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DISPOSAL PRICE AND ACQUISITION PRICE

1. Disposal Price
The disposal price is the amount or value of the consideration in money or money's worth for the disposal of the asset less the allowable expenses.
a. The computation of the disposal price is as follows:

RM RM
The amount or value of the consideration in money or money's worth for the disposal of the asset
XXX
LESS: Allowable expenses (b)
i)
The amount of any expenditure incurred on the asset for the purpose of enhancing or preserving the value of the asset, being expenditure reflected at the time of disposal
XX
ii)
The amount of any expenditure incurred in establishing, preserving or defending disposer's title to or right over the asset
XX
iii)
The incident cost of disposal
XX
XXX
Disposal price
XXX

b. The amount of expenditure wholly and exclusively incurred on the asset disposed of, are as follows:
i. Expenditure incurred for the purpose of enhancing or preserving the value of the asset, being reflected at the time of the disposal. For example additional works on building that has been acquired, and the construction cost of the building on vacant land that has been acquired [paragraph 5(1)(a) of Schedule 2].
ii. The amount of any expenditure incurred at anytime after his acquisition of the asset by the disposer in establishing, preserving or defending his title to, or to a right cover, the asset. Eg. Legal fees paid to defend ownership of the assets acquired [paragraph 5(1)(b) of Schedule 2].
iii. The incidental cost to the disposer of making the disposal such as fees, commission or remuneration paid for the professional services of any surveyor, valuer, agent and legal adviser [paragraph 5(1)(c) of Schedule 2].
Where an asset is disposed of, was acquired by the disposer prior to 1.1.1970, the amount of expenditure incurred prior to 1.1.1970 shall be disregarded.
With effect from 1.1.2019, where a disposal is subject to tax under Part 1 of Schedule 5, references to 1.1.1970 shall be construed as references to 1.1.2000.
With effect from 12.10.2019, where a disposal is subject to tax under Part I of Schedule 5, references to 1.1.1970 shall be construed as references to 1.1.2013. However, the amendment does not apply to the disposal of shares under paragraph 34 of Schedule 2 and shares in a real property company under paragraph 34A of Schedule 2.

2. Acquisition Price
The acquisition price is the amount or value of the consideration in money or money's worth given by or on behalf of the owner for the acquisition of the asset together with incidental cost of acquisition.
a. The computation of the acquisition price is as follows:

RM RM
Consideration in money or money's worth given by or on behalf of the owner for the acquisition of the asset
XXX
ADD: The incidental cost of acquisition (b)
XX
XXX
LESS:
  • Compensation for any kind of damage to the asset or depreciate of asset (c)
XX
  • Sum received under a policy of insurance for damage to the asset or depreciation of asset (d)
XX
  • Amount of deposit forfeited to the disposer (e)
XX
XXX
Acquisition Price
XXX

b. Incidental cost for acquisition the asset such as fees, commission or remuneration paid for the professional services of any surveyor, valuer, agent and legal adviser [paragraph 4(1) of Schedule 2]
c. Sum received by way of compensation for any kind of damage or injury to the asset or for the destruction or dissipation ofthe asset or for any depreciation or risk of depreciation of the asset [paragraph 4(1)(a) of Schedule 2]
d. Sum received under a policy of insurance for any kind of damage or injury to or the loss, destruction or depreciation of the asset [paragraph 4(1)(b) of Schedule 2]
e. Sum forfeited as deposit mad in conncetion with an intended transfer of an asset (cancellled disposal) [paragrapah 4(1)(c) of Schedule 2]
If an asset was acquired before1.1.1970, the acquisitin price of the asset is its market value on 1.1.1970. Any expenditure and receipt incurred prior to 1.1.1970 are disregarded in the tax computation.
With effect from 1.1.2019, where a disposal is subject to tax under Part 1 of Schedule 5, references to 1.1.1970 shall be construed as references to 1.1.2000.
With effect from 12.10.2019, where a disposal is subject to tax under Part I of Schedule 5, references to 1.1.1970 shall be construed as references to 1.1.2013. However, the amendment does not apply to the disposal of shares under paragraph 34 of Schedule 2 and shares in a real property company under paragraph 34A of Schedule 2.

3. Non Allowable Expenditure
Any expenditure allowable in computing adjusted income or adjusted loss for income tax purposes, shall not be taken into account in computing the acquisition price or disposal price of an asset for the purpose of RPGT regardless of whether such expenditure are claimed or not under the income Tax Act 1967 (ITA 1967)

Hit(s) : 3,483
Updated : : 2020-09-21 08:38:15

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