Goods And Services Tax
For residential property which is used as home office the tax ability of the property will depend on the approved use of the building in the Approved Layout Plan and Development Order ( Surat Kebenaran Merancang). If the building is approved for Mixed Development Purposes ( i.e. commercial and residential) by the relevant local authority and the approved layout paln and approved layout building is for Dwelling Purpose, the sale and lease of the property will be exempt. However if the building is approved for non-residential use such as office use then the sale and lease of the property will be taxable.
If a residential building built on commercial land like SOHO need to pay GST? The guideline is based on actual usage of the property like design and features. Same goes for vacant land. Residential land is exempted from GST. If SOHO is under HDA (Housing Developer Act) then it is obviously under residential usage and therefore is exempted from GST. What if is commercial usage house along Jalan Maarof? Their usage is commercial, so need to pay GST. Unless you are staying in one of the houses there and used it as residential purposes.
In the case of non residential land , individual is treated as business and therefore must be register for GST , if he has at any one time in his ownership;
- More than two commercial properties and who sells one and the value of the sale plus all other business income is more than the threshold
- More than one acre of commercial land and who sell one and the value of the sale plus all other business income in more than the threshold
- A singular and non cumulative commercial property of land that is worth more than RM 2 million.
Can a purchaser choose not to pay GST to the vendor? Purchaser can easily check whether the vendor is registered under the GST from www.gst.customs.gov.my. Purchaser has the right to purchase the commercial properties from a non registered vendor.
In Malaysia, carrying business can be through business vehicles of sole proprietorship, partnership, limited liability partnership or even private limited companies (Sdn Bhd). Each of these business vehicles are termed as a separate GST entity and must be registered with the RMC individually.
Sole proprietorship is under personal name, we have to add all business income all together and if exceeded Rm500,000, have to pay GST. IT is also can be voluntary registration but after registered shall remain for a period of at least 2 years. In the case of non residential land individual is treated as
Will Vendor/Landlord be charged GST for sale/rent of Commercial Property ?
- Vendor/Landlord must be a GST registered person (Taxable Person)
- In the course of furtherance of business of the Vendor/Landlord
- Property is located in Malaysia
- A person is liable to registered if his total taxable supply of the current month and the next 11 months exceeds Rm500,000.
- Any individual owning commercial property at any one time:-
- Make a supply of two commercial properties or commercial land not exceeding 1 acre would be treated as not carrying out business even if the sale is more than RM500,000 in a 12 months period;
- Would also be treated as not carrying out business if there is no intention of making a supply;
- Make a supply of rental services on such property is liable to be registered when the turnover for such supply exceeded the threshold amount of Rm500,000.
- GST is chargeable for commercial use rented property if the rental services on commercial property are liable to be registered when the turnover exceeded the threshold of RM500,000.
- Residential Used Property
- Agricultural Property
- General Use eg burial ground, playground, religious property
- No GST for rental derived from residential properties
Supply of Goods in Property Transaction
Definition as per Clause 2(1) of first schedule of GST Act:- Any transfer of The whole right of ownership of land; Land under an agreement for the sale of such land. Land under agreement which expressly stipulated that the ownership of such land will pass at some time in the future (subject to state consent) ; any interest under Deed of Assignment; or any strata title; is a supply of goods.
In the case of land, any individual is supplying commercial property for any license to occupy, rights to use, lease, rent or easement and annual turnover for such supply is more than the prescribe threshold in the 12 months period is treated as carrying out a business.