RPGT: New Section 19A – Relief other than in respect of Error or Mistake

Finance (No. 2) Bill 2023 proposes the Real Property Gains Tax Act 1976 is amended by inserting a new section 19A after section 19 as follows:-

“Relief other than in respect of error or mistake

section 19A(1) Where any person, who has furnished to the Director General a return in respect of a chargeable asset disposed of in a year of assessment in accordance with section 13 and has paid tax for that disposal, alleges that the assessment relating to that year of assessment is excessive by reason of—

1. any exemption, relief, remission, allowance or deduction granted for that year of assessment under this Act or any other written law is published in the Gazette after the year of assessment in which the return is furnished; or
2. the approval for any exemption, relief, remission,
3. allowance or deduction is granted after the year of assessment in which the return is furnished,

that person may make an application in writing to the Director General for relief.

Section 19A(2) The application under subsection (1) shall be made within five years after the end of the year the exemption, relief, remission, allowance or deduction is published in the Gazette or the approval is granted, whichever is the later. Section 19A(3) Upon receiving an application under subsection (1), the Director General shall inquire into the matter and may give such relief by way of repayment of tax which appears to the Director General to be just and reasonable.

Section 19A(4) An application under subsection (1) shall be made as nearly as may be in the same form as a notice of appeal under section 99 of the Income Tax Act 1967.

Section 19A(5) Where the applicant is aggrieved by the Director General’s decision on the application under subsection (1)—

1. the applicant may, within six months after being informed of the decision, request in writing to the Director General to forward the application to the Special Commissioners;
2. the Director General shall, within three months after receiving the request, send the application forward as if he were sending an appeal forward pursuant to section 102 of the Income Tax Act 1967; and
3. the application shall thereupon be deemed to be an appeal and shall be disposed of accordingly.”.

Overview of Section 19A

The proposed new Section 19A introduces a mechanism for taxpayers to seek relief when they believe their assessment is excessive due to changes in exemptions, reliefs, remissions, allowances, or deductions after submitting their tax return.

This section provides taxpayers a process for applying for relief in such cases.

Key Points:

Grounds for Relief:

• A person who has furnished a return for a chargeable asset disposed of in a year of assessment under Section 13 and has paid tax may apply for relief.
• The relief is sought when the assessment is considered excessive due to changes in exemptions, reliefs, remissions, allowances, or deductions:
  • Published in the Gazette after the year of assessment.
  • Approved after the year of assessment.

Application for Relief:

• The taxpayer must make a written application to the Director General within five years after the end of the year in which the relevant changes are published in the Gazette or approved, whichever is later.

Director General’s Inquiry and Relief:

• Upon receiving the application, the Director General will inquire into the matter.
• The Director General has the discretion to grant relief by way of tax repayment if it is deemed just and reasonable.

Application Format and Appeal Process:

• The application for relief must be made in a format similar to a notice of appeal under Section 99 of the Income Tax Act 1967.
• If the applicant is dissatisfied with the Director General’s decision, they can request, within six months of being informed, for the application to be forwarded to the Special Commissioners. The forwarded application is then treated as an appeal and is disposed of accordingly.

Example for Illustration:

Suppose a taxpayer sells a chargeable asset and pays tax based on the prevailing exemptions and reliefs.

After the tax payment, a new exemption was introduced through the Gazette publication that would have significantly reduced the tax liability for that year.

Within five years of the Gazette publication, the taxpayer can apply for relief under Section 19a.

Tax Impact:

This section provides a mechanism for taxpayers to seek relief when changes in exemptions, reliefs, remissions, allowances, or deductions occur after the submission of their tax return.

The impact is a potential reduction in tax liability if the Director General deems it just and reasonable to grant relief based on the changes in tax provisions.

The appeal process ensures a fair review of the Director General’s decision.