Taxation Of Property Transactions in Malaysia, May 2023

Property transactions attract various types of taxes, often involving complex questions. One main question is whether profits made in property transactions are taxable under the Income Tax Act 1967 or the Real Property Gains Tax Act 1976. How will the taxes be assessed when properties are transacted between different parties, or transferred within the taxpayer’s same business? How will transactions involving shares in property companies be treated? How are property transactions by real property companies governed?

This concise yet comprehensive book answers these baffling questions and other issues in relation to tax reporting and assessments of property transactions. It provides a practical understanding not only of the law but also of computation methods involved in taxation associated with the disposal, transfer, and conversion of property.

The text clarifies the concepts of “trading” and “adventure in the nature of trade”, analyzing the principles of law in determining whether a property is an investment or a stock in trade. The book discusses the taxation of housing developers and contractors with reference to the guidelines provided in Public Ruling No. 1/2009. The tax liability which may arise from land transactions by land-dealing and money-lender companies is examined. The treatment of income from the property rental business and the eligibility for capital allowances are considered. The book also explores taxation issues on timber and sand-extracting activities. A thorough analysis of the facts and principles propounded in several significant cases provides a better understanding of the complicated issues.

Tax professionals, revenue lawyers, accountants, property and business owners as well as tax students and taxpayers in general will benefit from the book as it contains discussions on how to determine the gains and tax liability on the disposition and transfer of property.

Table of Contents Introduction The Scope of “Trading” and “Adventure in the Nature of Trade” Transfers of Property within Taxpayer’s Business Real Property Companies Case Study: Natasri Sdn Bhd v Director General of Inland Revenue Case Study: Ketua Pengarah Hasil Dalam Negeri v Sin Seng Bee Transport Sdn Bhd Case Study: International Naturopathic Bio-Tech (M) Sdn Bhd v Ketua Pengarah Hasil Dalam Negeri Case Study: Ziranhao Sdn Bhd v Director General of Inland Revenue Extracting of Timber and Sand: Whether Sums Taxable or Deductible Taxation of Housing Developers and Contractors Land Transactions in Money-Lending Companies and Purchase and Sale of Shares in Land Dealing Companies Rent as Business Income