Presentation 3 Real Property Gains Tax

SHAHNAZ ZURIATI SABRI
ACADEMIC FELLOW
AHMAD IBRAHIM KULLIYYAH OF LAWS
WHAT IS REAL PROPERTY GAINS
TAX (RPGT)
RPGT is a tax on chargeable gains derived from:
 disposal of real property in Malaysia ; or
shares in real property companies (RPC) i.e. where
75% of their tangible assets are in properties
Real Properties includes residential and commercial

properties and vacant lands
PURPOSE OF RPGT
To generate revenue for the country
To reduce speculative activities on housing prices and

real estate market & sudden surge in property price,
which affect the affordability of people to buy
property.
RPGT
Section 3(1) RPGT Act 1979 Act 169:
A tax to be called real property gains tax shall be
charged in accordance with this Act in respect of
chargeable gain accruing on the disposal of any real
property (hereinafter referred to as “chargeable
asset”).
• Definition S.2 RPGT Act:
• Chargeable Asset = includes any real properties = any land
situated in Malaysia and any interest, option or other right
in or over such land
CHARGEABLE PERSON
S. 2 RPGT Act: Persons chargeable with RPGT include:
A company, partnership, a body of persons and
incorporation (Schedule 1 RPGT Act)
 *corporate veil is not relevant: directors/secretary jointly &
severally liable assessable with RPGT payable by the company
S.6(1): Chargeable Persons (citizens and foreign
persons)
 whether residing or otherwise in Malaysia for a year of
assessment shall be chargeable with RPGT accruing to
him in that year on the disposal of any chargeable asset.
FACTORS TO CONSIDER
Duration of Ownership of the

Property
Net Chargeable Gain
RPGT rates applicable
Exemption
DURATION OF OWNERSHIP
Date of Disposal / Acquisition
Date of the written sale and purchase agreement of the
disposal.
Otherwise, date of full payment of the consideration OR
the date when all things necessary for the transfer of
ownership under any written law are completed.
Where the disposal is subject to approval from the
Government/State Government: the date of approval or
if the approval is conditional, the date when the last
condition is satisfied.

CHARGEABLE GAINS
RPGT is imposed only if there is chargeable gains ie
disposal price exceeds acquisition price. RPGT not
chargeable if there is a allowable loss ie acquisition
price exceeds purchase price
NET CHARGEABLE GAINS
The final acquisition or disposal price may be arrived
after deducting or adding incidental costs or other
sums allowed (Allowed Expenditure) under RPGT
Act.
Allowable Expenditure
Incidental costs of acquisition and disposal including :
remuneration paid for the professional services of any

surveyor, valuer, accountant, agent or solicitor.
Legal fees
Sales commission
Administrative fees
Repair and renovation
CALCULATION OF RPGT
FORMULA:
RPGT payable
= Net Chargeable Gain x RPGT Rate
CHARGEABLE GAIN
FORMULA:
Chargeable Gain =
Final Sale Proceeds – Final Purchase Costs
Net Chargeable Gain

Chargeable gain - Exemption Waiver (RM10,000 or
10% of Chargeable Gain, whichever is higher)
FINAL SALE PROCEEDS & FINAL PURCHASE
COSTS
FINAL SALE PROCEEDS
FSP is calculated by deducting allowable costs
incurred from the Sale Price
FPC is calculated by addinFINAL PURCHASE COSTS

g up allowable costs to the Purchase Price
RPGT RATES
Provided in Schedule 4 of RPGT Act 1976 (ACT 169)
Effective from 1st January 2019.
Holding period Citizens / PR Non-Citizens Companies
Within 1 Year 30% 30% 30%

Within 2 Years 30% 30% 30%
6th Years onward 5% 10% 10%
PAYMENT OF RPGT
The Disposer is required to settle the balance of
RPGT payable within 30 days from the date of the
notice of assessment issued by IRD.
EXEMPTION
Exemption on gains from the disposal of one residential
property once in a lifetime to individual
Exemption on gains arising from the disposal of real

property by way of gift between family members (e.g.
husband and wife, parents and children, grandparents and
grandchildren)
10% of profits OR RM10,000 per transaction (whichever is

higher) is not taxable
EXEMPTIONS BEFORE JAN 2019
Schedule 4, Real Property Gains Tax Act 1976 provides for RPGT
exemptions for individuals:
Disposal of one private residential property once in a lifetime. (applicable
only on disposal of private residence under Paragraph 9 Schedule 3
(Section 8) of Real Property Gains Tax Act 1976)
Transfer as gifts in between family members applicable for transfer in

between husband and wife, parent and child, grandparent and grandchild.
(Transfer between sibling, is not applicable).
Waiver Exemption equivalent to 10% of chargeable gains or RM10,000

whichever is higher is not taxable.
Exemption is not applicable to Company

EXEMPTIONS AFTER JAN 2019
Malaysian citizen/permanent resident is given a one-time
exemption on gains from the disposal of one residential
property in his lifetime.
the disposal of property between husband and wife,

parents and children, grandparents and grandchildren by
way of gift will not attract RPGT if the disposer (including
a personal representative) is a Malaysian citizen, as the
disposer shall be deemed to have received no gain and
suffered no loss on the disposal.
relief equivalent to RM10,000 or 10% of the net chargeable

gain (whichever is greater) is also given to an individua
EXEMPTIONS AFTER JAN 2019
A Malaysian citizen who disposes of a property after five
years of ownership for a consideration sum of RM200,000
or below AND the disposal is made in the 6th year onward
is exempted from RPGT.
For disposal of a property acquired before Jan 1, 2000, the

market value as at Jan 1, 2000 will be taken as the
acquisition price for purposes of calculating the RPGT, if
any.
RPGT: DUTY OF SOLICITORS
The Purchaser’s Solicitors shall:
Retain amount out of the total consideration (if transaction

involving full or partial monetary consideration) an amount
equivalent to:
 CITIZEN/LOCAL COMPANY: 3%
 NON MALAYSIAN : 7%
Remit the retention amount to the Director General of Inland

Revenue (DGIR) is to be applied against RPGT payable by the
Disposer.
Inform the Vendor of the retention sum.

The Purchaser’s Solicitors shall submit:
 DISPOSER/VENDOR: form CKHT 1A / CKHT 3 (if eligible

for exemption).
ACQUIRER/PURCHASER: form CKHT 2A
Forms to be submitted to the Inland Revenue Board’s

branch where the Vendor’s tax file is maintained, together
with the relevant supporting documents.
If the Vendor is not liable for RPGT, he will also have
to submit form CKHT 3 and forward a copy to the
acquirer so that the Purchaser can submit it together
with his returns.
PENALTY FAILURE TO SUBMIT FORMS
If a disposer or acquirer, without reasonable excuse,
fails to complete and submit the relevant CKHT form,
he will be subjected to a fine not exceeding RM5,000
or to imprisonment for a term not exceeding 12
months or to both.
If no prosecution has been instituted in relation to

the failure to file the CKHT form, the director-general
may require that person to pay penalty of three times
the amount of the tax which is payable for that year.
CKHT FORMS
Material information to be included in the form:-
 income tax reference number;

 copy of previous Sale & Purchase Agreement to prove the
price of the property paid by the Vendor
 IC No. and correspondence address;
 Expenses of the Vendor to be claimed as deductions:-
receipt for your legal fees and disbursements incurred to
buy your house
receipt for renovations done to house
receipts for agent's commission, etc.
FORM 1A: Accompanying documents
for Real Property
Vendor: Form 1A
• Photocopy of stamped Sale & Purchase Agreement/stamped Form 14A/
stamped Proclamation of Sale of previous transaction (acquisition)
• Photocopy of stamped Sale & Purchase Agreement/stamped Form 14A/
stamped Proclamation of Sale, /Assignment of current transaction
(disposal)
• Sale by Administrator: ctc Letter of Administration/Grant of Probate/
Distribution Order
• Transfer by way of Love & Affection: ctc birth certificate/marriage
certificate/certificate of adoption
Vendor : CKHT 3
• (Vendor applying for exemption or where RPGT is not applicable)
CLAIMING EXEMPTION
• Complete Attachment 4 of Form 1A
• Enclose proof of residential occupation:
Utility Bills: electricity, water dated prior to disposal
Certificate of Completion and Compliance dated prior to disposal
• Enclose proof of allowed expenditure
Bill of Cost and Construction Contract
Professional Bill & proof of payment: Legal/Surveyor/Real Estate
Agents
FORM 2A: Accompanying documents
for Real Property
Purchaser: Form 2A
• Photocopy of stamped Sale & Purchase Agreement/stamped
Form 14A/stamped Proclamation of Sale, /Assignment of current
transaction
• Photocopy CKHT 3 (obtained from the Vendor), If Vendor is using.
• CKHT 502: for disposal on or after 1.1.2010
CKHT FORMS: Accompanying documents
for Shares
For Shares:
Photocopy of stamped Sale & Purchase
Agreement/Form 24A/Resolution
SUBMISSION OF FORMS
CKHT forms must be submitted to the Inland Revenue
Department within 60 days from date of acquisition:
(e.g. date of Sale & Purchase Agreement/Transfer (form
14A/Proclamation of Sale)
Proof of submission must be obtained as copy of it is
needed when submitting.
(e.g. covering letter stamped with proof of receipt)
Person submitting:
 Parties to the Sale & Purchase Agreement
 Legal firms acting for the parties

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SHAHNAZ ZURIATI SABRI

Real Properties includes residential and commercial

To reduce speculative activities on housing prices and

Duration of Ownership of the

remuneration paid for the professional services of any

Net Chargeable Gain

FPC is calculated by addinFINAL PURCHASE COSTS

Holding period Citizens / PR Non-Citizens Companies

Within 1 Year 30% 30% 30%

Exemption on gains arising from the disposal of real

10% of profits OR RM10,000 per transaction (whichever is

Transfer as gifts in between family members applicable for transfer in

Waiver Exemption equivalent to 10% of chargeable gains or RM10,000

Exemption is not applicable to Company

the disposal of property between husband and wife,

relief equivalent to RM10,000 or 10% of the net chargeable

For disposal of a property acquired before Jan 1, 2000, the

Retain amount out of the total consideration (if transaction

Remit the retention amount to the Director General of Inland

Inform the Vendor of the retention sum.

 DISPOSER/VENDOR: form CKHT 1A / CKHT 3 (if eligible

ACQUIRER/PURCHASER: form CKHT 2A

Forms to be submitted to the Inland Revenue Board’s

If no prosecution has been instituted in relation to

 income tax reference number;

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