Question 2

Asian Technology Sdn. Bhd (ATSB) is principally engaged in the technology business. It was incorporated on November 15, 2018 with an issued and paid-up capital of RM300,000 consisting 300,000 ordinary shares of RM1.00 each owned by Mr Andy and Mrs Andy in equal proportion. At this point the only asset owned by ATSB was cash amounting RM300,000.

On December 5, 2018, ATSB acquired a factory in Semenwang for a consideration of RM700,000 with a view to commence business. On that date ATSB became a Real Property company.

On December 20, 2019, ATSB acquired a parcel of vacant land measuring 10 acres in Sg Long for a consideration of RM5 million financed by cash and borrowings. The construction of the college campus costing RM10 million was completed in December 2011.

To finance the construction of the factory, ATSB obtained a term loan facility of RM10 million from BBN Bhd and increased its paid-up capital to RM1 million, and the amount due to shareholders of RM700,000 was converted to equity by the issuance of 700,000 ordinary shares of RM1.00 to Mr Andy and Mrs Andy in equal proportion on July 1, 2020.

On May 10, 2021, Mr Andy was offered by Baliy Bhd (BB) to acquire his 50% stake in ATSB at a price of RM10 per share. Mr Andy took up the offer and sold his 500,000 shares in ATSB to BB for a total consideration of RM5 million, and paid commission of RM50,000 to the agent who procured the sale.

Required:

Compute the real property gains tax, if any, payable by Mr Andy on the disposal of his 500,000 shares in ATSB to BB. Show all your workings.(10 marks)