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Understanding tax exemptions

26/10/2009 The Star

The PricewaterhouseCoopers team answers questions on the service tax, green technology and real property gains tax.

THIS is the second of a three-part question-and-answer series provided by PricewaterhouseCoopers on various aspects of Budget 2010. The final part will appear in StarBiz tomorrow. Email your questions to:

Q. I have been issued a credit card and I subsequently decide to cancel the credit card six months later, will I be able to claim the service tax paid?

A. The service tax law does not contain provisions for a refund of service tax under these circumstances.

If I have been issued a credit card free for life, how does the change in law affect me?

Service tax will be collected on the completion of each year after Jan 1, 2010. A principal cardholder will have to pay RM50 per card and RM25 for every supplementary card.

Will I still be paying service tax when I have meals at restaurants after GST is implemented?

GST will replace the current service tax. The Minister of Finance indicated that the rate of GST will be lower than the current rate of service tax. The current service tax rate is 5%.

With the reintroduction of real property gains tax we do hope that which is of lesser burden to the Rakyat would apply, says the Second Finance Minister

My company is considering purchasing a new building. We are looking at a building incorporated with “green technology”.

I understand there will be an exemption from stamp duty on the purchase of such buildings?

Stamp duty exemption would be available for buyers of buildings and residential properties that have been issued a Green Building Index (GBI) certificate.

The GBI is a rating index for environmentally-friendly buildings.

The stamp duty exemption would only apply to buildings or residential properties bought directly from real property developers and the exemption is only given once to the first owner of the building.

It may not apply to existing buildings that have subsequently been granted the GBI certificate.

The amount of the stamp duty exemption is given only on the additional cost incurred by the property developer to obtain the GBI certificate, and not on the full value of the building.

The exemption will apply for sales and purchases agreements executed from Oct 24 2009 until Dec 31, 2014.

I heard that there will be a tax of 5% to be imposed on gains from the disposal of real property from Jan 1, 2010.

It is proposed that real property gains tax will apply to disposals of real properties effective from Jan 1, 2010.

To date there has been a prevailing exemption on real property gains tax on such disposals since April 1, 2007.

Generally, the exemption would still apply to sale and purchase agreements executed by Dec 31, 2009.

Based on the Finance Bill, the rate of tax applicable will depend on the period the property has been held since it was acquired.

Previously, there was no tax for disposals by individuals from the sixth year onwards.

However, in the current proposal this has been removed. Therefore, both companies and individuals would be taxed at the scale rates that were applicable in the past.

The Second Finance Minister has recently clarified that the tax rate on such disposals of real property would be 5% irrespective of the period of ownership.

Therefore with the reintroduction of real property gains tax we do hope that which is of lesser burden to the Rakyat would apply.

I intend to sell my house next year. With real property gains tax applicable, will I need to file a return?

Does this mean 5% will be retained from money due to me from the sale of the property?

You would need to file a real property gains tax return within 60 days of the date of the disposal. This proposal increases the previous 30 day deadline to submit a return.

The proposed mechanism for payment of real property gains tax from Jan 1, 2010, the acquirer would be required to retain an amount not exceeding 2% of the total value of the consideration for the property.

The acquirer would then be required to pay that amount directly to the Inland Revenue Board within 60 days of the date of the disposal.

The IRB will apply this amount received from the acquirer against the amount of real property gains tax you would need to pay on the disposal of your house.

I am a Malaysian citizen currently lecturing at a local university in Selangor.

I am planning to apply for a full time 2-year teaching position at a tertiary organisation in the Iskandar region. Do I get any special incentive if I accept the offer?

Your employment offer in the Iskandar region would fall under one of the qualifying activities categorised as ‘educational services’.

If you apply and commence your employment in Iskandar Malaysia between Oct 24, 2009 and Dec 31, 2015, provided that you qualify as a Malaysian tax resident, your employment income will be taxed at the flat rate of 15%.

This could be substantially lower compared to the effective tax rate of a Malaysian tax resident.


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