Now that the Inland Revenue has issued their official guidelines (Garis Panduan CKHT) on the filing of the tax returns and payment of the Real Property Gains Tax (RPGT) it confirms the lack of comprehensive decision analysis by the Treasury. Remember Kepnoe Tregor’s Rational Manager? Remember the decision analysis process?

The last time we had to file RPGT returns - pre April 1, 2007 - the vendor and purchaser filed their returns within 30 days of the disposal and acquisition. The RPGT department then issued a notice of assessment of RPGT and the purchaser’s solicitors, who have retained the estimated RPGT, remit the tax to the department and the balance, if any, to the vendor together with all interest accrued.

The new official guidelines, however, prescribe that with effect from Jan 1, 2010 the purchaser must first forward the 2% of the purchase price to the RPGT department, irrespective of whether there is a gain on the disposal, within 60 days from the date of the sales and purchase agreement. To add salt to the wound, failure to do so will attract a penalty of 10% on the 2%.

Sadly, the implementation of the guidelines throws up too many anomalies.

For example, if a house was bought for RM500, 000 in October 2009, then sold for RM550, 000 in June 2010, there is a gain of RM50, 000. A sum of RM 11,000 (RM550,000 x 2%) will have to be remitted to the RPGT department within 60 days.

In reality, the RPGT payable is only RM2, 500 (RM50, 000 x 5%). So long as there is no assessment issued by RPGT department, the RM11,000 sits with the department without interest. Where is the fairness here?

Another example - if a house was bought and sold without any gain or at a loss within the first five years, the purchaser still has to remit 2% of the disposal price to RPGT department, file the RPGT returns and wait for a refund. Why scratch your left ear with your right finger going round the back of your head? Isn’t this just another Sisyphean task?

To make matters worse, the guidelines make no mention of the time frame on the refund of the balance of the retention sum of 2% after setting off the RPGT payable. Those of us who have at one time or another applied for income tax refunds know of the glacial speed that this department operates. Perhaps, Minister Koh Tsu Koon should also peg a KPI based on the timeliness of the refund of tax overpayment.

Anomalies arising from any decision could have been easily averted had the policy-makers tested their decision during their thinking process. Unfortunately for all of us, it appears that the Treasury boys were gazing out of the window.