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Taxation tutorial revision

Johnson, a non-citizen of Malaysia, presented a condominium to his grand-daughter, as a wedding present. James sold the property to Johnson on the 15^th of June 2021 for RM920,000. James bought the condominium from the developer in February 2019 for RM600,000 via the sales and purchase agreement. The legal charges came to RM7,000 and the stamp duty RM10,000. He spent RM100,000 renovating the house. He was compensated by the neighbour RM21,000 for the damages caused to the rear wall. He also received RM25,000 from the insurance company. Prior to the sale to Johnson, James has advertised the house for sale through an agent to whom he had a deal to pay 2% commission from the sale proceeds. He collected RM20,000 through the agent a deposit from a couple who wanted to buy the property. The deal however did not go through.

James has an allowable RPGT loss of RM13,,000, from the disposal of a commercial property in 2015.

Required:

1. Determine the acquisition price of the condominium property by James. (4 marks)

2. Determine the disposal price of the condominium property by James. (3 marks)

3. Compute the chargeable gain subject to real property gains tax (RPGT) on the disposal of the condominium by James to Johnson. (5 marks)

4. State, with reasons, the RPGT rate applicable to the gain on the disposal of the condominium by James and the RPGT payable. (3 marks)

(Total: 15 marks)

Note: You should indicate by the use of the word nil any item referred to in the question for which no adjusting entry needs to be made in the computations for parts (a) and (b).

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