Student are able to :-
a. identify the nature and incidences of these taxes
b. identify related agencies and legislation govern the taxes
c. explain the basis of assessment and tax rates
d.explain an appeal, relief and exemption (if any) available to the taxes.
INTRODUCTION TO STAMP DUTY
Nature and Incidences
a form of tax assessment govern by Stamp Act 1949
levied on a range of written instruments; agreements, mortgages, bill of sale and insurance policies
pay to Collectors Stamp Duty, Stamp Duty Office, Inland Revenue Board
transfer of property, regardless with or without consideration, attracted Stamp Duty.
Principle on Stamp Duty
The subject matter of tax is the INSTRUMENT and not the TRANSACTION.
Note : INSTRUMENT and DOCUMENT specified in Stamp Act 1949
Duty by whom payable
[Third Schedule (Section 33) Stamp Act]
Nature of instrument => Person liable to pay duty
• Conveyance transferee => the grantee or
• Charge or Mortgage => the chargor or mortgagor
• Lease or Agreement for lease => the lessee
TYPES OF DUTIES
The Stamp Act 1949 provides
1. Ad-Valorem Duty
the imposition of ad-valorem duty is according to value on instrument of transfer and instrument creating interest.
2. Fixed Duty
the imposition of fixed duty on legal, commercial, mercantile or capital market instruments and duplicate/subsidiary /collateral instruments
BASIS OF ASSESSMENT
Purchase of Property
levied on the document of transfer based on the money value of the consideration or market value of the property whichever is greater [Schedule 1 para 32(a)]
Lease/Tenancy
lease or tenancy instrument which secures annual rent exceeding RM2,400 without fine or premium. [Schedule 1 para 49(a)]
RATE OF TAX
Purchase of Property [Schedule 1 para 32(a)]
Market Value/Purchase Price => Rate
• The first RM100,0000 => RM1.00
• Amount excess of RM100,000 but not exceeding RM500,000.00 => RM2.00
• In excess of RM500,000.00 => RM3.00
** For every RM100 or fractional part of RM100 on the consideration or market value whichever is higher.
Stamp duty scale effective January 1, 2018
Market Value/Purchase Price => Rate
• The first RM100,0000 =>RM1.00
• Amount excess of RM100,000 but not exceeding RM500,000.00 => RM2.00
• Amount excess of RM500,000.00 but not exceeding RM1,000,000.00 => RM3.00
• In excess of RM1,000,000.00 => RM4.00
** For every RM100 or fractional part of RM100 on the consideration or market value whichever is higher.
Lease/Tenancy
Lease Period Rate
•not exceeding 1 year => RM1.00
•exceed 1 year but not exceed 3 years => RM2.00
•exceed 3 years /indefinite years => RM4.00
** For every RM250 or part thereof in excess of RM2,400
EXEMPTION & RELIEF
Exemption, Relief & Remission
Relief from stamp duty in case of transfer of property between associated companies [Section 15A]
for specified instruments executed in connection with the purchase of certain low cost houses;
on the transfer of assets between associated companies, where either company owns 90% or more of the other company, or where a third company owns 90% or more of both associated companies no stamp duty transaction between husband and wife or vice versa - pursuant to Stamp Duty (Exemption)(No10) Order 2007.
transfer of property from parent to child/child to parent, 50% stamp duty payable - Stamp Duty (remission)(No7) Order 2002.
instruments of deed of assignment for transfer of real property to Real Estate Investment Trust or a Property Trust Fund approved by the Securities Commission;
A 100% stamp duty exemption is given on the purchase of a first home costing not more than RM300,000. For houses priced between RM300,000 and RM500,000, the stamp duty exemption will still be given but only in respect of the value of RM300,000. (Budget 2017) **available for sale and purchase agreements and housing entered into between 1 January 2017 and 31 December 2018.
A 100% stamp duty exemption is given on a loan agreement relating to a sale and purchase agreement executed from 1 January 2017 to 31 December 2018 for the purchase of the following:
a. only one unit of residential property at a price not exceeding RM300,000; or b. First RM300,000 of only one unit of residential property which is priced at more than RM300,000 but not exceeding RM500,000. The remaining balance of the value of the said property will be subject to the prevailing rate of stamp duty. (Budget 2017)
**This exemption is available for individual Malaysian citizens and is limited to one residential property only.
TIME OF STAMPING
• Instrument executed or signed in Malaysia Within 30 days from the date it was executed or signed
• Instrument executed or signed outside Malaysia Within 30 days after it was first received in Malaysia ** a penalty for late stamping will be imposed due to failure to stamp within the stipulated period
PENALTIES
Penalties for late stamping [Section 47A] a. RM25 or 5% of the amount of the deficient duty, whichever sum be the greater, if the instrument is stamped within 3 months after the time for stamping; b. RM50 or 10% of the amount of the deficient duty, whichever sum be the greater, if the instrument is stamped later than 3 months but not later than 6 months after the time for stamping; or
c. RM100 or 20% of the amount of the deficient duty, whichever sum be the greater, in any other case.
** The person liable to any penalty under section 43 or section 47A shall be the person by whom the duty is payable in accordance with Part I
APPEAL
Any person who is dissatisfied with an assessment or additional assessment of the Collector may object to the assessment or additional assessment and apply to the Collector to review the assessment or additional assessment. by written notice (referred to in this Act as “notice of objection”) [Section 38A (1)]
Any person who is dissatisfied with the decision of the Collector under subsection 38A may, within twenty-one days after the person is notified in writing of that decision and upon payment of duty in conformity therewith, appeal against the decision to the High Court [Section 39(1)]
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