Q.
(a) Explain five (5) situations in which the disposal price shall be deemed at Market Value in the imposition of Real Property Gains Tax. (10 marks)
(b) Daud bought a double storey terraced house on 20th August 2011 for RM400,000. One month later, the car porch leaned and Daud succeeded in recovering RM10,000 by way of damages from the developer. In September, 2013, he made a renovation to the house costing RM50,000. In November the same year, Haikal entered into an agreement to buy the property and he paid a deposit of RM30,000. However, Haikal failed to secure a bank loan and the sale was aborted and the deposit was forfeited. In June, 2014, Daud sold the property for RM700,000 and incurred the following expenses for the sale:
Valuation fee-----------------RM6,700
Cost of advertisement-------RM1,200
Agency fee--------------------RM10,000
Calculate Real Property Gains Tax payable by Daud. (15 marks)
(25 marks, 2015 Q3)
(19.09.2015)
A.
(a) Refer earlier post here on Market Value vs Actual Price in RPGT and Stamp Duty.
A summary is provided here:
1. Gifts.
Where an asset is disposed of by way of a gift, the disposal shall be deemed to be a disposal at the market value of the asset:
Provided that, where the donor and recipient and husband and wife, parent and child or grandparent and grandchild, and the gift is made within five years after the date of acquisition of the asset by the donor, the donor shall be deemed to have received no gain and suffered no loss on the disposal and the recipient shall be deemed to have acquired the assets at an acquisition price equal to the acquisition price paid by the donor plus the permitted expenses incurred by the donor.
2. Exchanges.
Where an asset is disposed of by being exchanged for another asset (whether chargeable or not) the market value of the asset received by the disposer shall be taken as the consideration for the disposal:
Provided that, if the asset received by the disposer has no market value, the Director General may take the market value of the asset disposed of as the consideration for the disposal.
3. Section 25(2) where it is anti-avoidance provision, thereby Director General detects schemes of tax avoidance, evasion or hindrance to the operation of the Act.
4. When it cannot be valued, the Director General of Inland Revenue Board would decide based on market value.
5. When it is a compensation for loss of office or in consideration of past service or employment. This is more like an exchange of gift, but for particular reasons e.g. to relinquish one's entire shareholding of a company in exchange for a plot of land.
(b) RPGT payable by Daud and its calculation please go here.