Are profits made on the sale of art pieces, jewellery and collectibles taxable? Are proceeds from the sale of properties or shares subject to tax? Once there is a disposal of asset, the question that is always being asked is whether the gain on disposal is subject to tax. In ascertaining the taxability of such gains or receipts, the first task is to determine whether such gains or receipts arise from a capital transaction or a revenue transaction.
If a gain is treated as revenue in nature rather than capital in nature, the gain may be subjected to income tax under the Income Tax Act, 1967 (the Act). On the other hand, gains which are capital in nature are not taxable in Malaysia, except for gains derived from disposal of real properties or shares in real property companies.
Whether a gain arising from a transaction is capital or revenue in nature would depend on the facts and circumstances surrounding the transaction.
Badges of Trade
The characteristic features of a trading activity, or the badges of trade as listed below, are used to test the existence of a trade or an adventure in the nature of trade:
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