premium for land alienation in taxation

1. PREMIUM FOR LAND
ALIENATION
SGHL 2153 : TAXATION
Hairul Amirul bin Harun B15GH0073
Khairul Akhmal bin Abdul Rahman A14GH0156
Nurul Atikah bt Arifin B15GH0049
Nursyuhadah bt Bahari A14GH0151
Nurul Amira bt Fadzilah A14GH0107
Noraihan bt Mohd Razali A14GH0073
Siti Zahrah bt Aminuddin B15GH0057
Phoon Yin Yi B15GH0052
Norhedayah bt Hamzah A14GH0159

2. • Disposal / alienation
• State Authority have powers to dispose land which is divided
into 2 categories:
a) Disposal of alienation
• Freehold
• Proprietary lease
b) Disposal other than alienation
• Reserve Land
• Temporary Occupancy Licence
• Permit to Extract , Remove and Transport Rock Material
• Use of Airspace
INTRODUCTION
2

3. • when the state authorities agreed to to alienate
them completely, the applicant must pay as follows:
a) an annual tax for the first year
b) premium
c) fees for surveyor land
d) payments related to the preparation and registration
of documents

4. WHAT IS LAND PREMIUM?
LAND PREMIUM IS THE AMOUNT OF MONEY IN THE FORM OF
PREMIUM TO BE PAID TO THE LAND AUTHORITY IN THE EVENT OF
THE APPLICATION FOR :
CHANGE OF AND USE
/CONVERSION
SUBDIVISIONAMALGAMATION
PREMIUM
Lump sum paid by the lessee to
the State Authority to extend
the lease
FURTHER PREMIUM
Charge on approval of
variation for :
• Change category of land
use
• Annulled the conditions
TYPES OF LAND PREMIUM
LAND
ALIENATION

5. CONVERSION OF AGRICULTURAL STATUS TO
ANOTHER AGRICULTURAL STATUS
To:
• Rubber- <= 4 hectares (RM 75.00)
• Rubber- > 4 hectares (RM 124.00)
• Palm Oil Tree and Cocoa - <= 4 hectares (RM 99.00)
• Palm Oil Tree and Cocoa - > 4 hectares (RM 149.00)
• Coffee, coconut and tea- (RM 50.00)
• All types of Plantation and Fruits- (RM 75.00)
• Rice Plantation (RM 37.00 per hectare)
• Animals (RM 99.00 per hectare)

6. CALCULATION OF LAND PREMIUM
FOR BUILDING (RESIDENTIAL)
EXAMPLE 1
•Premium for residential land:
Determine the premium of bungalow land with 99-year leasehold interest expiring on
2060 if the owner want to extend the lease for another 99 years on 2011. The market
value of land is RM400,000.
1/2 x 1/100 x RM400,000 x 49 years = RM98,000
1/2 x 1/100 x value of land x (term of new lease – balance of existing lease)

7. CALCULATION OF LAND PREMIUM
FOR BUILDING (RESIDENTIAL)
EXAMPLE 2
•Further premium for conversion from Agricultural Land to Building Land:
•The rate of land premium : 15% of Current Market Value (CMV)
Developers Maju Sdn Bhd has applied to change the category of their land from
agriculture to residential use. The current market value of the agriculture land is
RM1,000,000 which located in Kuala Selangor. When the application approved, the
market value of that conversion land (residential) increased to RM2,000,000. How
much that developer should pay the further premium if their application approved?
RM2,000,000 x 15% = RM300,000
So, the further premium that the developer should pay is RM300,000.

8. ADDITIONAL PREMIUM FOR
BUILDING (RESIDENTIAL)
•Additional premium is the charges imposed towards development in excess of the
provision which were agreed between the payer premium and land administrator.
Bil. Residential Per Plot
1. Low Cost House RM100
2. Terrace House
2.1 Single Storey
2.2 Double Storey
2.3 For Each Additional Storey
RM150
RM250
RM100
3. Semi Detached House
3.1 Single Storey
3.2 Double Storey
3.3 For Each Additional Storey
RM250
RM350
RM200

9. ADDITIONAL PREMIUM FOR
BUILDING (RESIDENTIAL)
Bil. Residential Per Plot
4. Market, High Rise Apartment (Low Cost) and Flat
(Low Cost)
4.1 A plot with an area below 500 sq metre
4.2 A plot with an area of 501 – 1,000 sq metre
4.3 A plot with an area of 1,001 – 2,001 sq metre
4.4 A plot with an area of 2,001 – 3,000 sq metre
4.5 A plot with an area of 3,001 sq metre and above
RM1,500
RM2,000
RM3,000
RM4,000
RM5,000
Plus
RM1,000
for every
500 sq.

10. • Number of premium = 20% of the difference in the market value
before and after the variation.
• FORMULA:
3 × 1 × value of land × (term of new lease-balance of existing
lease)
4 100
• The calculation of the additional premium is based on the State
Land Rules. The basis and rates of premium different between the
respective states in Malaysia. A market value has to be determined
first in order to calculate the premium of the industrial land.
INDUSTRIAL LAND

11. 99 year leasehold interest expiring on 2069. If the owner
want to extent the lease for another 99 years on 2015. The
calculation will be:
The market value is RM7,000,000
Market value before variation = RM 5,000,000
Value of land = RM 7,000,000 – RM5,000,000
= RM 2,000,000 x 0.20%
= RM 400,000
CALCULATION

12. 1970 2015 2069 2114
99 years
99 years
Formula:
3 × 1 × value of land × (term of new lease-balance of existing lease)
4 100
3 x 1 x RM 400,000 x 54 years
4 100
Premium paid = RM 162,000.00

13. CONCLUSION
Amount of money in premium to be paid to the L.O
Source of income of state government
Different premium for each state
Premium for each category (agricultural, residential
and industrial) are different
Determine market value to calculate the premium
Higher market value, higher premium