Q.
(a) With reference to Local Government Act 1976 (As amended), explain FIVE (5) reasons for the amendment of Valuation List. (10 marks)
(b) Imran has bought a double Storey terrace house in Taman Ungku Tun Aminah, Johor Bahru. Details of the subject property are as follow:
Lot No. : 1699
Tenure : Freehold
Land Area : 140 square metres
Built-up Area : 110 square metres
Category Landuse : Building (Commercial)
Transaction Price : RM430,000
Date of purchase : 12 Dec 2014
The last revaluation exercise for holdings under the jurisdiction of Majlis Perbandaran Johor Bahru was done and gazetted on 1st January 2013.
The 'tone of list' under the Improved Value for double stores terrace house in this area is RM280,000. Currently for the year 2015, the assessment rate for dwelling building is at 0.12% and 0.35% for commercial holdings.
Apply the principles of rebus sic standibus, determine the amount of Assessment Tax of the holding to be paid by Imran for the first half of the year. (15 marks)
(25 marks, 2016 Q7)
A
a)
Amendment to Valuation List
Section 144 (1) of Local Government Act, 1976 has the below reasons:
- (a) Mistake of name or any particulars omitted in the List
- (b) Increase in the value due to modification, changes to the rateable building
- (c) Decrease in the value due to modification, changes to the rateable building
- (d) Rateable holding which was jointly rated, but should have been separately rated
- (e) Issue of new titles of the holding
- (f) Changes of value due to law relating to planning
The Valuation Officer will carry out the new valuation, and provide notice to the same. Those who has objection will have to make objection in writing not less than 10 days before the time fixed in Notice for a confirmed 'new valuation list'.
Ref:
S.144 Local Government Act 1976.
b)
The principles of rebus sic standibus is in fact, more for the valuation of 'Annual Value'. It is a principle for the rent calculation 'as at the time of available things thus standing' in arriving at an annual value.
However, for Johor, it still applies the practice of using 'Improved Value' and not 'Annual Value'. Thus, the interpretation of 'rebus sic standibus' here would be more of the Market Value at the time it is without taking into any changes likely due to market fluctuations.
The last valuation list done to the area was 1st Jan 2013. And, Imran bought the house in 12 Dec 2014, and the valuation date given on the 'market value' or 'improved value' of similar double storey house is on current date 2015.
The issue is 'which value is the correct value?' This is the core of this question.
Is it Imran's transacted price RM430,000, or the 2015 market value which is RM280,000?
The law (Local Government Act, 1976) says in Johor, where it follows 'improved value', the value for calculation of assessment rate is the current market value. Therefore, the correct 'value' is RM280,000, as it reflects the most recent valuation of the property holding.
As the holding is Building (Commercial), the rate used should be 0.35% of RM280,000, which is:
RM280,000 x 0.35% = RM980 per year,
= RM490 per 6 months.
And, based on Local Government Act, 1976 the local council can charge a drainage rate, to a maximum of 1%. However, as the question did not specify what drainage rate is applied here, it is left as open ended.
Ref:
Own account.