agreement, Loan or Facility Agreement and Charge are executed outside Malaysia, the time for stamping the same is 30 days after they have been first received in Malaysia.
Late stamping and penalties:
Within 3 months - RM25 or 5% of the outstanding amount
More than 3 but less than 6 months - RM50 or 10% of the outstanding amount
More than 6 months - RM100 or 20% of the outstanding amount
This is significantly a heavy amount bearing in mind that the transaction was RM3.5mio. 5% of duty due. Stamp duty for transaction of RM3.5mio is
RM1,000 for the first RM100,000 (1%)
RM8,000 for the next RM400,000 (2%)
RM90,000 for the remaining RM3mio (3%)
= RM99,000
5% of RM99,000 = RM4,950
Therefore, Mr Sunny may appeal to the Collector of Stamp Duties for reduction of penalty and the Collector of Stamp Duty may consider the purchaser’s appeal if he thinks fit.
If upon rejected and Mr Sunny still remain hopeful for an appeal, he can appeal to the High Court as provided under Section 39, Stamp Duty Act, 1949.
| LAW & REALTY: Stamp duty payable |  |
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| Contributed by Bernard Kok Yin Fook | |||||||
| Friday, 17 August 2007 06:17am | |||||||
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A PURCHASER of a property, besides paying legal fees to his solicitors, will have to pay to the Collector of Stamp Duties stamp duty on the Sale and Purchase Agreement; the Memorandum of Transfer; and if he is taking a loan to finance the purchase of the property and charged the property as security, he will have to pay stamp duty on the facility or Loan Agreement and the Memorandum of Charge.
Sale and Purchase Agreement, Loan or Facility Agreement and Charge executed in Malaysia are to be stamped within 30 days of their execution. If the Sale and Purchase Agreement, Loan or Facility Agreement and Charge are executed outside Malaysia, the time for stamping the same is 30 days after they have been first received in Malaysia.
(a) How to calculate the stamp duty payable The stamp duty chargeable on the Sale and Purchase Agreement is RM10 each. With regard to the Memorandum of Transfer, the rates of the duty are as follows:-
For every RM100 or fractional part of RM100 of the contract price or the market value of the property, whichever shall be greater –
(i) RM1 on the first RM100,000.00;
(ii) RM2 on any amount in excess of theRM100,000 but not exceeding RM500,000; and
(iii) RM3 on any amount in excess of RM500,000.
For example, the stamp duty on a Memorandum of Transfer for a property worth RM500,000 is calculated as follows:-
In case of the purchaser is taking a loan and charged the property as a security, it is common practice now to treat the Loan or Facility Agreement as principal instrument and the charge as subsidiary instrument. In the aforesaid circumstances, the principal instrument will be charged with ad valorem duty whereas the subsidiary instrument will be charged only RM10.
The ad valorem duty for the principal instrument of a loan is calculated at RM5 for each RM1,000 or part thereof. For example, if the loan is RM400,000, the stamp duty payable is calculated as follows:-
RM5 x RM400,000 ÷ RM1,000 = RM2,000
(b) When a document is to be stamped
Sale and Purchase Agreement, Loan or Facility Agreement and Charge executed in Malaysia are to be stamped within 30 days of their execution. If the Sale and Purchase Agreement, Loan or Facility Agreement and Charge are executed outside Malaysia, the time for stamping the same is 30 days after they have been first received in Malaysia.
As for the Memorandum of Transfer, it has to be sent to the Stamp Office for adjudication to determine whether the stamp duty is chargeable based on the contract price or the market value of the property. The Memorandum of Transfer shall be stamped within 30 days from the date of the notice of assessment.
(c) Objection to the value assessed
In the event the market value assessed by the Collector of Stamp Duties is greater than the contract price, the stamp duty chargeable will be based on the market value instead of the contract price.
If the purchaser is dissatisfied with the assessment, he may object to the assessment by giving written notice to the Collector of Stamp Duties within 30 days from the date of assessment. The purchaser shall provide particulars and information to support his objection. The Collector of Stamp Duties may on review, cancel the original assessment if it appears to him that the original assessment is excessive and substitute with a fresh assessment or maintain the same assessment if it appears to him that the original assessment is not excessive.
However, the purchaser, in making objection to the original assessment, is not relieved from paying the duty based on the original assessment within 30 days from the date of the original notice of assessment.
Therefore, it would be advisable that the purchaser pays the duty under protest and at the same time pursue with the objection.
If he succeeds in the objection, he may recover the excess stamp duty paid from the Collector of Stamp Duties. If the purchaser is not satisfied with the review by the Collector of Stamp Duties, he may appeal to the High Court within 21 days after the purchaser is notified in writing the result of the review.
(d) Penalty on document not stamped within time
If a document is not stamped within the timeframe, the purchaser will have to pay, in addition to the stamp duty payable, a penalty and the rates of the penalty are as follows:-
(i) RM25 or 5% of the duty, whichever shall be greater, if the same is stamped within three months after the time of stamping;
(ii) RM50 or 10% of the duty, whichever shall be greater, if the same is stamped later than three months but not later than six months after the time of stamping;
(iii) RM100 or 20% of the duty, whichever shall be greater, if the same is stamped later than six months after the time of stamping.
The purchaser may appeal to the Collector of Stamp Duties for reduction of penalty and the Collector of Stamp Duty may consider the purchaser’s appeal if he thinks fit.
(e) Consequences of a document not duly stamped
A document which is not stamped or insufficiently stamped is not void or unenforceable for that reason alone. However, such document may be rejected as evidence if it is required to be produced before the Court. In that event, the party who wishes to produce the unstamped or insufficiently stamped document will have to pay the stamp duty payable and penalty before such document can be received as evidence.
Notwithstanding the abovementioned proposition in law, the Legal Profession (Practice and Ettiquette) Rules 1978 has provided that it is unethical for a lawyer to object to such documents from being produced unless the objection goes to the root of the subject matter of the litigation.
The writer is a member of the Conveyancing Practice Committee, Bar Council, Malaysiawww.malaysianbar.org.my.
Note: This column is brought to you by the Malaysian Bar Council for your information only. It does not constitute legal advice. You should, therefore, seek professional legal advice for your specific needs. Neither the Malaysian Bar nor the Sun Media Corp Sdn Bhd shall be liable to any reader who suffers losses as a result of relying on this column.
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©Ref:
Malaysian Bar Council, available at
http://www.malaysianbar.org.my/conveyancing_practice/law_realty_stamp_duty_payable.html