STATUTOR

Y
VALUATION
RES 611
 LEARNING OBJECTIVE
At the end of this topic student should be able to:
1.Explain what is stamp duty

2.Identify the important of duly stamped documents

3.Determine the market value of the property accordingly to

Section 12A of Stamp Duty Act (date of valuation)
4.Implement the theory related to stamp duty into valuation
work
INTRODUCTION TO STAMP DUTY

▪ Stamp duty is a tax that is levied on documents.

-

▪ A physical stamp (a revenue stamp) had to be attached to

or impressed upon the document to denote that stamp
duty had been paid before the document was legally
effective
▪ Stamp duty being a duty on instruments means there must
be a document before the duty arises. Thus if there is no
instrument involved there will be no duty.
 INTRODUCTION TO STAMP DUTY

THERE ARE TWO TYPES OF STAMP DUTY:

i) FIXED DUTIES

Amount of duties to be paid is fixed. It does not vary with the

-

value -
of transaction specified in the instrument
Eg. Agreement or Memorandum of Agreement -RM10.
(Item 4 , First Schedule)
Article of association - RM 100
(Item 10 , First Schedule)
INTRODUCTION TO STAMP DUTY
ii)AD VALOREM DUTY
Amount of duties to be paid varies with the value of
transaction in the instrument.
Eg. Stamp duty payable on differing rates
chargeable on conveyance, assignment or transfer
of properties.
(Item 32 (a) First Schedule)

Instruments chargeable with stamp duty are in First

Schedule of The Stamp Act 1949.
INTRODUCTION TO STAMP DUTY
THE GENERAL / BASIC PRINCIPLES FOR
IMPOSING STAMP DUTIES

(a) Instruments Liable to Duty – section 4

Stamp duty is charged upon an instrument / document,

not upon transaction.

If a transaction can be completed without a document,

then there is no stamp duty.
 INTRODUCTION TO STAMP DUTY
(b) Principal Instrument and Subsidiary
Instrument – section 4(3)

⚪ If several instruments are used for the completion of a

transaction, the principal instrument is subject to stamp
duty as stated in the First Schedule, the subsidiary
instrument is subject to a fixed duty of RM10.00

⚪ The parties involved shall determine which is the principal

instrument and which is subsidiary instrument.

⚪ If the principal instrument is exempt from stamp duty, all

the subsidiary instruments will also be exempted
INTRODUCTION TO STAMP DUTY

(c) Single Instrument Relating to Different Matters –

section 6

If a single instrument is used for different matters, it will be

subject to duty as if it were several and separate
instruments. This provision is to avoid duty evasion.

According to section 6(b), an instrument already subject to

ad valorem duty can be subject to further duties including fixed
duties.
 INTRODUCTION TO STAMP DUTY

(d) Liability Under Two Heads or Items

There is always a possibility that an instrument may

fall under two heads. If such case arises, then the
Collector of Stamp Duties has the right to take stamp
duty under the head which gives the higher duty.
 INTRODUCTION TO STAMP DUTY

(e) Position of Instruments Not Duly Stamped – Section 51

Meaning of Duly Stamped

Duly stamped as defined under section 2 means that:
the instrument bears an adhesive or impressed stamp of
not less than the proper amount and that such stamp has
been affixed for used in accordance with the law for the
time being in force in Malaysia.
INTRODUCTION TO STAMP DUTY
Implication of document not duly stamped
According to section 52(1) of the Act, instruments not duly
stamped cannot be admitted as evidence.
However the instrument is admissible:
(a) if duty and penalty are paid subject to certain
specific condition
(b) in a criminal court
Every person who has authority to receive evidence or the
officer of public office must impound the documents if it
was found that the document was not duly stamped.
THE STAMP ACT 1949 (ACT 378)
Registration of Not Duly Stamped Instruments

According to section 69(2), it is an offence to register

instruments not duly stamped.

The person who register such instruments shall be liable

to a fine not exceeding RM1,500.00.
VALUATION FOR STAMP DUTY

Stamp duty is generally calculated based on the

market value or the consideration whichever is the
higher.

Section 12A states the date for determining the

market value of any property under transfer being
transferred, settled or gifted shall be:
VALUATION FOR STAMP DUTY
TIME OF ASCERTAINING THE MARKET VALUE
(SECTION 12A)

Where an instrument is chargeable with duty under item

32(a) of the First Schedule, the date of determining the
market value of any property being transferred, settled or
gifted shall be: ad valorem duty

◦ in the case of a settlement or gift, the date of execution of the

the instrument of trust or settlement or gift; or

◦ in a case of a transfer implementing a sale under a duly

stamped agreement of sale and purchase, the date of
execution of that agreement.
VALUATION FOR STAMP DUTY

In the case of a transfer of any property granted by a

statutory body, a local authority or any co-operative society
registered under any laws relating to co-operative societies,
the day when the final terms of transfer had been
communicated to the transferee, and in the case of
subsequent resale of that property, the date of consent
by the statutory body or local authority or the board of the
co- operative society for that resale; or
VALUATION FOR STAMP DUTY

in the case of a transfer under a duly

stamped sale and purchase agreement where
financial agreement have been made in
accordance with the Syariah, the date of the
execution of that agreement; or

in any other case, the date of execution of the

instrument of transfer.
VALUATION FOR STAMP DUTY
Penalty
Any person obstructing or hindering the Collector or
any valuer authorized by the Collector in the
exercise of his powers or refuses to comply with a
notice under section 3A(1), shall be liable to a fine
not exceeding RM250.00
PROPERTY CONVEYANCE
Conveyance, Assignment,
Transfer or Absolute Bill of Sale: RM100 of the amount of the money value
(Form 14A-NLC)
a) On sale of any property
(except stock, shares,
marketable securities and
accounts receivables or book
debts of the kind mentioned in
paragraph (c)
For every RM100 or fractional part of
of the consideration or the market value of
the property, whichever is the greater –
RM1.00 on the first RM100,000;
RM2.00 on any amount in excess of
RM100,000 but not exceeding
RM500,000;

RM3.00 on any amount in excess of

RM500,000 but not exceeding
RM1,000,000

RM4.00 on any amount in excess of

RM1,000,000
VALUATION FOR STAMP DUTY
Stamp duty is calculated based on the MV or
consideration, whichever is higher.
In determining the Market Value, a valuer may adopt
any appropriate approach of valuation :
Market Approach
Cost Approach
Income Approach.
STAMP DUTY FOR TENANCY AGREEMENT

A lease or tenancy instrument which secures annual

rent not exceeding RM2,400 is exempted from stamp
duty. The prescribed rate of duty on the instrument
which secures annual rent exceeding RM2,400 is as
follows :
 TENANCY/LEASE
Item Lease or Agreement for
Lease
When the lease is for a period

÷
49 a) Without fine or premium Not exceeding Exceeding one Exceeding three
when the average rent one year but not years or for any
calculated for a whole exceeding-three indefinite period
year years

i. Does not exceed Nil Nil Nil

RM2400

i. For every RM250 or part RM1.00 RM2.00 RM4.00

thereof in excess of
RM2,400
STAMP DUTY FOR TENANCY AGREEMENT

Example:
Property X rents out for RM900 monthly rental for a
one year lease period.

Annual rental: RM900 X 12 = RM 10,800.

Deduct the exempted amount: RM 2,400
RM 8,400
STAMP DUTY FOR TENANCY AGREEMENT

For lease period of one year and not exceeding 1 year,

the rate of stamp duty will be RM1.00 for every
RM250 in excess of RM2,400:
So,
RM 8,400 / RM 250 X RM1 = RM33.6

Stamp duty payable is RM34

EXERCISES
Property X rents out for RM1200 monthly rental for a
three years lease period with a rent review every two
years. The first rent review the rent increased about
5%, therefore the rate of stamp duty will be:?

Property X rents out for RM1200 monthly rental for a

four years lease period with a rent review every two
years. The first rent review the rent increased about
5%, therefore the rate of stamp duty will be:?
 Solution
Rental for 2 years

RM1200 X 12 month = RM14,400

RM1200 X 12 month = RM14,400

:
RM1200 x 5% X 12 month = RM1260 x 12 =RM15120

Total = RM43920/3 =RM14,640 - RM2400

' me amount
Rental Perannum = RM12,240/250 = RM48.96
jhm
.

3 years rental = Rate RM2, _

table -

Therefore = RM49xRM2 = RM 98

SD payable is RM98