RPGT queries answered
06/04/2007 The Sun LAW & REALTY: By Roger Tan
Roger: Bar Council happy with Finance Ministry's quick response to its
queries.
WHEN Prime Minister Datuk Seri Abdullah Ahmad Badawi announced on March 22
at the Invest Malaysia Conference 2007 that the real property gains tax (RPGT)
would be scrapped (see theSun report, “Real Property Gains Tax scrapped”,
March 23), many conveyancing lawyers were immediately faced with the
following consequential issues:
(1) Is this an exemption from RPGT under the Real Property Gains Tax Act
1976 or a total abolition of RPGT?
(2) Do sellers/disposers still need to file the CKHT 1 form (“Cukai
Keuntungan Harta Tanah Borang 1”), and buyers/acquirers, the CKHT 2 form;
(3) Does this announcement also apply to corporations and foreigners;
(4) If a sale and purchase agreement (SPA) is dated prior to April 1, 2007,
whether the seller/disposer and buyer/acquirer still need to file CKHT 1 and
2 forms, and what if it is after April 1, 2007. In other words, which is the
cut-off period – date of the SPA or date of completion of the purchase in
the SPA?; and
(5) If a property is disposed prior to April 1, 2007, is the seller/disposer
required to declare any gain in his personal income tax returns and what if
it is after April 1, 2007.
Of course, whenever such an important policy is made by the government, two
parties will be immediately affected – the party that implements it and the
other party which is affected by it, all the more so when the change in law
would take effect about one week after the announcement.
Due to the urgency of the matter, I then spoke to the Treasury Solicitor of
the Finance Ministry, Hue Siew Kheng, who referred me to the Ministry’s Tax
Analysis Division.
On March 29, I was able to speak to the Senior Deputy Secretary of the
Division, Siti Halimah Ismail who kindly on the same day directed her
assistant, Kamariah Ahmad, to provide us with oral answers to the above
queries over the phone, subject to a written reply and confirmation from her
division to our said letter.
As April 1 is a Sunday and armed with the oral responses, the Council was
able to provide legal practitioners and their clients before April 1 the
answers to be expected from the division to the above-mentioned queries.
On April 1, the Real Property Gains Tax (Exemption) (No. 2) Order 2007 was
published in the Gazette vide P.U. (A) 146:
The Division of Tax Analysis replied officially with the answers to our
queries in its letter dated April 4 to the Council’s Conveyancing Practice
Committee as follows:
“• The Real Property Gains Tax Exemption Order which has been gazetted as
P.U.(A) 146 on April 1, 2007 exempts the application of all provisions of
the Real Property Gains Tax Act 1976. This Order came into force from April
1, 2007 and will apply to all disposals that occur with effect from April 1,
2007.
• If a disposal occurs on April 1, 2007 or thereafter, both the
seller/disposer and buyer/acquirer will no longer need to file CKHT 1 and 2
forms for any sale and purchase of property;
• If a disposal occurs before April 1, 2007, both the seller/disposer and
buyer/acquirer are required to file CKHT 1 and 2 forms;
• The RPGT abolition applies to all categories of sellers/disposers and
buyers/acquirers i.e. individuals and corporations including nonresidents;
• The date of disposal of a property is based on the date the sale and
purchase agreement is executed or on the date of completion if the agreement
is a conditional contract (new amendment to paragraph 16 of Schedule 2 to
the Real Property Gains Tax Act 1976 through the 2007 Budget) or on the date
of the transfer/completion if no sale and purchase agreement has been
signed; and
• If a property is sold/disposed prior to April 1, 2007 then the
seller/disposer must declare any real property gains tax in the personal
income tax returns. However, if it is sold/disposed on April 1, 2007 or
thereafter, a declaration need not be made.”
With this, members of the public are now advised that unless there is a
requirement to file CKHT 1 and 2 forms after April 1, 2007 as explained
above, no solicitor will now charge his clients the fees for preparation,
filing or witnessing of CKHT 1 and 2 forms which are fixed at RM300 and
RM200 per form respectively under the Solicitors Remuneration Order 2005.
Lastly, the Bar Council wishes to commend the Finance Ministry, in
particular Siti Halimah of its Tax Analysis Division, for being so helpful
and quick to attend to our queries. We also note that we are able to reach
the relevant Ministry officials quickly because their contact details are
published on its website at http://www.treasury.gov.my.
All these speak volumes about the importance of having a business-friendly
and effective public delivery system whenever the government wishes to
implement new policies and undertakings. The exemplary working attitudes of
these civil servants should be emulated by their other colleagues.
The writer is the chairman of the Conveyancing Practice Committee, Bar
Council, Malaysia (www.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.
