Happy with no RPGT?

I was talking to Politikus, a political blogger the other day. As usual, when you talk to a political blogger, the topic tends to be… well… somewhat political. Was talking about election and some hero calling us bloggers liars and stuff like that when I mentioned the gomen is really giving out lots of goodies… one being the abolishment of Real Property Gains Tax (“RPGT”). Politikus’ reaction was…. “Huh! What is RPGT?”. Well, can't blame Politikus, after all, Politikus graduated with a degree in law and politics, not the usual boring accounting and finance.

For those who are not aware, the gomen announced that RPGT will be abolished effective 1 April 2007 (If I am not mistaken). This means, when you buy and sell property and make a profit, you don’t need to pay tax anymore. Prior to this, you need to.

No need to pay tax ya’ know… don’t pway pway… No tax… Nice or not? Well, nice if you have a lot of property, nice if you are a property tycoon. But for you and I who makes just enough to pay car instalment and housing instalment… by the time we clear our credit card bills, we are already praying hard for next month’s pay… how to be happy at such news?

When the news first came out… wahhhh… everyone was saying… very good oh, sell my house, make some money, no need to pay tax. They talked as though they have 10 or 20 house to sell. I think people shouldn’t be throwing party at the abolishment of RPGT because:

1. You and I don’t have many properties to sell;
2. As an individual, RPGT rate is 0% when you hold a property for more than 5 years, i.e. you and I don’t need to pay any tax if we sell our property after 5 years.

Well, looks like it’s not exactly very good news now huh? Well, the sky is not all dark and gloomy. If you happen to be a super rich dude with very the many properties, then ok la, you can now throw a party to celebrate… make a lot of money no need to pay tax.

If you own a company that holds property(s), then you can also be happy la. This is because corporate property owner needs to pay 5% tax despite holding a particular property for more than 5 years. So companies with property(s) can now do something noble and perhaps give their employees more bonuses. Imagine those property development companies sell a piece of land and make RM10m (it’s possible by the way)… that’s like RM500k worth of tax saved! But will such companies treat their employees in such a nice manner?
Another fella which I think (just think only la) will benefit from this are the famous toll concessionaires. You know la… they are very pitiful ya’ know, build toll for us, and then they claim they made losses, they claim they spend a lot of money repairing those highways, and then they have ungrateful toll users protesting against toll hikes… really not easy to be toll concessionaires. Since so difficult to be toll concessionaires, perhaps they might decide to dispose those highways. And if (just if) they do… then no need to pay tax lor.

So basically, if you have a lot of properties and make money from those properties… no need to pay tax. But if you earn more than RM2,500 a month, you have to pay tax. Nice or not?

On a related note, my friends in the tax industry said they are waiting for the official legislation to confirm the abolishment. Perhaps it’s not as simple as it seems. Ya’ know, the thing with our gomen… sometimes… they give you A… you have to fulfil B, C, D, E, F, G, H….. X, Y, Z before you can get A.