Proposed Amendments to Real Property Gains Tax Act 1976
16 March 2023
The Finance Bill 2023 was tabled for its first reading in the Dewan Rakyat of the Malaysian Parliament on 14 March 2023.
Amongst others, the Finance Bill 2023 proposes to amend the Real Property Gains Tax Act 1976 (‘RPGTA’) in the following respects:
||Transfer of assets between former spouses
||It is proposed that the transfer of assets1 between former spouses pursuant to any court order in consequence of the dissolution or annulment of their marriage is to be treated as a transaction in which the disposal price is deemed equal to the acquisition price provided that the transfer involves an asset owned by a Malaysian citizen.2
Presently such a transfer between former spouses is subject to real property gains tax ranging between 0% to 30% based on the period which the asset has been held by the disposer of the property.3
Where the former spouse to whom the asset is transferred under the court order subsequently disposes of the asset, that former spouse is deemed to have acquired the asset at an acquisition price equal to the acquisition price paid by the former spouse from whom the asset is transferred plus permitted expenses.4
||Limitation of scope of transfer to a controlled company
||Presently, the transfer of assets owned by an individual, his spouse or by an individual jointly with his spouse or with a connected person, by a nominee or trustee for an individual or his spouse or for both, to a company resident in Malaysia or not, that is controlled by the individual, his spouse or by the individual jointly with his spouse or with a connected person, by a nominee or trustee for an individual or his spouse or for both, for a consideration consisting of shares in the company or substantially of shares5 in the company and the balance of a money payment, is a transaction in which the disposal price is deemed equal to the acquisition price.
It is proposed that the controlled company to which the assets are transferred under the above-referred provision must be a company incorporated in Malaysia.6
The proposed amendments to the RPGTA will come into operation on the date that the Finance Act 20237
comes into operation.
Alert by Eo Shao Dong (Associate) of the Real Estate Practice of Skrine.
This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact email@example.com.
For the purposes of the proposed amendments, all of which relate to Schedule 2 of the RPGTA, an ‘asset’ refers to a chargeable asset (see Paragraph 1(1) of Schedule 2 of the RPGTA).
Proposed new paragraph (ia) to Paragraph 3(1)(b) of Schedule 2 and amendment to Paragraph 3(2) of Schedule 2 of the RPGTA.
See Part I of Schedule 5 of the RPGTA.
Proposed amendment to Paragraph 19(5) of Schedule 2 of the RPGTA. Paragraph 19(5) also provides that if the property was acquired by the transferor prior to 1 January 1970, the acquisition price shall be the market value of the asset as at 1 January 1970 plus permitted expenses incurred by the transferor after 1 January 1970 less the types of payments received or forfeited by the transferor under subparagraphs (a), (b) or (c) of Paragraph 4(1) of Schedule 2 of the RPGTA.
The expression “a consideration consisting substantially of shares” means a consideration consisting of not less than 75% of shares (see Paragraph 1(4) of Schedule 2 of the RPGTA).
Proposed amendment to Paragraph 3(1)(b)(ii) of Schedule 2 of the RPGTA.
The Finance Bill 2023 will become the Finance Act 2023 after it has been passed by the Dewan Rakyat and the Dewan Negara and received Royal Assent and been gazetted.