Recent LHDN Announcement: Capital Gains Tax Return Submission Program

Earlier this year, effective from January 1, 2024, The Lembaga Hasil Dalam Negeri (LHDN) or Inland Revenue Board (IRB) of Malaysia subjected various types of firms and organisations to Capital Gains Tax (CGT) under the Income Tax Act (ITA) 1967. These include companies, limited liability partnerships, trusts and co-operatives that receive profits or gains from the disposal of capital assets, including:

Shares of a non-listed company incorporated in Malaysia.
Shares of a foreign-controlled company holding real estate in Malaysia, shares of another controlled entity, or both.

Labuan entities, including Labuan companies, limited liability partnerships, foundations, and trusts, that opt for or are mandated to pay tax under the ITA 1967 are also liable for capital gains tax.

Understanding the Details About the Capital Gains Tax Return Form Filing Programme

The Capital Gains Tax Return Filing (CGTRF) starts on March 1, 2024. Taxpayers can refer to the programme on the IRB’s official online portal.

The submission of CGTRF and payment of CGT must be completed within 60 days after the disposal date of capital assets. However, disposals occurring between January 1 and February 29, 2024, are exempt from taxation and do not require submission to the CGTRF.

Reporting Requirements

The CTGRF must be submitted by individuals obligated under sections 66 to 75B. For this submission, appointing a licensed tax agent as per section 153 of the ITA 1967 is permissible.

As part of its commitment to enhancing customer service through digitalisation, LHDN is requiring the adoption of electronic services (e-Services). As a result, CGT reporting is mandatory through e-filing via the e-CKM form for taxpayers. The tax agents must submit CGTRF through the Tax Agent e-Filing System (TAeF) version 2.0.

These services are available online through the MyTax Portal starting March 1, 2024. To access e-CKM, taxpayers must have a Tax Identification Number (TIN) and digital certificate.

Document Requirements for Tax Submission

The taxpayers need not submit the working sheet or supporting documents used for tax computation with the CGTRF. However, these documents must be retained for seven years after the year the CGTRF is submitted to the Director General of Inland Revenue.

All documents, including those relevant to tax relief claims under sections 132 and 133 of the Income Tax Act 1967, need to be provided only upon request for audit purposes.

Grace Period for Tax Payment

For assessments issued according to Sections 91, 96A, and subsections 90(3), 101(2) of the ITA 1967, the tax or remaining tax balance must be paid within 30 days from the assessment date. However, an additional grace period of 7 days is given.

Bottom Line

The LHDN’s Capital Gains Tax Return Form Filing Programme is an important update that requires timely compliance. It is intended to simplify the tax filing process by providing specific exclusions, deadlines, and the ability to appoint licenced tax agents. Taxpayers can comply with the latest tax obligations by following the defined procedures.

For more details about the tax updates, you can reach out to DataTracks MBRS XBRL experts @ +60-392-126-125 or email enquiry@datatracks.my.