Jul 25 2020, 03:42 AM
QUOTE(piggy2008 @ Jul 24 2020, 09:30 PM)
Dear sifus sekalian,
My friend and his siblings have just acquired a piece of land and the land title is under their personal name. My friend also owns a company operating child care centre. He is willing to let his Company pay for the cost of the land (deposit+term loan installments) provided that his siblings bestow upon him the right to use the property and build a childcare centre.
My question is,can the payments by Company can be capitalised in their books? is there any deemed RPGT or tax issues? If cannot capitalise, Company can expense off and the benefit from the payment is capital gain on my friend's part and thus, is non taxable gain?
Why would your friend pay for EVERYTHING and INCLUDE his siblings as co-owner ?????????????? ...... he can purchase the property using his OWN name.My friend and his siblings have just acquired a piece of land and the land title is under their personal name. My friend also owns a company operating child care centre. He is willing to let his Company pay for the cost of the land (deposit+term loan installments) provided that his siblings bestow upon him the right to use the property and build a childcare centre.
My question is,can the payments by Company can be capitalised in their books? is there any deemed RPGT or tax issues? If cannot capitalise, Company can expense off and the benefit from the payment is capital gain on my friend's part and thus, is non taxable gain?
What is their logic in the purchase ??????????.
Why would a PAYING OWNER required to asked for permission from NON-PAYING OWNERS to use the property ..... is like saying major asking minor shareholder how to run the company !
To answer your questions ...
1. If the property is not bought using company's name, he cant capitalised it, i.e. treat it as a fixed asset. Is a PERSONAL purchase.
2. The purchased deposit can be treat as rental deposit by the company.
3. The monthly installment payment by the company can be treated as rental paid for using the land and building in P&L.
4. Nett rental 'received' by the join siblings are divided equally after deducting loan interest and related expenses for yearly income tax declaration.
5. Expenses for upkeep of building can be treated as Company's expense in P&L, OR ......as deductions from gross rental received in income tax declaration.
6. RPGT is only applicable when the property is sold.
This post has been edited by mini orchard: Jul 25 2020, 07:10 AM
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