Governed under Real Property Gains Tax Act 1976, RPGT is a tax on capital gain ( Profit) on the disposal of a chargeable (not all) asset,includes real property and shares in real property companies.
Formulae:
Disposal price - acquisition price X RPGT rate = RPGT
RPGT rates at 5% for all current disposals chargeable RPGT.
Exemptions:
a) gain on disposal of a chargeable asset from 1 April 2007 - 31 Dec 2009
b) after 1 Jan 2010 where the disposal is made after 5 yr from the date of acquisition
November 2, 2010
Property Market
Property market at bull run? The price to be at uptrend which focus on the residential prices and in Kuching, houses priced at more than affordable price ranged RM100k to RM500k. Hopefully there is no "price frothing" in Sarawak. The super cycle stage that property investment has experienced seems to be vary noted elsewhere. To search for the recent price log in to National Property Information Centre(NAPIC) and various price averaging RM270k up to RM700k sold and published.
The new trend that seemingly relevant to Kuching property investment is the landed residential within gated and guarded communities. In KL, these houses are selling like hot choc as a class of its own.The purchasing pattern in both Kuching and KL seem to be vary in terms of fixed rates offered and also the prefential pyscometric of both.
Loan to value ratio cap at 80% must be thrown to public in order to capitalising the property market up to its value.
The new trend that seemingly relevant to Kuching property investment is the landed residential within gated and guarded communities. In KL, these houses are selling like hot choc as a class of its own.The purchasing pattern in both Kuching and KL seem to be vary in terms of fixed rates offered and also the prefential pyscometric of both.
Loan to value ratio cap at 80% must be thrown to public in order to capitalising the property market up to its value.
October 20, 2010
Marketing Research and Forecasting Demand
We can provide a quality marketing tools for our business. Eg, LG Telecom focuses on individual customer needs to improve retention and efficiency of its marketing programs. Lifetime models, analysis result and offerings so that they can gain a clear and consistent understanding of its customers.
Create useful score tools in achieving customer needs. The recommendations or complaint from customers can be useful and measurable in order to fulfill the best value, by initiating the best response.Consumer and Market Knowledge (CMK) is a large market research which its goal to bring consumer insight to decision making at all levels.
Companies normally budget marketing research at 1-2% of company sales.More than than, outsource because it is not relevant or equivalent to time consuming or research to be conducted. The marketing research firms fall into three categories:
a) Syndicated-service research firm- gather consumer and trade information, whch they sell for a fee.
b) Custom marketing research firm- hired to carry out specific projects. design the study and report findings.
c) Specialty-line marketing research firms- specialized research services.
October 19, 2010
SPSS Statistics
Using SPSS to measure and analyze primary survey are getting importance not only to researcher, also to government officers. The basic reason for this is effectiveness and also reliability of the findings would concurs effective and useful information. In Sarawak, KPI of your organization or even snall unit can be measure through SPSS. Just how to intrepret and analyze is different,more over, needs training and solution based channel.
SPSS would give an organizations view of financial and non financial performances for a certain period.
SPSS would give an organizations view of financial and non financial performances for a certain period.
Differences between Provision and Contigent Liabilities
Provisions
A provision is a liability of uncertain timing or amount.
Recognition
A provision should be recognised when, and only when:
(a) an entity has a present obligation (legal or constructive) as a result of a past event;
(b) it is probable (ie more likely than not) that an outflow of resources embodying
economic benefits will be required to settle the obligation; and
(c) a reliable estimate can be made of the amount of the obligation.
The Standard notes that it is only in extremely rare cases that a reliable estimate will not be possible. In rare cases it is not clear whether there is a present obligation. In these cases, a past
event is deemed to give rise to a present obligation if, taking account of all available evidence, it is more likely than not that a present obligation exists at the end of the reporting period.
Measurement
The amount recognised as a provision shall be the best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The best estimate of the expenditure required to settle the present obligation is the amount that
an entity would rationally pay to settle the obligation at the end of the reporting period or to transfer it to a third party at that time.
Where the provision being measured involves a large population of items, the obligation is estimated by weighting all possible outcomes by their associated probabilities. Where a single obligation is being measured, the individual most likely outcome may be the best estimate of the liability. However, even in such a case, the
entity considers other possible outcomes.
Contingent liabilities
A contingent liability is:
(a) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or
(b) a present obligation that arises from past events but is not recognised because:
(i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or
(ii) the amount of the obligation cannot be measured with sufficient reliability.
An entity should not recognise a contingent liability. An entity should disclose a contingent liability, unless the possibility of an outflow of resources embodying economic benefits is remote.
Contingent assets
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity. An entity shall not recognise a contingent asset. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and its recognition is appropriate.
A provision is a liability of uncertain timing or amount.
Recognition
A provision should be recognised when, and only when:
(a) an entity has a present obligation (legal or constructive) as a result of a past event;
(b) it is probable (ie more likely than not) that an outflow of resources embodying
economic benefits will be required to settle the obligation; and
(c) a reliable estimate can be made of the amount of the obligation.
The Standard notes that it is only in extremely rare cases that a reliable estimate will not be possible. In rare cases it is not clear whether there is a present obligation. In these cases, a past
event is deemed to give rise to a present obligation if, taking account of all available evidence, it is more likely than not that a present obligation exists at the end of the reporting period.
Measurement
The amount recognised as a provision shall be the best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The best estimate of the expenditure required to settle the present obligation is the amount that
an entity would rationally pay to settle the obligation at the end of the reporting period or to transfer it to a third party at that time.
Where the provision being measured involves a large population of items, the obligation is estimated by weighting all possible outcomes by their associated probabilities. Where a single obligation is being measured, the individual most likely outcome may be the best estimate of the liability. However, even in such a case, the
entity considers other possible outcomes.
Contingent liabilities
A contingent liability is:
(a) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or
(b) a present obligation that arises from past events but is not recognised because:
(i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or
(ii) the amount of the obligation cannot be measured with sufficient reliability.
An entity should not recognise a contingent liability. An entity should disclose a contingent liability, unless the possibility of an outflow of resources embodying economic benefits is remote.
Contingent assets
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity. An entity shall not recognise a contingent asset. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and its recognition is appropriate.
January 5, 2010
SIGNIFICANT INFLUENCES
3 types of company that cannot be consolidate but for which equity basis is suitable in preparing consolidated accounts are:
a) subsidiaries that are not consolidated but investment in long term
b) Associates company where investor holds substantial amount of equity shares and able to exert influence and not control
c) Joint ventures
Associate definition according Malaysian Accounting Standard Board (MBSB 12)
- enterprise in which investor has a significant influence
Significant influence
- investor holds directly or indirectly 20% or more voting right of the investee.
- 20 % - 49 %
Measure Significant
- measure by participation in the financial and operating policy decision of the investee but not control of those policy
How to evide Significant
- representation in the Board of Directors
- policy making process
- material inter-company transaction
- interchange of managerial personnel
- dependency on technical information
a) subsidiaries that are not consolidated but investment in long term
b) Associates company where investor holds substantial amount of equity shares and able to exert influence and not control
c) Joint ventures
Associate definition according Malaysian Accounting Standard Board (MBSB 12)
- enterprise in which investor has a significant influence
Significant influence
- investor holds directly or indirectly 20% or more voting right of the investee.
- 20 % - 49 %
Measure Significant
- measure by participation in the financial and operating policy decision of the investee but not control of those policy
How to evide Significant
- representation in the Board of Directors
- policy making process
- material inter-company transaction
- interchange of managerial personnel
- dependency on technical information
January 4, 2010
FRS 112
"Only death and taxes are certain" seems to be the scary word of entrepreneur and business entity. Tax planning and way of mitigating tax for the purpose of smoothing the income level are merely important. Malaysia tax system founded that only tax on profit is paid in the year it is earned. Tax losses can be carried foward and offset against future profits indefinetly but not prior year period profits.
This indicate that the tax system are surrounded by the real time accounting features that enable the business entity to plan and manage their profit for the year efficiently and correctly. Each year, company has to make an estimation on thier tax payable based on tax rules. They are also enabled to recompute thier tax imposed or payable at mid year period.However, if the company paid more than they estimated or scheduled, then, tax recoverable or classed as current asset must be taken into account.
The simple tax transaction then, required more sophisticated approach to mitigate tax that predilected to tax avoidance or tax evasion. In Malaysia, companies are allowed to deduct tax on dividends paid provided they have sufficient tax credit. What is deduct tax on dividend?
Deduct tax on dividend means the company only taken up dividend at profit( after less tax) in their accounts. However, according to GAAP and accounting convention, Income should be recognized on residual or based on the company`s income recognition policies. This indicate that the company should taken up the tax paid into their account.
Illustration 1:
ABC paid dividend to CDE RM200,000.00(net) which the tax rate imposed in the year was 26%. So, the gross amount should be taken into account is RM200,000.00 x 100/74 = RM270,270.27. By way of:-
Debit: Tax RM70,270.27
Debit: Bank RM200,000.00
Credit: Dividend Income RM270,270.27
By doing this in your account, the dividend received was regrossed based on Generally Accepted Accounting Policies (GAAP) and FRS118 Revenues Recognition.
(FRS118 Revenue Recognition: the gross inflow of economic benefits during the period arising in the course of the ordinary activities of an enterprise when those inflows result in increase in equity,other that increase in relating to contributions from equity participants.)
What is has to do with tax?
When dividend are recieved, tax transaction must be accurate. Then, the S.110(tax credit ) would came to ground that, only sufficient tax credit enable the company to pay dividend. Meaning to say, the company must be able to meet their shareholders expectation, when they able to pay dividend by virtue of tax credit.
If, there is insufficient tax credit S. 110, then, the company has to remit the tax to tax authorities, that is, Inland Revenue Board. For the company, this is double transaction, in which, the has to pay dividend(reduce assets), then pay tax to IRB(reduce assets) and maybe, would increase liabilities:- short or long term period.
The importance of the company to plan their tax and dividend must be inline with policies and companies objectives.Every payments must be accurately determine by the Financial Controller or Accountant, in which the permenant or temporary differencies must be understood.
What is Permenant and Temporary Differences?
Permenant differences are:
a) donations to unapproved charities
b) entertainment expenses
c) penalties
d) fines
Why permenant differences must be controlled?
In tax computation, permenant differences must be add back( not allowed) for any tax computation.
What is Temporary Differences?
Temporary differences are items that do not taken up as tax items in the current period( current year) but, would be the tax item in later period(subsequent years). Example of temporary differences are:
a) Depreciation - imposed the tax allowances in tax computation
b) Prov for bad and doubtful debts - specific bad debt allowed, the total carrying value would be taken into account.
c) Provision for warranties or repair - allowed as deductible expenses only when the goods are returned or repair. The provision in the current year are not allowed,but future cost incurred are allowed.
d) R&D - in accounting, research is expense off, but development are capitalised if meet criteria. But in tax rules, all research and development cost are written off when incurred. The development cost are not recognised.
e) Interest expense accrued - amount paid are allowed, tax rules not recognised the interest accrued.
f) Financial asset held for trading - a company tha bought a machine for RM23,000.00, then at the end of the year, carrying fair value of RM24,000.00 would taken up the fair value RM24,000.00 in the financial assets. But in tax rules, the initial amount of RM23,000.00 would be recognised when the differences (RM24,000 - RM23,000) RM1,000.00 would be recognised as gain. In the casgflow statement, gain must be disclosed as diffences in increase in assets. In tax, gain are taxable which it is not allowed for deductible.
g) Rental recieved in advance - in accounting, rental recieved in advance are recognised as liabilities, in accordance to FRS118, income received are only recognised when it incurred. But in tax rules, the rental in advance will suffer tax when recieved.
This indicate that the tax system are surrounded by the real time accounting features that enable the business entity to plan and manage their profit for the year efficiently and correctly. Each year, company has to make an estimation on thier tax payable based on tax rules. They are also enabled to recompute thier tax imposed or payable at mid year period.However, if the company paid more than they estimated or scheduled, then, tax recoverable or classed as current asset must be taken into account.
The simple tax transaction then, required more sophisticated approach to mitigate tax that predilected to tax avoidance or tax evasion. In Malaysia, companies are allowed to deduct tax on dividends paid provided they have sufficient tax credit. What is deduct tax on dividend?
Deduct tax on dividend means the company only taken up dividend at profit( after less tax) in their accounts. However, according to GAAP and accounting convention, Income should be recognized on residual or based on the company`s income recognition policies. This indicate that the company should taken up the tax paid into their account.
Illustration 1:
ABC paid dividend to CDE RM200,000.00(net) which the tax rate imposed in the year was 26%. So, the gross amount should be taken into account is RM200,000.00 x 100/74 = RM270,270.27. By way of:-
Debit: Tax RM70,270.27
Debit: Bank RM200,000.00
Credit: Dividend Income RM270,270.27
By doing this in your account, the dividend received was regrossed based on Generally Accepted Accounting Policies (GAAP) and FRS118 Revenues Recognition.
(FRS118 Revenue Recognition: the gross inflow of economic benefits during the period arising in the course of the ordinary activities of an enterprise when those inflows result in increase in equity,other that increase in relating to contributions from equity participants.)
What is has to do with tax?
When dividend are recieved, tax transaction must be accurate. Then, the S.110(tax credit ) would came to ground that, only sufficient tax credit enable the company to pay dividend. Meaning to say, the company must be able to meet their shareholders expectation, when they able to pay dividend by virtue of tax credit.
If, there is insufficient tax credit S. 110, then, the company has to remit the tax to tax authorities, that is, Inland Revenue Board. For the company, this is double transaction, in which, the has to pay dividend(reduce assets), then pay tax to IRB(reduce assets) and maybe, would increase liabilities:- short or long term period.
The importance of the company to plan their tax and dividend must be inline with policies and companies objectives.Every payments must be accurately determine by the Financial Controller or Accountant, in which the permenant or temporary differencies must be understood.
What is Permenant and Temporary Differences?
Permenant differences are:
a) donations to unapproved charities
b) entertainment expenses
c) penalties
d) fines
Why permenant differences must be controlled?
In tax computation, permenant differences must be add back( not allowed) for any tax computation.
What is Temporary Differences?
Temporary differences are items that do not taken up as tax items in the current period( current year) but, would be the tax item in later period(subsequent years). Example of temporary differences are:
a) Depreciation - imposed the tax allowances in tax computation
b) Prov for bad and doubtful debts - specific bad debt allowed, the total carrying value would be taken into account.
c) Provision for warranties or repair - allowed as deductible expenses only when the goods are returned or repair. The provision in the current year are not allowed,but future cost incurred are allowed.
d) R&D - in accounting, research is expense off, but development are capitalised if meet criteria. But in tax rules, all research and development cost are written off when incurred. The development cost are not recognised.
e) Interest expense accrued - amount paid are allowed, tax rules not recognised the interest accrued.
f) Financial asset held for trading - a company tha bought a machine for RM23,000.00, then at the end of the year, carrying fair value of RM24,000.00 would taken up the fair value RM24,000.00 in the financial assets. But in tax rules, the initial amount of RM23,000.00 would be recognised when the differences (RM24,000 - RM23,000) RM1,000.00 would be recognised as gain. In the casgflow statement, gain must be disclosed as diffences in increase in assets. In tax, gain are taxable which it is not allowed for deductible.
g) Rental recieved in advance - in accounting, rental recieved in advance are recognised as liabilities, in accordance to FRS118, income received are only recognised when it incurred. But in tax rules, the rental in advance will suffer tax when recieved.
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