Budget 2014: Property Sector Hit Hard by RPGT and DIBS ruling

As widely expected, property sector would be one of the hardest hit sector in view of the proposed cooling measures to be imposed. Out of the 3 tightening rules forecast by Finance Malaysia, 2 already Bingo! (Read our previous articles regarding property sector "3 Tighter Rules for Property Sector?" and "3 Critical Factors to watch out by Year End")

These cooling measures announced highlighting that government will not hesitate to curb property speculations and to ensure a affordable property prices. Of course, property developers will be the one screaming painfully.

The 3 Key Measures:

1. Higher Real Property Gains Tax (RPGT)
   This was the 3rd consecutive year government raised RPGT. Even said so, it was just reinstated back to its original rates since 2007. The different this time compared to previous rounds was different set of rates to be imposed on different categories of buyers as shown below:
   
   
   
   
   
   
   
2. Banning DIBS
   As predicted by us previously, DIBS was deemed to be one of the key motivating factor for speculators, thus pushing up property prices to current level. By banning DIBS, it will effectively diminished the speculative interest as the cost of investment increase with interest payment during construction period. It's good to genuine and first-time house buyers.
   
   
3. Higher minimum Purchased Price for Foreigners
   To minimized influx of hot money shoring up local property prices, government raised the minimum purchased price to above RM1mil from RM500k per unit. However, this doesn't impact the market much because most properties purchased by foreigners are above RM1mil. Nevertheless, foreigners' favorite investment hotspot, such as Iskandar or KLCC or Mont Kiara area would be affected.

Would this be the end of property up-cycle?

Budget 2014: Good to have GST ?

Definitely, one of the hottest debate in Budget 2014 would be the implementation of 6% Goods and Services Tax (GST) starting April 2015. Although it was opposed strongly by opposition parties, government pushed ahead with its implementation emphasizing GST as a "fair and comprehensive" tax as the current tax system has many weaknesses.

Why GST is a MUST ?

Without you realizing, our current tax system has many loopholes whereby many people do not fulfill their responsibilities as a taxpayer. They tends to under-stated their real income, paying less tax than they should, or even worse... none. However, under the GST system, everyone will be taxed every time you spend.

And, if you're paying tax now, you should be happier. Why? Simply because government have a wider tax revenue now with GST because everyone is paying tax. Wouldn't it better?

Why April 2015 ?

Instead of Jan 2015 (expected date), government now has more time to explain and educate the public on GST. In other words, government is playing it safe, "buying time" to minimize the misunderstanding among Malaysians.

Is it okay ?

Implementation is very vital. It's best to implement GST and lowering down the personal income tax rate simultaneously. And, this time government did consider this well. As long as it was implemented properly, this should bode well for our nation to broaden the tax revenue, thus reducing the budget deficit and maintaining the credit rating of our country's obligations.

Why MyEG ?

Strange question over here? Yes. As we knew, MyEG already successfully completed its trial version for GST computation in business premises. Do you know why MyEG shoot up to all-time high to closed at RM2.25 today?

Money Management Concept of 70s, 80s, 90s

When come to money matters, different generations have their own thinking. Before reading on, please listen to your heart deep down inside, what is your thinking? Hahaaa.... Bingo? Let's see...

70s: Saving

Generally, this generation not only hardworking in job, but also hardworking in saving. They usually save their money in banks or placed it in fixed deposit, cultivating a very good saving habit. Pre-retirement: Wealth Accumulation and investing in their children's education. Post-retirement: Wealth Enjoyment and depending the financial support from children. That's a great trade off (at least for that generation)!!!

80s: Self-Sustainable

Due to higher inflation, this materials emphasis generation feeling the pinch of not enough money every month. Credit card, car loan, housing loan, insurance premium... !!! No wonder many of them financially critical when come to month ends. Parents for 80s will be more than happy, if their 80s children doesn't need their financial support anymore. God bless!

90s: Consuming
For them, money is meant to be spent. In other words, this would be a great loss to them if they don't enjoy life now. Very often, they learnt how to spend first before saving money. Anyway, parents were their ATM (Automatic Tomorrow's Money), continuing financial support for their beloved children. Hence, financial management and saving concept for 90s usually is poorer.

So, is this true?

UnTold EPF RM2500 Death Benefit?

Lately, there is a chain email spreading across social media regarding EPF Death Benefit as below:

" ATTENTION to everyone who has an EPF account !!! No matter how old are you, no matter how long you have held your EPF account, no matter how much money you have in you EPF account, and matter how long you have paid for your EPF, according to Government Law, EPF will need to pay RM 2500 to an EPF account holder's family when he/she died (family members need to claim the RM 2500 within 2 months). EPF never inform us about this, I reckon very few people's family did actually receive this RM 2500 when his/her family member died because not many people know about this. Where did this RM 2500 goes when the died's family did not claim for RM 2500? Someone's pocket ??? We don't know! So please bombarded this info to all your families, relatives, colleagues and friends, let them know about this info and remember to claim RM 2500 when his/her family die. Don't let this RM 2500 goes to someone's pocket !!! "

Is this true? Below is the respond from EPF:

The above email contained untruthful accusation. The EPF would like to inform its members that a Death Benefit payment of RM2,500 will be presented to the dependents of the deceased members as a gesture of compassion and to ease their financial burden. However, this benefit will only be given once and subject to the following conditions:

• Malaysian citizen;
• Member has not reached the age of 55 at time of death;
• Application for Death Withdrawal is made within 6 months from the date of the demise of the member.

The Death Benefit is payable to the members’ dependent or next-of-kin when the application for Death Withdrawal is made. 

The EPF would also like to emphasis that the money for Death Benefit comes from EPF’s investment earnings and not from the members’ savings. If the dependent does not qualify under the conditions for Death Benefit, the money will still remain with the EPF to be distributed to all members as annual dividend.

Source: EPF