Cases where you don’t have to pay tax on gold sales
When your gold sale is 500,000 yen or less, it’s tax-free
Any profit from selling gold is generally considered a ‘capital gain’ and is subject to tax. However, under certain conditions, it is possible to be exempt from this tax.
One of these is the “Special Deduction of 500,000 yen.”
This is a system where you are not taxed if your annual capital gains are 500,000 yen or less.
For instance, if your profit, after deducting the purchase price and fees, is 400,000 yen, it falls within the 500,000 yen deduction limit, and thus, no tax is levied.
By skillfully utilizing this deduction, you can receive the profits from your sale tax-free. As this special rule is determined on a yearly basis, it is important to be mindful of the timing of your sale.
The relationship between capital gains and the special deduction.
Capital gains refer to the profit obtained from selling assets such as gold, after deducting acquisition costs and fees. A special deduction of 500,000 yen per year is applied to these capital gains.
For example, if you purchased gold for 23,200 MYR, paid 1,450 MYR in fees, and sold it for 43,500 MYR, your capital gain would be:
43,500 MYR – (23,200 MYR + 1,450 MYR) = 18,850 MYR
After subtracting the 14,500 MYR special deduction, the taxable amount would be 4,350 MYR.
This means that by planning your sales so that your profit doesn’t exceed 500,000 yen, you can convert your gold into cash without paying tax.
The difference between “tax-free” and “no need to declare.”
“Tax-free” and “no need to declare” sound similar but have different meanings. If the profit you make from selling gold falls within the special deduction for capital gains (up to 14,500 MYR), you generally don’t have to pay tax. However, this only means that no tax is incurred, and there may be cases where you still need to file a tax return.
For example, if in the same year you are claiming other income deductions such as for medical expenses or a home loan, and you are applying for a tax refund, you must also include the tax-free profit from your gold sale in your tax return.
This is because the Inland Revenue Board needs to have a full picture of all your income to accurately determine the correct amount of tax. Therefore, it is important not to assume that “tax-free” means you don’t have to declare anything, and instead, to consider your situation in conjunction with any other deductions you may be claiming.
The taxation system for profits from gold sales.
Capital gains or miscellaneous income—which is your case?
According to income tax rules, any profit earned from selling gold is treated as either “capital gains” or “miscellaneous income.”
For example, a one-time sale, such as selling a gold necklace you bought a long time ago for the first time, is categorized as “capital gains.”
In contrast, if you are repeatedly buying and selling gold to profit from price fluctuations, or if you are doing it continuously for business purposes, it may be classified as “miscellaneous income.”
The difference in tax rates between short-term and long-term capital gains.
When the profit from selling gold is treated as capital gains, it is categorised into either “short-term capital gains” or “long-term capital gains” based on the holding period, and each has a different tax rate.
Specifically, if the period from purchase to sale is five years or less, it is considered short-term, and if it is over five years, it is considered long-term.
The mechanism is that for short-term gains, the tax rate is applied to the full amount of the profit after deductions, while for long-term gains, the tax rate is applied to half of the amount after deductions.
This means that by selling after holding for more than five years, the taxable amount is effectively halved, and you can significantly reduce your tax. Let’s check the difference in the table below.
| Holding Period | Income Category | Features of Taxation Method |
| 5 years or less | Short-term Capital Gains | The entire amount after deduction is taxable. |
| More than 5 years | Long-term Capital Gains | Half (1/2) of the amount after deduction is taxable. |
The reason why the 5-year holding period is a crucial turning point for tax savings.
When you sell gold, one crucial point you cannot overlook is the “holding period” from the time of purchase.
This is because if you sell gold that you have held for more than five years, there is a special benefit where the amount subject to tax, after deductions, is halved for the purpose of calculating capital gains.
This is a preferential measure for “long-term capital gains.” For example, even if your profit was 20,300 MYR, after subtracting the special deduction of 14,500 MYR, only half of the remaining 5,800 MYR—which is 2,900 MYR—would be taxable. If this were a short-term gain, the entire 5,800 MYR after the deduction would be taxable.
Therefore, since waiting just a little longer to sell can lead to tax savings, you should always check the holding period when considering selling your gold.
Cases where annual profits from sales are RM14,500 or less.
If the profit from selling gold, when calculated as capital gains, is 14,500 MYR or less per year, it will not be subject to tax due to the special deduction.
It is important to note that this amount applies to the “profit,” not the “sale price.” For example, even if you sell gold that you bought for 29,000 MYR for 34,800 MYR, you might not be taxed because the profit is only 5,800 MYR.
By strategically distributing your sales over time, you can keep your annual capital gains within the 14,500 MYR limit and adjust your sales to avoid paying tax. This is especially useful if you own multiple gold items; instead of selling them all at once, you can sell them over a few years to maximize your tax-free allowance.
Special rule for small-value transfers of less than 8,700 MYR, such as jewelry.
Under tax law, there is a special rule that allows for tax exemption even if a profit is made, as long as the sale price for a single item or a set of “personal movable assets” is less than 8,700 MYR.
This provision applies to items such as paintings, antiques, and jewelry, and includes gold necklaces and rings.
When this special rule is applied, even if you make a profit from the sale of gold, you will not have to pay any tax as long as the item is sold for less than 8,700 MYR.
However, as the criteria are based on the price of “one item” or “one set,” caution is needed when selling multiple items together or products sold as a set.
If the appraised value is close to 8,700 MYR, it is safer to confirm the price beforehand before selling.
For employees with a side income of 5,800 MYR or less.
For employees with an annual income of 580,000 MYR or less, there is generally no obligation to file a tax return if their miscellaneous income and capital gains from side jobs, etc., are 5,800 MYR or less per year.
As the profit from selling gold is included in this category, no declaration is required if the total, combined with other side incomes, is within 5,800 MYR. For example, you must calculate it together with profits from flea market apps or fees for writing.
By using this “5,800 MYR rule,” it is possible that not only will you not have to pay tax on a small-value gold sale, but you may also not have to file a declaration at all.
However, even if a tax return is not required, you may still be asked to file a resident tax declaration, so it is safe to check the rules of your local municipality.
Legal ways to save on tax when selling gold.
A strategy to suppress annual profit through planned, dispersed sales.
If you anticipate making a large profit from selling gold, it is an effective strategy to sell it in a planned manner over several years instead of all at once.
For example, if you make a capital gain of 29,000 MYR in one year, you will be taxed. However, if you sell it in two installments of 14,500 MYR each over two years, you can apply the special deduction in both years, potentially making it tax-free.
To effectively use the annual tax-free limit of 14,500 MYR, a dispersed sale over multiple years is a valid tax-saving method. By using this method, you can steadily convert your gold into cash while bringing your tax burden close to zero.
To maximize the effect, you should plan your sales in advance, so be sure to consider the timing along with market prices.
How to use the 5-year rule to halve the tax rate through long-term ownership.
If your gold holding period exceeds five years, the capital gains become “long-term capital gains,” and only half of the profit after deductions is subject to tax.
For example, even if you have a profit of 17,400 MYR, and after the 14,500 MYR deduction a remainder of 2,900 MYR, with long-term gains, only 1,450 MYR is taxable. This halves your tax burden compared to short-term gains.
If your holding period is just a few months away from exceeding five years, waiting a little longer to sell could lead to a significant tax-saving effect.
Furthermore, even for gold acquired through inheritance or as a gift, you can carry over the previous owner’s holding period, so it might surprisingly be classified as a long-term capital gain. Before selling, it is advisable to check the holding period and make an effort to sell when it is over five years.
The significant benefits of keeping your acquisition cost certificate.
To calculate the profit from selling gold, the acquisition cost, which proves “how much you bought it for,” is extremely important.
If you cannot prove the acquisition cost, the tax office may calculate it using a “deemed acquisition cost” of 5% of the sale price, which can result in a larger taxable amount.
Therefore, it is crucial to keep documents such as receipts, invoices, or payment slips from the time of purchase, as they serve as proof of the acquisition cost and can help reduce your future tax burden.
Especially for items held for a long time, which are prone to being lost, it is also recommended to save a digital copy. By having clear proof of the acquisition cost, your capital gains calculation will be more favorable, and you can avoid paying unnecessary taxes.
Summary
When selling gold, by having a good understanding of how to do so without paying tax, you can maximize the profit you are left with.
There are surprisingly many conditions for tax exemption, such as the special deduction of up to 14,500 MYR per year, the special rule for jewelry and other items under 8,700 MYR, and the 5,800 MYR rule for employees.
Furthermore, strategies like the mechanism to halve the taxable amount through long-term ownership of over five years, or selling in installments over several years to utilise the tax-free allowance, are also effective.
In addition, keeping documents that can prove the acquisition cost and being mindful of the frequency of your transactions to avoid being classified as miscellaneous income are key to tax savings.
By correctly understanding the system and being creative with your timing and methods of sale, it is very much possible to achieve these goals.
Frequently Asked Questions
If you sell gold, up to how much is tax-free?
Capital gains from selling gold are tax-exempt due to a special deduction if the annual profit is 14,500 MYR or less. This applies not only to gold bullion but also to the combined capital gains from other assets subject to comprehensive taxation, such as stocks and real estate. For example, if your profit from selling gold is 8,700 MYR and you have no other capital gains, the total is 14,500 MYR or less, so the taxable amount is zero.
When selling gold, will I not have to pay tax if the amount is 14,500 MYR or less every year?
Yes. If the total annual capital gains (profit after deducting acquisition costs and fees), combined with other capital gains, is 14,500 MYR or less, you will not be taxed for that year. However, it is important to note that if you make sales over multiple years or have other capital gains, all of them will be aggregated.
If I sell gold for 29,000 MYR, how much tax will I have to pay?
Even if you sell gold for 29,000 MYR, whether tax is applied or not is determined by “how much you bought it for.”
For example, if the purchase price was 17,400 MYR, the profit would be 29,000 MYR – 17,400 MYR = 11,600 MYR. Since this profit is within the 14,500 MYR special deduction, no tax is applied.
On the other hand, if the purchase price was 8,700 MYR, the profit would be 700,000 yen, and the taxable amount after the deduction would be 20,300 MYR – 14,500 MYR = 5,800 MYR.
For instance, if a person with an annual salary of 116,000 MYR earned this 5,800 MYR in capital gains, their tax burden is expected to be approximately 1,160 MYR, which includes income tax calculated as 5,800 MYR × 20% – deduction” and resident tax as “5,800 MYR × 10%.”
As such, whether you are taxed depends on the purchase price, making it important to calculate your profit in advance.
If gold is sold for 58,000 MYR or more, will I have to pay tax?
When the gold sale amount is 58,000 MYR or more, the buyer will submit a “Payment Record” to the tax office, and the tax office will be aware of this information. You must be careful because a tax return may be required even if your profit is 14,500 MYR or less. The obligation to submit a Payment Record generally arises when the sale amount is 58,000 MYR or more.
