a$)$ Mr James purchased a piece of land and signed an agreement for its purchase on $14$ July

$2016$ at an agreed price of RM$339,270.$ He settled the payment fully on $30$ September $2016$ upon

obtaining a bank loan. The vendor then transferred the land to him on $21$ November $2016.$ Mr

James incurred the following expenses in acquiring the land: stamp duty of RM$5,785$ and legal

fees of RM$2,825.$ Mr James spent RM$47,340$ on levelling the land after the purchase.

In February $2017,$ the land was partially damaged by a flash flood and he was paid a compensation

of RM$30,000.$ Again in April $2018,$ the land was flooded, and he received a further compensation

of RM$15,000.$

In October $2018,$ Mr James decided to sell off the land. He advertised for the sale and a buyer

responded and paid a deposit on RM$7,000$ after some initial negotiation. The buyer was not

successful in obtaining a bank loan to buy the land, and Mr James forfeited the deposit of

RM$7,000.$

A dispute arose regarding the title to the land from a third party, and Mr James had to retain a

lawyer to successfully defend his right to the land. The legal fee was RM$7,000.$

Subsequently, another buyer agreed to purchase the land for RM$433,950$ after a hard bargain, and

he signed an agreement with Mr James on $15$ October $2019.$ The payment was settled on $15$

November $2019.$ The title was transferred to the buyer on $15$ December $2019.$

In securing a buyer for the land, Mr James had incurred the following expenditure: valuation fee:

RM$6,707$; advertisement: RM$1,184$; brokerage fee RM$9,468.$

Up to the time of sale, Mr James had incurred an interest charge of RM$63,120$ on the mortgage

loan he took to buy the land and had also incurred legal fees of RM$3,400$ to a lawyer to advise and

handle the disposal.

Required:

In relation to the Real Property Gains Tax $($RPGT$)$ Act $1976,$ determine the RPGT for the disposal

of the land.

$(20$ marks$)$

$($b$)$ Mr James have another property, a piece of vacant land. On $11$ December $2019,$ his land

costing RM$240,000,$ was compulsorily acquired by the Government for the construction of a

railway station. He received compensation of RM$550,000.$

Required:

Discuss the tax implication on the receipt of compensation of RM$550,000.$

$(5$ marks$)$

Total: $25$ marks