In the
The Taxpayer was assessed to real property gains tax ("RPGT") by the Appellant in this case, the Inland Revenue Board Of Malaysia ("LHDN"), under Part II of Schedule 5 of the Real Property Gains Tax Act 1976 ("RPGTA") on the gains from the disposal of 19 parcels of office units in an office building that it had acquired in two tranches, the 1st of which was on
Following the issuance of the assessments, the Taxpayer filed an appeal to the Special Commissioners of Income Tax ("SCIT") against the Notice of Assessment (Form K) and Notice of Additional Assessment (Form KA) for the Year of Assessment (YA) 2014, both dated
"...bahawa pelupusan aset oleh Perayu pada tarikh
DAN bahawa Notis Taksiran (Borang K) dan Notis Taksiran Tambahan (Borang KA) bertarikh
The LHDN, aggrieved with the SCIT's decision, filed an appeal to the
- Whether the applicable RPGT rate on the disposal of the Asset by the Taxpayer should be based on Part II (rate levied on a disposer company - which was the rate levied in the assessments in question by the LHDN) or Part I (for all other cases not falling under Part II and III) of Schedule 5 of the RPGTA in force for the YA 2014; and
-
Alternatively, whether the Notice of Assessment (Form K) and Notice of Additional Assessment (Form KA) for the YA 2014 dated
11 September 2015 were wrongly issued against the Taxpayer when they ought to have been issued to AmTrustee Berhad as trustee for the Taxpayer under the REIT?
In addressing the first issue, the
The Court also noted that the LHDN itself does not recognise a REIT to be a company pursuant to para 4 of Public Ruling 2/2015 which states that "...a REIT/PTF is not a company but a trust body...". In essence, the
In answering the second question, the Court turned to the RPGTA. Relying on the provisions of section 6, and paragraph 8 of Schedule I of the RPGTA, the Court held that, when trust assets are disposed, the person chargeable to tax for the disposal is the trustee. Furthermore, under paragraph 35(1) of Schedule 2 of the RPGTA it provides that "where an asset is an asset of a trust or partnership, then in whatever persons the ownership of the asset is vested, any acquisition or disposal of the asset shall be treated as an acquisition or disposal by the trustee..., and any gain or loss in respect of a disposal shall be assessed on or attributed to the trustee or the partnership."
This effectively means that the LHDN had mistakenly assessed the Taxpayer for the disposal when it should have taxed AmTrustee Berhad instead. In light of the above findings, the
Commentary:
The Tower REIT case, despite not being that complex in its issues, is nevertheless an important milestone in tax law in
The RPGTA has since been amended to state that Part II of Schedule 5 of the RPGT Act specifies the rates of RGPT applicable to companies incorporated in
"PART II
In the case where the disposer is a company incorporated in
The other relevant impact of this case is that the LHDN will have to re-examine its hitherto practice of issuing notices of assessment to REITs in cases of taxation under the RPGTA. The Court held that the correct party to be addressed is the REIT's trustee companies. This decision may also have an impact on past assessments already issued by the LHDN in the REIT's name as such assessments may be subject to appeal by the taxpayer. However, it is to be noted that the LHDN has filed an appeal against the
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Mr
D3-3-8
Solaris Dutamas
No 1 Jalan Dutamas 1
50480
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