It is true that tax and death are certain, and don't believe that you need to keep records for only 7 years. Well, maybe, for companies it can be without limitation of time, or more likely where there is suspicion of fraud.
I have just got a case of a family company, say Bapa dan anak2 Sdn Bhd. Before the company was sold in 1995, in 1992 the family house was transferred to Emak who transferred it to Emak Sdn Bhd. Bapa dan anak2 Sdn Bhd was purchased by a Bumiputera company solely for the land it held and the name was changed soon after.
In 2010, one of the former directors of Bapa dan anak2 Sdn Bhd received a letter from LHDN demanding the payment of RPGT amounting to some Rm13,500, allegedly arising from the transfer of the house to the mother.
Two former directors went to see the officer in charge and was told that they issued a letter to the Bumiputera company in 1998 concerning the matter, but without success, and now they tried to contact the former directors instead. This was in defence, I supposed, of their acting within 6 years under the Statute of Limitation Act (?) : transaction in 1992, action taken in 1998. But just imagine, now it is 2010, how are the former directors going to find the relevant documents, the lawyer who handled the transfer (assuming he keeps records for so many years) and so on and so forth?
Are we supposed to keep records for 12 years, or in this case, 18 years in case LHDN suddenly catches up on some unfinished business?
I would imagine the transfer of property would definitely involved the services of a legal firm, and I also assume the firm would as a matter of routine, filed the necessary form for RPGT purposes to see whether there is any liability under it.
Any lawyers out there willing to give his opinion on this?
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