RPGT: Amendment of Section 14 - Assessments

"Section 14 Assessments" is read as follows:-

Section 14(1) [Assessment where return is made]

Where a person makes a return under section 13(1), the Director General may—

1. (a) accept the return and make an assessment accordingly;

2. make an assessment after making such adjustments as he considers necessary; or

3. reduce an assessment made for the year of assessment for which the return was made, in giving effect to section 7(4)(a).

Section 14(2) [Assessment where no return is made]

Where a person does not make a return under section 13(1), the Director General, if he is of the opinion that that person is chargeable with the tax, may make an assessment accordingly:

Provided that the making of an assessment in respect of a person under this subsection shall not affect any liability otherwise incurred by that person by reason of his failure to make the return.

Section 14(3) [Assessment can be made at appropriate time]

The Director General, where it appears to him desirable, either because a chargeable person is about to leave Malaysia or for any other reason, that an assessment should be made forthwith, may at time make whatever assessment he considers appropriate; and any assessment so made shall, when the year of assessment to which it relates and the time allowed under section 13(1) for making a return of disposals have expired, be adopted with such revision (if any) as the Director General thinks necessary as the assessment for that year.

Section 14(4) [Assessment of deceased chargeable person]

The death of a chargeable person shall not prevent the making of an assessment in respect of disposals by him before his death, and where any such assessment is made—

1. the notice of assessment under section 17 may be served on the executor of the deceased person; and

2. the assessment shall have the same effect as regards imposing a liability on the estate of the deceased person as it would have had if it had been made during his life time:

Provided that no such assessment shall be made more than three years after the end of the year of assessment in which the Director General is informed in writing by the executor of the death of that chargeable person in a form prescribed under this Act.

Section 14(5) [Failure to retain and remit payment]

Where pursuant to section 21B, an acquirer fails to retain and remit the amount required under that section, and the failure is by reason of an incorrect or wrong notification furnished to him under section 13, there shall be included in the assessment made in respect of the person who furnished such notification, a sum equal to ten per cent of the tax payable by that person.

Section 14(5A) [Director General’s discretion]

Notwithstanding subsection (5), the Director General may, in his discretion for any good cause shown, remit the whole or any part of the sum referred to in that subsection and, where the sum remitted has been paid, the Director General shall repay the same.

Section 14(6) [Meaning of “tax payable”]

For the purpose of subsection (5), “tax payable” means the amount of tax charged on the chargeable gain, excluding any allowable loss referred to under subsection 7(4).

Basic Understanding

This section outlines the process of assessing tax liabilities under the Real Property Gains Tax Act 1976.

Here's an explanation of the key provisions:

14(1) Assessment where the return is made:

• If a person makes a return under section 13(1), the Director General may:

  • (a) Accept the return and make an assessment accordingly.

  • (b) Make an assessment after making necessary adjustments.

  • (c) Reduce an assessment made in giving effect to section 7(4)(a).

14(2) Assessment where no return is made:

• If a person doesn't make a return under section 13(1) and the Director General believes the person is liable for tax, an assessment may be made. However, this won't affect any other liabilities incurred due to the failure to make the return.

14(3) Assessment can be made at an appropriate time:

• The Director General, if necessary, may make an assessment at any time, especially if a chargeable person is about to leave Malaysia or for other reasons. The assessment made shall be adopted as the assessment for the relevant year with any necessary revisions.

14(4) Assessment of deceased chargeable person:

• The death of a chargeable person won't prevent an assessment for disposals made before their death.

• The assessment may be served on the executor of the deceased person, and it has the same effect as if made during the person's lifetime.

• However, such an assessment should not be made more than three years after the end of the year in which the Director General is informed of the death.

14(5) Failure to retain and remit payment:

• If an acquirer fails to retain and remit the required amount under section 21B, and the failure is due to incorrect or wrong notification, a sum equal to 10% of the tax payable by the person furnishing the notification shall be included in the assessment.

14(5A) Director General’s discretion:

• The Director General has the discretion, for good cause shown, to remit the whole or any part of the sum referred to in subsection (5).

• If the remitted sum has been paid, the Director General shall repay it.

14(6) Meaning of “tax payable”:

• For the purpose of subsection (5), "tax payable" refers to the amount of tax charged on the chargeable gain, excluding any allowable loss referred to under subsection 7(4).

In summary, Section 14 outlines the assessment procedures, covering scenarios where returns are made or not made, considerations for deceased persons, and provisions for discretionary remission by the Director General.

The section aims to ensure fair and accurate assessments of tax liabilities related to real property gains.

Finance (No. 2) Bill 2023

The proposed amendments to Section 14 of the Real Property Gains Tax Act 1976 under the Finance (No. 2) Bill 2023 aim to streamline the assessment process and clarify certain aspects. Here's an explanation of the amendments and their potential tax impact:

Amendments to Section 14:

Substitution of subsection (1):

• The new subsection (1) states that when a person furnishes a return in accordance with Section 13, the Director General is deemed to have made an assessment on the day the return is furnished. The assessment is based on the amounts of tax on the chargeable gains as specified in the return.

Insertion of subsection (1A):

• The new subsection (1A) introduces provisions related to the deemed assessment:

  • (a) The return referred to in subsection (1) is deemed to be a notice of assessment.

  • (b) The deemed notice of assessment is deemed to have been served on the person on the day the Director General is deemed to have made the assessment.

Explanation and Potential Tax Impact:

• Streamlining the Assessment Process: The amendments aim to streamline the assessment process by deeming the assessment to have been made when the person furnishes the return.

• This could expedite the assessment timeline and provide clarity on when the assessment is considered to have taken place.

• Deemed Notice of Assessment: Treating the return as a deemed notice of assessment simplifies the communication process.

• It establishes that the return itself serves as formal notification of the assessment.

• Service of Deemed Notice: The provision specifying the day on which the deemed notice is served helps in determining the timeline for the taxpayer's awareness of the assessment.

• Potential Administrative Efficiency: By deeming the assessment to have occurred promptly after the return is furnished, the amendments may contribute to administrative efficiency for both taxpayers and the tax authorities.

• Tax Impact: The direct tax impact will depend on the accuracy of the information provided in the return.

• If the return accurately reflects the chargeable gains and associated tax, then the deemed assessment aligns with the taxpayer's disclosure.

• However, if there are discrepancies, it could lead to adjustments by the Director General.

• Effective Date: The amendments are set to come into operation on 1 January 2025, indicating that these changes will be applicable for assessments made on or after that date.

In summary, the proposed amendments aim to simplify and expedite the assessment process by deeming the assessment to have been made upon the submission of the return. This could enhance administrative efficiency and provide clarity in the communication of assessments to taxpayers.