a. explain the nature of Quit Rent
b. distinguish Quit Rent from Assessment Rate
c. the exercise of Land Conversion
d. taxation calculation and
e. premium payable
Nature and Incidences Land taxes are
• a form of levy or land tax
• collected by the State Government through Land Offices/Registry of title Office.
• provided in the National Land Code 1965 and subject to State Land Rules
• imposed on owners of all alienated land - freehold or leasehold land
• also known as ANNUAL RENT
• assessed with the reference to the land area
• an important means of raising revenue from landowners
• paid to the relevant Land Office annually
• TWO (2) types of Land Taxes i. Quit Rent ii. Premium & Additional Premium
LAND TAXES – QUIT RENT
The National Land Code makes it an obligation of the landowners to pay the quit rents by a certain date without being informed to do so. The last date for payment of quit rent varies from state to state, but most states have 31st May of each year as the deadline
The amount of QUIT RENT payable varies
• from state to state
• by location - depends on where the land is located
• by category of land use – different rates for different categories, three categories of land use are agriculture, building and industry. Under each category of land use such as Building, there are again different rates depending on whether the land is used for commercial or residential
• The amount of rents payable in respect of alienated lands endorsed on the document of title
The “document of title” in relation to any land
means both the register document of title
and the issue document of title.
Basis of calculation [Selangor]
1. Land category [urban, town or mukim]
2. Activities on the land [residential, commercial or industrial]
3. Fixed rate according to district within Selangor.
4. Land area in square metre
Annual Rent = area (in sq metre) x Fixed rate (according to district) / 100
Land & District Office = 9 office
Registry of Title Office - 1 office ( Pejabat Tanah & Galian )
Hak Milik Sementara Mukim - HS (M) -
Leasehold - dapat Pajakan Mukim
Freehold - dapat Geran Mukim
Hak Milik Sementara Daftar - HS (D)
Leasehold - dapat Pajakan Negeri
Freehold - dapat Geran
Under HS (M) and HS (D)
PT - Pecah Tanah change become Lot after get the title
QUIT RENT vs ASSESSMENT RATE
Quait Rent / Cukai Tanah ( Tahunan )
Provision : Sec 5, National Land Code
Collection Body : State authority ( land office / land registrar )
Basis Of Assessment : reference to land area
Payment Term : annually ( before 31 may )
Payable Party: owner (representative ) of alienated land
Assessment Rate / Cukai Pintu
Provision : Sec 127, Local Government Act 1976 ( Act 171 )
Collection Body : Local Authority
Basis Of Assessment : Annual Value / Improve Value
Payment Term : Half yearly in advance ( Jan and July )
Payable Party: owner or occupier of rate able holdings.
Premium
• A premium is charged on the alienation of the land.
Alienation is defined in Section 76 of the
National Land Code 1965 as
"........ disposal of State Land by the State Authority for a
term not exceeding ninety-nine years or in
perpetuity…......".
• The amount of premium is determined based
on a certain percentage of the market value
of the land in accordance to the respective
State Land Rules.• Lump sum paid by the lessee to the State Authority to extend the lease…… LAND TAXE
• Premium Calculation (based on Selangor Land Rules 1966)
¼ x 1/100 x land value* x lease tenure
applied for x land area
• Leasehold renewal when the lease expire a premium is required
• Premium Calculation (based on Selangor Land Rules 1966)
For residential use
¼ x 1/100 x land value x term of new lease – balance of
existing lease x land area
For commercial & industrial use
¾ x 1/100 x land value x term of new lease – balance of
existing lease x land area
Example :
determine the premium of bungalow land with 99 year leasehold interest expiring on 2060.
if the owner wanted to extend the lease for another 99 years on 2011. The market value of land is RM 400,000
1/4 x 1/100 x value of land x ( term of new lease - balance of existing lease )
= 1/2 x 1/100 x RM 400,000 x ( 2060-2011 )
= RM 2,000 x 49
= RM 98,000
http://www.thesundaily.my/news/876772
Conversion Premium ( Additional Premium )
Nature and Incidences
• term “conversion” is not used in the National Land Code NLC
• a form of land development process known as “variation of conditions, restrictions and categories” as provided under Section 124 to 124A of the National Land Code 1965.
• Land conversion also encompass applications for surrender or re-alienation. Surrender land on condition that certain portions of land be immediately re-alienated in different units
CONVERSION EXERCISE
• In Peninsular Malaysia, policy on land use begins when the respective State Governments alienates a piece of land and issues a land title to a person or body under the National Land Code1965.
• All lands alienated by the State Government according to the provisions of the Act are subjected to the following endorsement on the document of title
a. its category of land uses; pursuant to Section 52 of the National Land Code 1965, all alienated lands are divided into three (3) categories of land use i.e. “agriculture”, “building” and “industry”.
b. The conditions attached to the land, comprising “implied conditions” and “express conditions” and “restrictions in interest”
• All land owners must use the land in accordance to the categories of land use and the express condition stipulated in the document of title. Failure to do so is a breach of condition of the land alienation and the State Authority can forfeit the land.
• Landowner who intends to use his land for another category of land use other than the category stated in the title, may apply to the respective State Authority for :-
a. alteration on imposition of category of land use.
b. removal from the land title expression to which the land is subject, or
c. the rescission or amendment of any express condition or restriction in interest to enable the owner to use or develop his land accordingly
d. purpose other than that is allowed at present (Sec 124, NLC).
• Upon approval of the land conversion, State Authority shall direct that the category of land use be endorsed in the document of title to the land and the existing category (if any) shall be deleted.
• The State Authority will charge an additional premium on all applications approved for change of use.
• Theoretically, the conversion charge is a percentage of the difference in value between the new and the existing use.
• In Malaysia land conversion fees is based on a percentage of the improved value of the land. The percentage is in accordance to the respective State Land Rules.
• Improved value is the difference in value of the land in existing land use category and the new category of land use.
• A premium is paid in the event of application to/for
i. Conversion of land use
ii. Land alienation
iii. Amalgamation
iv. Subdivision
* what is conversion? its take place when a landowner applies State Authority to "Alter" his present category of land use ( section 124 & 124A )
• Conversion of land use refers to the variation of the titled category of land use from the existing category to another category or the variation of express condition
• An additional premium is imposed on the conversion of land use. The basis for the computation of additional premium is provided in the various State Land Rules and it differs between States.
• Theoretically, the conversion charge is a percentage of the difference in value between the new and the existing use.
• In Malaysia land conversion fees is based on a percentage of the improved value of the land. The percentage is in accordance to the respective State Land Rules. Improved value is the difference in value of the land in its existing land use category and the new category of land use.
• The rate of further premium to be charged on approval of variation of categories or conditions under section 124 of the Code shall be as follows:
a. From Agricultural Purpose To Other Purposes
i. to be used for building for residential purposes - 15% of the value of the land
ii. to be used for building for commercial purposes - 30% of the value of the land
iii. to be used for building for industrial purposes - 20% of the value of the land
b. From Residential Purposes To Other Purposes
i. to be used for building for commercial purposes - 10% of the value of the land
ii. to be used for building for industrial purposes - 10% of the value of the land
c. From Industrial Purposes To Commercial Purposes - 10% of the value of the land
d. From Commercial Purposes To Industrial & Residential Purposes - RM1,000 (nominal) per lot
• For the purpose of this rule “ value of the land” means the market value of the land at the time before the approval of variation of categories or conditions under Section 124 of the Code.
• From one type of agriculture cultivation to another type of agriculture cultivation …the approval is to enable …
i. land for cultivation of padi, nipah, or sagu to be used for the cultivation of rubber, coconut, oil palm, cocoa, coffee or other crops as may be determined by the State Authority – RM100.00 per hectare
ii. land under any agricultural purpose, other than padi, nipah and sagu, to be used for the cultivation of rubber, coconut, oil palm, cocoa, coffee or other crops as may be determined by the State Authority - RM50.00 per hectare iii. land for the cultivation of rubber, coconut, oil palm, cocoa, coffee or other crops as may be determined by the State Authority - RM50.00 per hectare.
• From one type of agriculture cultivation to another type of agriculture cultivation …the approval is to enable …
i. land for cultivation of padi, nipah, or sagu to be used for the cultivation of rubber, coconut, oil palm, cocoa, coffee or other crops as may be determined by the State Authority – RM100.00 per hectare
ii. land under any agricultural purpose, other than padi, nipah and sagu, to be used for the cultivation of rubber, coconut, oil palm, cocoa, coffee or other crops as may be determined by the State Authority - RM50.00 per hectare
iii. land for any agricultural purpose to be used for breeding and keeping of fish, livestock or other animals - RM100.00 to RM500.00 per hectare.
