I may agree with you guys the government is stupid in many areas, but when it comes to taxation, you guys are naive to think the government is as stupid

Guys, please don't argue. The RPGT Act 1976 is the reference

Anti-avoidance provisions

Sec 25 (2)

The Director General, where he has reason to believe that
any transaction has the direct or indirect effect of—
(a) altering the incidence of tax which is payable or suffered
by or which would otherwise have been payable or suffered
by any person;

(b) relieving any person from any liability which has arisen
or which would otherwise have arisen to pay tax or to
make a return;

© evading or avoiding any duty or liability which is imposed
or would otherwise have been imposed on any person by
this Act; or

(d) hindering or preventing the operation of this Act in any
respect, may, without prejudice to such validity as it may have in any other
respect or for any other purpose, disregard or vary the transaction
and make such assessments as he considers just and proper in the
circumstances.

may, without prejudice to such validity as it may have in any other
respect or for any other purpose, disregard or vary the transaction
and make such assessments as he considers just and proper in the
circumstances



Although it is not commonly heard that LHDN go after property disposal which artificially suppress the selling price to reduce/escape RPGT, it doesn't mean you can do it. For those who believe they can out-smart the government, please go ahead to fool the government. Please remember to disclose your identity to me so that I can report you to LHDN. Upon successful recovery of tax avoidance, I will be given by LHDN 15% (or is it 30%) of tax recovered from you, legally

This post has been edited by Showtime747: Apr 5 2014, 10:07 AM

So bearbear, have you read Sec 25(2) ? We still can simply put in RM300k as selling price and LHDN just have to accept ?

Please refer Sec 25(2) of Real Property Gain Tax Act 1976

You can ask the judge when LHDN takes you to court whether Sec 25(2) will be enough to make you pay the difference in RPGT. The provisions of Sec 25(2) is obvious enough for LHDN to catch people who under pay RPGT.

Don't get me wrong. You can always sell below market value and report RPGT based on S&P price. But if the difference between S&P price and market value is too big, LHDN can also go after you based on the Anti-Avoidance Provision. This provisions give them power to tax people trying to out-smart them. But if your price is around the market price, LHDN won't bother to tax you.

Bro,

Sec 25 Anti-avoidance provisions has 2 sections. The example you mention is about Sec 25(1) which is specific to a avoidance scheme. Section 25(2) is a "catch all" provision. Its effect is to allow LHDN to catch all "out-smart" avoidance scheme

If the provisions in Sec 25(2) refer to only Sec 25(1), then section 25(2) should be Sec 25(1)(a), 25(1)(b) and so on. Also, the wording in Sec 25(2) is obvious to be a stand alone section

That should clarifies

Good that you bring up Sec 25(3) which mention "person". The definition of "person" is in Sec 2. It does not limit to connected person eg husband and wife in your example

It didn't say so because it is a catch all section. But the effect of the wording is obvious enough

For example

Sec 25(2)(a) "altering the incidence of tax" - by understating disposal price intentionally, RPGT is lesser, hence it is "altering the incidence of tax"

Sec 25(2)© "evading and avoiding any duty and liability which is imposed" - by understating disposable price intentionally, RPGT is less, hence you are trying to avoid and evade tax


Bona fide selling at below market price most probably will not be queried by LHDN. If acquisition price is RM400k, market price is RM700k, you sell say RM600k, I think it is still acceptable because of property conditions, facing, renovation etc. But if market price is say RM700k, the S&P price is RM400k, then it should raise LHDN eyebrow. We can play around with the selling price to reduce some RPGT, but not overboard lah. Under Sec 25(2), they can go after elaborated scheme

I can't alter your belief. Not here to convince you. It is up to you to interprete. Next time if you have the chance to talk to your lawyer, do ask him/her this section

Bro,

The article actually reinforce my interpretation of Sec 25(2). I have highlighted the essence of anti-avoidance provision above. In what way do you think the article contradict my interpretation

Bro, inter related or not is not the question. That is technical. The question is we can't simply understate the disposal price for RPGT. LHDN can go after you if you have overdone.