RPGT: Amendment of Section 13 – Returns

“Section 13 Returns” is read as follows:-

Section 13(1) [Return of disposal of chargeable assets]

Every chargeable person who disposes of a chargeable asset and every person who acquires the asset so disposed of shall, within sixty days (or such further period as the Director General may allow on a written request being made to him) of the date of disposal of that asset, make a return—

1. specifying in respect of the asset disposed of the acquisition price, the disposal price and the gain or loss on the disposal;
2. furnishing all information necessary to determine the acquisition price and disposal price of the asset disposed of; and
3. where the market value of the asset is to be taken for the purposes of this Act, submit a written valuation of the asset by a valuer.

Section 13(2) [Disposals by nominee]

Every nominee shall, within sixty days (or such further period as the Director General may allow on a written request being made to him) of the date of disposal by him of a chargeable asset on behalf of any person, make a return specifying—

1. the name and address of the person on whose behalf the disposal was made;
2. the asset disposed of; and
3. the date on which he first began to hold that asset as nominee for that person.

Section 13(3) [Assets transferred]

Where any assets acquired—

1. from any person by a company controlled by that person, by his wife or by him jointly with his wife or a connected person; or
2. with the approval of the Director General under paragraph 17 of Schedule 2, by a company from another company in the same group,

are transferred by the acquiring company to its stock in trade, the acquiring company shall within sixty days after the transfer make a return giving particulars of the assets transferred.

Section 13(4) [Prescribed form: nominee]

Where a person makes a return under this Act, the return shall be in the prescribed form:

Provided that, where the person making the return is a nominee, the return shall be made to the income tax office nearest to the nominee’s principal place of business or abode in Malaysia or if he has no place of business or abode in Malaysia, to the office of the Director General.

Section 13(5) [Declaration in return]

Where a person is required to make a return for the purposes of the income tax law, he shall make a declaration in that return whether or not he has made a disposal of chargeable assets in the year of assessment for which that return is made.

Section 13(6) [Notification of non-application or exemption from tax]

A person who disposes of a chargeable asset and is required to make a return under this section may furnish to the Director General, together with the return, a notification in the prescribed form that such disposal is not subject to tax or exempt from the payment of tax under this Act.

Section 13(7) [Due date for notification to acquirer]

For the purpose of section 21B, the notification referred to in subsection (6) shall be served to the acquirer within sixty days from the date of the disposal.

Basic Understanding

Section 13 of the Malaysian Real Property Gains Tax Act 1976 outlines the requirements for chargeable persons involved in the buying, selling, or transferring of properties to provide necessary information to the tax authorities.

Here’s a breakdown:

13(1) Return of disposal of chargeable assets:

• If you sell or acquire a property subject to real property gains tax, you must submit a return to the tax authorities within 60 days of the sale.
• The return should include details about the property’s purchase price, selling price, and the resulting gain or loss from the transaction.
• If the property’s market value is used for tax purposes, you must include a certified valuer’s written valuation.

13(2) Disposals by nominee:

• If someone acts as a nominee and sells a property on behalf of another person, they must submit a return within 60 days of the sale.
• The return should include the name and address of the person on whose behalf the sale was made, details about the property, and the date when the nominee started holding the property.

13(3) Assets transferred:

• Suppose a company transfers assets acquired from a connected person or within the same corporate group.
• In that case, the company must submit a return within 60 days of the transfer, providing details about the assets transferred.

13(4) Prescribed form: nominee:

• Returns must be submitted in the prescribed form, and nominees need to submit returns to the income tax office closest to their principal place of business or residence.

13(5) Declaration in return:

• When submitting a return for income tax purposes, any person must declare whether they have disposed of chargeable assets during the relevant assessment year.

13(6) Notification of non-application or exemption from tax:

• Any person selling chargeable assets can include a notification with their return, using a prescribed form, stating that the disposal is not subject to tax or is exempt from tax payment under the Real Property Gains Tax Act.

13(7) Due date for notification to acquirer:

• If a notification is included to declare non-applicability or exemption from tax, it must be served to the acquirer (buyer) within 60 days from the date of the property’s disposal.

In summary, Section 13 ensures that chargeable persons involved in property transactions provide accurate and timely information to the tax authorities, helping assess and collect real property gains tax.

Finance (No. 2) Bill 2023

The proposed amendment to Section 13 of the Malaysian Real Property Gains Tax Act 1976 introduces changes to the requirements for persons involved in property transactions.

Here’s an explanation of the amendments and their potential impact:

Amendments to Section 13(1):

1. Deletion in paragraph (b): The word “and” at the end of paragraph (b) is deleted, indicating a separation between the different requirements listed in the section.
2. Substitution in paragraph (c): The wording related to submitting a written valuation is replaced with a requirement to provide a valuation of the asset’s market value based on a valuation made by a certified valuer.
3. Insertion of paragraphs (d) and (e):

• (d) Specifying the chargeable gain and tax payable: Chargeable persons are now required to specify the chargeable gain and the amount of tax payable (if any) on that chargeable gain for the property disposal. This adds a new level of detail to the information provided in the return.
• (e) Containing particulars required by the Director General: The return must now contain any additional particulars deemed necessary by the Director General. This allows tax authorities to request specific information relevant to the property transaction.

Explanation and Example:

These amendments aim to enhance the clarity and completeness of information submitted by chargeable persons involved in property transactions.

By specifying the chargeable gain and tax payable, the tax authorities can more easily assess and verify the accuracy of the information provided.

Example:

Suppose a chargeable person sells a property for RM200,000 that was acquired for RM150,000.

The chargeable gain is RM50,000.

If the applicable tax rate is 5%, the tax payable would be RM2,500 (5% of RM50,000).

Potential Tax Impact:

The impact on taxpayers is mainly in providing more detailed and specific information in the return.

This could lead to a more accurate assessment of tax liability.

Taxpayers must ensure that they include the chargeable gain, tax payable, and any additional particulars as required by the Director General.

It’s important to stay informed about these changes and comply with the amended requirements to avoid any penalties or issues with tax authorities