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©The Sun
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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.
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