En. Segar had acquired a landed property from Mr. Kamal for RM274,725. He signed the agreement on 15 July 2016 and settled the payment using a bank loan on 30 September 2016. The property ownership was then transferred to his name on 30 November 2016. In acquiring the property, En. Segar incurred stamp duty of RM4,495 and legal fees of RM2,373.

Upon acquisition, En. Segar spent RM37,851 on extending and renovating the property. On 10 April 2017, the property was partially damaged by fire and he received insurance compensation of RM48,420. In September 2017, the property was flooded and he managed to make an insurance recovery of RM12,088 from his insurer.

In October 2018, En. Segar was approached by a buyer to purchase the property who paid a deposit of RM6,600 and proceeded to make an application for a bank loan. The buyer however, was not successful in his application and as per the agreement, En Segar then forfeited the deposit of RM6,600.

En. Segar‟s ex-wife had filed a claim on the property and En Segar retained a lawyer to successfully defend his right to total ownership. The legal fee was RM7,700.

En. Segar sold the property to Raymond for RM354,200 and an agreement for the sale was signed on 15 April 2019. The payment was fully settled on 16 May 2019. The ownership was transferred to Raymond on 17 June 2019.

In securing a buyer for the property, En Segar had incurred the following expenditure:

i) valuation fee RM5,495

ii) brokerage fee RM7,692

iii) advertisement: RM977

En. Segar had incurred an interest charge of RM51,318 on the bank loan he took to buy the property.

Required:

a) In relation to the Real Property Gains Tax 1976 (as amended), compute the chargeable gain arising from the disposal of the property, after exemption under Schedule 4 of the said Act. (20 marks)

(b) En. Segar have another property, a piece of vacant land. On 11 December 2019, his land costing RM240,000, was compulsorily acquired by the Government for the construction of a railway station. He received compensation of RM550,000.

Required: 

Discuss the tax implication on the receipt of compensation of RM550,000. (5 marks)