How to approach the Advanced Taxation exam

You will need a detailed knowledge of the ATX syllabus. This includes assumed knowledge of technical areas brought forward
from the TX syllabus, which must be refreshed and updated for the examinable Finance Act. Be aware that:
 All questions will be scenario-based
 All questions will contain a mixture of computational and discursive elements
 More than one topic area of the syllabus may be examined in each question
 Questions may involve
 Consideration of more than one tax
 Some elements of planning
 The interaction of taxes
Links to support resources
 Technical articles
 Examiner’s approach article
 How to earn professional marks
 Past exam questions and answers
 Examiner’s reports
Writing a good answer – how to demonstrate professionalism:
Question 1 will include 4 professional marks, typically for a memo or notes to your tax manager. Marks may be awarded for:
 Overall presentation of the requested format
 The approach taken to problem solving
 Clarity of explanations and calculations
 Relevant advice
 Effectiveness of communication
Tackling the exam - PREPARE
These are not mutually exclusive, for example:
―Prepare the following notes and calculations…‖ CALCULATE
―Calculate … with supporting explanations …‖ and
―Explain … with supporting calculations …‖ EXPLAIN
ATX – ‘Think more – write less’
Heed this mantra from the examining team to improve your performance. THINK

Requirements are everything – How will you do what the requirement is asking? Planning your answers is crucial.
What have you been asked to do?
What do you not need to do?
Have you identified the relevant issues?
Have you thought about the point
you want to make, before you Make sure you know why you‘re doing a particular calculation before you prepare it.
start writing? This will help you Will it help you to answer the requirement?
to write concisely.
Tips for success in the ATX exam
✓ Identify all the requirements in the Section A case study questions in:
 The requirements section
 The document referenced in the scenario (e.g. e-mail from your manager)
✓ Allow sufficient time to analyse requirements into all constituent parts to ensure every part is answered
✓ If given certain figures to use, do not waste time recalculating them
✓ Relate any calculation or discussion to the context in the given scenario
✓ Do not waste time addressing issues which have not been asked for
✓ Appreciate that professional skills are required throughout all answers to achieve high marks
Preparation advice from the examining team
 ‗Know your stuff‘ – you must
o Have thorough, precise knowledge of the entire syllabus
o Refresh brought forward knowledge from the TX-UK syllabus
 Practice questions under exam conditions.
 Learn how to spot ―triggers‖ which are there to point you towards the required answer
 Be prepared to answer questions on ethical issues
 Be ruthless in critiquing your answers

1 T55555555ype text here5

 LEASING
\

Normal Lease Lessor Lessee Deemed sale Lessor Lessee

Under ITLR’86
Taxable Income/ Lease rental Lease rental
Deductible Expense is taxable is deductible Taxable Income/ Lease interest Lease interest
Deductible Expense is taxable is deductible
Claim for Eligible Not Eligible
capital allowances Claim for Not Eligible Eligible
capital allowances

REGULATION 2
The gross income from leasing transactions shall be deemed to be separate &
distinct business source from the other activities of that person.

REGULATION 3 Lease rental receivable is recognised to have been accrued evenly

throughout the period of the lease term as follows:
  
  Lease rental = No. of days in that basis period X Total lease
 receivable Total no. of days in lease agreement rental receivable

REGULATION 4 [Lease agreement = sale agreement]

Option to Beneficial Acquisition of Special Purpose Sale and Lease- Lessee has
purchase Ownership asset below Asset back right to sell
 this rule only to market value  Custom made  Where lessee and he
sale and leaseback  m.v. = assets has claimed receives
situations where 80% of  Asset is capital proceeds of
the lessee has not structurally allowances sale
TWDV 2
claimed capital incorporated in respect of
allowances before. into a building asset prior to
the lease.
2
 UNIT & PROPERTY TRUST

GAIN ON REALISATION OF INVESTMENT - S61(1)(b) Proviso

The gain on realisation of investment shall not be treated as income of the trust body i.e. it is not taxable for income tax.
However if they are real property or RPC shares than there could be RPGT implications.

PERMITTED EXPENSES
 manager's remuneration;
SPECIAL DEDUCTION FOR QUALIFYING  maintenance of register of unit holders
 share registration expenses
CAPITAL EXPENDITURE - S63A  secretarial, audit and accounting fees,
telephone charges, printing and stationery
QCE  costs and postage
 P & M for the purpose of deriving rent
Deducted from the FORMULA
from the letting of real property.
adjusted income of rent B
 Expd for alteration of an existing
from the letting of real A x --
building for installing that P&M but
property 4C
cannot exceed 75% of the aggregate
cost of asset plus this expd.
Conditions  Expd on preparing or levelling land to A total permitted expenses incurred
Incurred QCE prepare a site for installing P&M but B gross income consisting of dividend, interest and
Owner cannot exceed 10% of the aggregate rent chargeable to tax
Use for that purpose cost of asset plus this expd.. C aggregate of gross income consisting of dividend &
(whether interest (exempt or not),and rent and gains made
from the realisation of investments (whether chargeable to
MECHANICS OF THE ALLOWANCE - S63A(2) tax or not)
 1/10 of the capital expenditure incurred  Minimum deduction 10%
 Unabsorbed allowances cannot be c/f  No c/f of unabsorbed deduction
 Deducted in arriving at total
income b4 approved donations
P35 Sch6 Exemption of Interest Income
 Sec / bonds issued / guaranteed by Govt / St. Govt P35A Sch6 Exemption of Interest Income
 Deb. NOT L/St approved by SC 3 paid or credited by a bank or financial institution licensed
 BSM issued by BNM Type text here5
under FSA 13 or IFSA 13 or DFIA 02 but excludes those
from wholesale fund which is a money market fund,
3
 REAL ESTATE INVESTMENT TRUST & PROPERTY TRUST FUND
INVESTMENT
Size
 Initial - min SINGLE PURPOSE
RM 100 COMPANIES (SPC) REAL ESTATE (RE) REAL ESTATE /
million  unlisted companies  registered leasehold NON REAL
 Subsequent  principal assets property ESTATE RELATED
funds comprise of real  real estate - outside ASSETS
launched estate Malaysia
min. RM 25 - subject to SC
million approval
LIQUID ASSETS ASSET BACKED
- listed REIT
SECURITIES

LISTED REIT BORROWINGS

 Min 75% total assets in To acquire RE or SPC UNLISTED REIT
* RE * SPC *liquid assets *RE related assets – with approval of SC & Trustee  Min 70% total assets in
 Min 50% of total assets in Max: 35% of total asset value at *RE *RE related assets *SPC
*RE or *SPC the time of borrowing

 Rental Y (all properties) = Single Biz Y source

Chy’ble Income @ 24%  S33 & 34 deduction available
 Exempt if 90% of  incl: manger‘s remuneration
 excl: trustee‘s fee
TY is distributed when subsequently distributed No CA nor Loss c/f
 Latest 2 months unit holder pays tax  Current year loss cannot set-off other Y
after fin. y.e. but claims S110 set-off

10% Penalty RPGT & Stamp Duty

NON exempted on transfer of
R Co no wht / NR COMPLIANCE WHT & Penalty – RP to REIT/PTF
Co 24% wht debt due to Govt.
/others 10% wht
4
 INVESTMENT HOLDING COMPANY

DEFINITION
GROSS INCOME PERMITTED FORMULA
UIHC EXPENSES B
 activities consist mainly UIHC
 Holding investment  Directors Fees A x --
of holding investments &
Section 4 (c) to (e)  Salary & Allowances 4C
 >/= 80% of its GY
 Other Y incl  Management Fees A total permitted expenses incurred
(exempt or not) is derived
business  Secretarial, Audit, B gross income consisting of dividend,
therefrom. interest and rent chargeable to tax
Section 4 (f) Accounting
LIHC in addition, must be
 is resident in Malaysia LIHC  Telephone Printing & C aggregate of gross income consisting of
 All income are Stationery, Postage dividend & interest (whether exempt or
and not), or not) and rent and gains made from
 listed on the Bursa business sources  Rent & incidental expenses
BUT separate to maintain an office the realisation of investments (whether
Malaysia chargeable to tax or not)
sources
 restricted to 5% of B
 No c/f of unabsorbed deduction
 Deducted in arriving at total
income b4 approved donations
DIRECTLY ATTRIBUTABLE EXPENSES
Dividend & Rental income Business income (LIHC)
Interest Y - assessment - repair & Normal rules of deductibility
- interest - interest exp maintenance Common expenses – apportion on GY basis
expense - fire ins.pm - quit rent Can claim CA BUT can‘t c/f CA & Losses
For actual business source (not deemed) eg management
fees, can c/f CA & Losses plus current year losses, can set-
off the aggregate income

5
5
Type text here
 ISLAMIC INSTRUMENTS
(For individuals) - EXEMPTION OF INTEREST INCOME

Interest-Free Banking Scheme with a Bank ) Al- Wadiah A/c

& Finance Company licensed under Banking ) Investment A/c: No Limit
and Financial Institutions Act 1989 / )
Islamic Banking Act 1983 & BSN )

Pawn
Savings AR-RHANU
AL- WADIAH

AL-MUSYARAKAH
Fixed AL-MUDHARABAH
Deposit Partnership

AL-BAI BITHAMAN AJIL

Personal loan BAI AL INAH
Hire purchase

BAI-’AL-DAYN
AL-MURABAHAH Short term Factoring
financing

AL-IJARA THUMMA AL BAI

AL-QUARDH AL-HASSAN

Benevolent loan Leasing with option

PIONEER STATUS LeasingINVESTMENT TAX ALLOWANCE
to purchase
AL-IJARA

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PIONEER STATUS / INVESTMENT TAX ALLOWANCES
ELIGIBILITY Promoted activity / Promoted product

SCOPE COMPANIES IN: Manufacturing Agriculture Integrated agriculture Hotel Tourism Others

Includes: Sole-proprietor, Partnership, Associations & Cooperatives

SEPARATE ACCOUNTS MUST BE MAINTAINED: QUALIFYING CAPITAL EXPENDITURE

Pre Pioneer Pioneer Post pioneer Manufacturing Agriculture Tourism
CA/RE c/f CA/RE b/f CA/RE c/f RE c/f Factory clearing & preparation clearing of land
Capex on storage/treatment/ CA c/f = CA b/f P&M of land, planting of crops planting of trees & plants
disposal of scheduled waste Hotel access roads & bridges roads & other
is deemed incurred on the Hotel Building irrigation & drainage systems infrastructure
1st day of post pioneer P&M P & M for crop cultivation provision of birds
animal farming, aquaculture, inland or deep-sea animals & other exhibits
Loss c/f Loss b/f Loss c/f Loss c/f = Loss b/f inland or deep-ea fishing and other agricultural, P&M
MAX 7 yrs or pastoral pursuits, building including those for building including those
for the welfare/living accommodation, structural for the welfare / living
Mechanics of Tax Exempt Account improvements on land or other structures accommodation,
the relief structural improvements
% of St. Y (Non-pioneer current year losses) & other structures
during the tax relief period (Current year & b/f pioneer losses) Mechanics of the relief
(starts when 30% of Credited to exempt account 50% - 100% of QCE
production capacity is achieved) Set –off against 70% /100% of St. Y
exempt 2- tier tax exempt dividends during the qualifying period of 5/10 years

7
PIONEER Projects of High Contract In- R&D Technical / Others
STATUS National & Technology R&D house Co. vocational
Strategic Co. (no R&D training
Importance services to Co.
H Co, /
Sub Co./
Fellow
Subs. /
Assoc. Co.)
Tax Relief 5 years but
Period extendable 10 years 5 years 5 years
to 10
% of St. Y
offset 100 100 100 70

INVESTMENT TAX ALLOWANCE

Qualifying
Period 5 5 10 10 10 10 5
% of QCE
100 60 100 50 100 100 60
% of St. Y
offset 100 100 70 70 70 70 70

8
 REINVESTMENT ALLOWANCE
AGRICULTURE
SCOPE: MANUFACTURING RESIDENT COMPANY

QUALIFYING
CAPEX
Factory
P&M  clearing & preparation of land
 planting of crops
provision of irrigation or drainage systems .
 provision of plant & machinery
 construction of access roads including bridges),
construction or purchase of buildings
For pioneer company, QCE incurred during the TRP, is
 (including those provided for the welfare of persons
deemed to be incurred on the 1st day of the post-pioneer
or as living accommodation for any persons & structural
period.
improvements
land or other structures) )
Minister
 the construction of chicken & duck houses )
EXPANSION - Increase in production capacity
rearing of chicken and
QUALIFYING ducks
PROJECT:
DIVERSIFICATION MODERNISATION
Additional/related products upgrading equipment & processes
within the same industry for greater efficiency / quality
improvement of product /
reduction of cost
AUTOMATION
CONDITIONS
 Company has been in operation for not less than 36 months MECHANICS OF THE RELIEF
 Disposal subject to control  60% of QCE
 Period of entitlement is limited to 15 consecutive YA beginning from  set-off against 70% of St.Y (co which achieve the PER
the YA in which the capital expenditure was first incurred prescribed by the Min.- 100%)
 If asset is disposed off within 5 years from the date of acquisition. Add  credited to exempt account
the RA claimed as part of statutory income in YA disposal 9  2-tier tax exempt dividends
 Unabsorbed RA can be c/f (Maximum 7 years)  Unabsorbed allowance can c/f

9
 EXPORT (Xp) INCENTIVES
MITC Allowances for increased Xp IT Ex (No.17) Order 2005
IT E(No.6 &7) Order 2019
CONDITIONS  Company  Co Incorp & Resident in  Resident company
 Incorp in M‘sia Malaysia  Incorp in M‘sia
 60% Msian owned  60% Malaysian owned  60% Msian owned
 Approved by MATRADE  Manufacturer / engaged in  Carrying on Manufacturing / agricultural
 Annual sales – 10M agriculture activities
 Max. 20% from trading in
commodities
 use local banking, finance,
insurance, ports amd airports
EXPORT  Sale of goods & commodities  Sale of manufactured  Sale of manufactured products & defined
(FOB value)  either locally manufactured / products & defined agricultural produce
imported for subsequent Xp agricultural produce  Excludes sales 2 FIZ, FCZ, LMW, Labuan,
 Excludes sales 2 FIZ, LMW&  Excludes sales 2 FIZ & L‘kawi & Tioman, goods prohibited from
Commissions & profits fr. tdg on LMW Xp under Customs Act & as per Schedule
the Comm. Exch. in the Order

MECHANICS  20 of VIE  % of VIE  % of VIE

 Restd 2 70% of StY  Agricultural produce 10%  Achieve sig. inc. in
 2 tier TED  Mfctd goods (SME) Xp ( 50%) 30%
VA  30% (20%) 10%  Penetrate new mkt
VA  50% (40%) 15% (detm by MATRADE) 50%
 Restd 2 70% of statutory  Awarded EEA 100%
d
income  Rest 2 70% of statutory income
 2 tier TED  2 tier TED

MUTUALLY  PIA ‘86 incentives  PIA ‘86 incentives
EXCLUSIVE  RA  RA
 Allowances for increased Xp
 Deduction 4 Cost of Acquisition of a
Foreign Co.
10
 DOUBLE DEDUCTION FOR PROMOTION OF EXPORTS (Xp)

IT (Deduction for Promotion of Export Rules Resident company with the purpose of promoting the export of services.
1986 Income Tax (Deduction for Promotion of Export of
Eligibility Services) Rules 1999
 Malaysian resident company (a) market research
 expenses are incurred for promoting the export of goods (b) cost of tender preparations including the cost of preparation of models
or agricultural produce or payment made to a resident company for the preparation of models
Qualifying Expenses used in the bidding of international contracts;
 publicity & advertising outside Malaysia (ba) preparation of models or payment made to a
 provision of samples outside Malaysia company resident in Malaysia for the preparation of models used
 export market research for participation in an international competition.
 preparation of tender for supply of goods to prospective (c) cost of preparing technical information
customers overseas (d) travel to a country outside Malaysia for promotion of export of
 participation in trade fairs / exhibitions approved by the services
Minister / negotiate or conclude sale contracts outside o fare - full deduction
Malaysia including o accommodation - MAX RM 300 per day
 travel – full o sustenance - MAX RM 150 per day
 accommodation– MAX RM 300 per day (e) cost of maintaining a sales office overseas for promotion of exports of
 sustenance – RM 150 per day services
 provision of technical information (f) publicity & advertisements in any media outside Malaysia
 provision of exhibits & other expenses for trade fairs or Income Tax (Deduction for Promotion of Export of
exhibitions approved by the Minister held o‘side
Services) Rules 2002.
M‘sia
(a) feasibility studies for overseas projects identified for the purpose of
 public relations work
tender;
 maintenance of overseas sales office
(b) participation in a trade or industrial exhibitions in Malaysia or overseas
 professional fees 4 packaging design:
approved by MATRADE
 goods are Xp quality
(c) participation in exhibitions held in a Malaysian Permanent Trade and
 co employs local professional services
Exhibition Centre overseas;
IT (Deduction for Promotion of Export Rules 2002
(d) expenses by way of air fares in respect of travel to a country outside
 participation in a virtual trade show / trade portal; as
Malaysia by a representative of the Company; and
verified by MATRADE);
(e) travel to a country outside Malaysia
 costs of maintaining warehouse overseas.
 fare- full deduction
11
 accommodation - MAX RM 300 / day
 sustenance - MAX RM 150 per day
11
 DOUBLE DEDUCTION FOR PROMOTION OF EXPORTS (Xp)

IT (Deduction for Promotion of Export Of Professional Income Tax (Deduction For Promotion Of
Services) Rules 2003 Export Of Higher Education) Rules 2001
 Resident person CONDITIONS
 expenses are incurred for promoting the export of professional service A company carrying on the business of providing
DOUBLE DEDUCTION higher education in Malaysia
 feasibility studies for overseas projects identified for the purpose of DOUBLE DEDUCTION
tender  market research
 cost of tender preparations  cost of tender preparations
 cost of tender preparations including the cost of preparation of models  cost of preparing technical information
or payment made to a resident company for the preparation of models  travel to a country outside Malaysia for
used in the bidding of international contracts; promotion of export of higher education &
 preparation of models or payment made to a participation in trade fairs or exhibitions
company resident in Malaysia for the preparation of models used approved by the Minister of Education
for participation in an international competition.  fare - full deduction
 market research  accommodation - MAX RM 300 per day
 cost of preparing technical information  sustenance - MAX RM 150 per day
 participation in trade fairs or industrial exhibitions in Malaysia or  cost of maintaining a sales office overseas for
overseas approved by MATRADE promotion of exports of services
 participation in exhibitions held in a Malaysian Permanent Trade and  publicity & advertisements in any media outside
Exhibition Centre overseas which is approved by MATRADE Malaysia
 travel to a country outside Malaysia for promotion of export of
professional services
 fare - full deduction
 accommodation - MAX RM 300 per day
 sustenance - MAX RM 150 per day
 cost of maintaining a sales office overseas for promotion of exports of
services
 publicity & advertisements in any media outside Malaysia

12 Siva Nair
 DOUBLE DEDUCTION FOR RESEARCH & DEVELOPMENT EXPENDITURE

Qualifying Research Expenditure

 Double deduction under section 34A. CA CLAIM
 Research project has been approved by the IRB  buildings & P&M
 Relief not confined to research related to the  capital expenditure on alteration or
company‘s present business renovation of rented premises
 Research means  such assets are deemed to be in use
 systematic or intensive study for the purposes of a business.
 field of science or technology
 object of using the results for
 production / improvement of materials,
devices, products or processes.
 Excludes
* quality control *routine testing,
*social science *routine data ITA % of % of St Y Qualifying
or humanities, collection, capex set-off Period (yrs)
*efficiency or *market research
management studies, *sales promotion. R & D Co 100 70 10
* routine modifications * cosmetic/stylistic
or changes modifications In –house 50 70 10
 Ineligible expenditure can qualify for a single R & D Co
deduction. Contract 100 70 10
 Approval is usually given for up to three years
with the possibility of extension.
R & D CoSTATUS- CONTRACT R & D CO.
PIONEER
 provides R & D services in Malaysia only to a company
other than its related company
 100% exemption of statutory income
 Double deduction under section 34B.for  for 5 years
 cash contribution to an approved research institute  losses can c/f to post pioneer period
 or payment for the use of the services of
 approved research institute
 approved research company
 R & D company
 contract R & D company 13 © Siva Nair 2003
 CROSS BORDER TRANSACTIONS

BRANCH VS SUBSIDIARY
 Either incorporate a company or acquire a foreign company
 Simple to operate because  Disclosure – limited to the activities of the company only
no need to annually file  Better image & profile than branch, therefore better chances of
accounts and less onerous borrowing facilities
compliance with company  Incentives / Grants – normally available to companies only
law.  Retention of profits until the tax climate is conducive for
 No stamp duties repatriation
 No withholding taxes on  Justification of overheads
repatriation of profits  On sale of shares in subsidiary no tax ( unless RPC shares)
 Losses available for offset  profits
( Malaysia – only for  Losses available for offset ( Malaysia – only for insurance & sea
insurance & sea and air and air transport)
transport)
 Asset transfer does not entail balancing adjustments, because
 Asset transfer does not ownership does not change
entail balancing
adjustments, because
ownership does not change
LOAN vs SHARE CAPITAL
 Loan interest is deductible if loan used in business or laid out on assets used / held for use in the business (beware of thin capitalization
rules). Dividends is not deductible
 Payment of interest can facilitate shifting of profits
 Choice of currency of loan i.e. US company can lend in USD or MR
 No / minimal stamp duties on loan compared to issue of shares
 Loans are flexible can be converted to shares but not vice versa
 Share endows ownership rights to control the company
 Share capital investment - can opt for dividend payment or profit retention depending on tax climate at home
 Share capital facilitates adherence to debt / equity ratio

14 © Siva Nair 2003

 PERMANENT ESTABLISHMENT
DEEMED PE
 A fixed place of business / place of management it carries on supervisory activities in that other
 branch  office factory workshop contracting state for more than 6 months
mine, oil well, quarry or other place of extraction providing the services of public entertainers
of natural resources
a building site or construction, installation or assembly
project which exists for more than 6 months FURTHER CONCEPT OF PE
farm/plantation an authority to conclude contracts in the name of the enterprise
place of extraction of timber or forest maintains stocks of goods from which it regularly fills orders
produce

NOT A PERMANENT ESTABLISHMENT

Facilities is for storage, display or delivery of goods
Maintenance of a stock of goods for the purpose of storage, display or delivery
Maintenance of a stock of goods for processing by another enterprise
Maintenance of a fixed place of business for purchasing goods /collecting information for the enterprise
Maintenance of a fixed place of business for advertising / supply of information / scientific research / for other preparatory activities
Parent company and subsidiary company
Trading with Malaysia through a broker, general commission agent or any other agent of an independent status
Trading through an agency
Sales representatives (even with a office here) for advertisement / collection of information & NO power to conclude contracts

SECTION
SECTION
SECTION 109F
109 WITHHOLDING TAX
107A
Interest -15% SECTION SECTION
SECTION
Royalty – 10% 109B 109D
109A Contract Payments Section 4(f)
- 10% NR contractor income –
REIT / PTF - 3% Employees of 10%
Public Section 4A NR co – 24% NR contractor
Entertainer – 15% income Others -10%
- 10%

15 © Siva Nair 2003

 BILATERAL / UNILATERAL RELIEF

Conditions:
 resident
 claim made in writing within 2 years after the end of the year of assessment
 income must be taxable in Malaysia
 must have suffered foreign tax on the income derived from a country which
has / has not concluded a tax treaty with Malaysia

Mechanics of the relief

LOWER OF
Foreign income Malaysian
-------------------- X income tax
Total income payable
OR
Foreign tax paid / ½ Foreign tax
paid

16 © Siva Nair 2003

 ETHICS IN TAXATION

ETHICAL
SAFEGUARDS TO CONFLICT
5 Fundamental THREATS OFFSET THE RESOLUTION
Principles THREATS

DISCLOSURE OF INFORMATION FACTORS TO CONSIDER REGARDING DISCLOSURE

TAX
THREAT OF IRREGULARITIES
SAFEGUARDS
CONFLICT
OF PLANNING
INTEREST AVOIDANCE
G
MITIGATION
EVASION
ACCEPTANCE
TAX
PROSPECTIVE AGENT V
CLIENTS PRINCIPAL
CHANGE IN
PROFESSIONAL
APPOINTMENT

17 © Siva Nair 2003

 TRUST
Residence
Status A trust is an equitable obligation, binding a person (who is called a trustee) to deal with
R – ONLY if property over which he has control (which is called the trust property), for the benefit of persons
1trustee is R (who are called the beneficiaries or cestuis que trust), of whom he may himself be one, and any
Otherwise NR one of whom may enforce the obligation.
BUT NR IF
1. trust created
outside Malaysia ORDINARY SOURCE (OS) DISCRETIONARY TRUST
by a non citizen
2. trust is 1 BEN >1 BEN
administered TY Ben =TY TB TY Ben A=TY TB X DIA / DITotal 1 BEN
outside Malaysia Lower of TY TB OR Amount received
3. trust income is in distribution ratios - do time apportionment >1 BEN
wholly derived Lower of TY TB OR Total amount received
from outside
Malaysia ACCUMULATIONS
 Not < ½ trustees
4. Amt rec’dA Amount
are NR --------------- X TY TB
Attributable share is accumulated until received
Amt rec’dtotal
a certain age after which it distributed
Section 61(2) - provides to the ben - capital (not taxable)
that the DG may deduct the
income entitlement of a
resident beneficiary from
the trust's gross income TRUST ANNUITIES
when he ascertains the R & NR Trust (with all of its income derived from Malaysia)
\ chargeable income of the
 annuity payable for YA can be deducted in full when calculating the total income for that
resident trust in Malaysia year.
Other non-resident trust body
 annuity payment can be deducted only up to its Malaysian source income.
RECIPIENT
TB (R) - all of the income of the trust body is derived from Malaysia.
TB (NR) – if deriving part of their income from Malaysia, the annuity is deemed to be derived
from Malaysia but only to the extent that it is deductible in arriving at the total income of the trust.
18 © Siva Nair 2003
18
 SETTLEMENT
SETTLOR RELATIVE
NOT FOR VALUABLE
CONSIDERATION a child or stepchild of the settlor
a child of whom the settlor has custody or
maintains at their own expense
a child adopted by the settlor or by the
settlor‘s spouse
a spouse, grandchild, brother, sister, uncle,
ANTI –AVOIDANCE aunt, nephew, niece or cousin of the settlor.
S 65
(1) (2)
 During the life of the settlor  any person has the power (3)
 At the beginning of the YA  whether immediately / in the future  where the settlor, or
 the relative is unmarried &  with / without the consent of others any of their relatives,
 below the age of 21  to revoke / determine the settlement or or
 income will (or may) any of its provisions whereby  any company they
become payable or  the settlor / spouse control,
applicable to (or for the  will / may become beneficially  makes use of any
benefit of) a relative of the entitled to the settlement property income / accumulated
settlor  NOT APPLICABLE where property income of the
. reverts to settlor / spouse bcos relative settlement
predeceases them  by borrowing or
. otherwise.
* Any tax paid by a settlor on income deemed to be his as a result of. these *
provisions can be recovered by him from the trustees or any other person who
has received such income.

19 © Siva Nair 2003

 WHAT IS TRANSFER PRICING?
 system of pricing the cross-border transfer of goods,
services and intangibles between entities in a group of
Multinational Enterprise (MNE).
 Transfer pricing also applies if such transactions were to
take place between associated companies within the
country.

TYPE OF TRANSACTIONS
 the sale or purchase of goods / MEANING OF CONTROL AND THE ARM’S LENGTH
inventory; ASSOCIATED ENTERPRISES PRINCIPLE
 the sale, purchase or lease of  if one of the enterprises  The price
tangible assets; participates directly or  of same
 the provision of services; indirectly in the management, transactions if made
 the transfer, purchase or use control or capital of the other  between
of intangible assets; enterprise; or independent entities
 the lending or borrowing of  the same persons participate  under the same or
money; directly or indirectly in the similar
 other transactions which management, control or circumstances
affect the profit or loss of the capital of both enterprises.
enterprise

COMPARABILITY ANALYSIS Transaction

Conditions in between
a controlled / independent
related persons
transaction

No material Reasonably accurate adjustments

differences can be made to eliminate any
material differences

STANDARD ANS: TRANSACTION BETWEEN RELATED PARTIES – TP

SCRUTINITY BY REVENUE AUTHORITIES –- TAX AUDIT - UPWARD
INCOME ADJUSTMENTS ISSUE OF ASSESSMENTS & ADDITIONAL
ASSESSMENTS - HEFTY PENALTIES FOR INCORRECT RETURNS.-
STRONGLY ADVISE [CLIENT] REFRAIN FROM ADOPTING SUCH
PRACTICES & CHARGES AT PREVAILING MARKET RATES,

20 © Siva Nair 2003

S140A - TO IMPLEMENT TRANSFER PRICING REGULATIONS - POWER TO
SUBSTITUTE THE PRICE
Where the DG has reason to believe that any property or services is acquired or supplied at a price
which is either less than or greater than the price which it might have been expected to fetch if the
parties to the transaction had been independent persons dealing at arm’s length, he may in
determination of the gross income, adjusted income or adjusted loss, statutory income, total income or
chargeable income of the person, substitute the price in respect of the transaction to reflect an arm’s
length price for the transaction.
 The transactions or the financial assistance referred to shall be construed as a transaction or financial
assistance between—
(a) persons one of whom has control over the other;
(b) individuals who are relatives of each other; or
(c) persons both of whom are controlled by some other person.

ADVANCE PRICING ARRANGEMENT (APA) S 138C

 To manage TP issues more effectively and efficiently companies
can apply to the DG for APA
 a mechanism to predetermine prices of Gds & Svs to be transacted
in the future btw a company & its rel cos for a specified period

PARTIES INVOLVED DG &

 RCo – transactions with rel co o‘seas (unilateral APA)
 RCo – transactions with rel co o‘seas - with the competent
authorities (bilateral APA)
 RCo – transactions with more than 1 rel co o‘seas - with the
competent authorities (Multilateral APA)
 The transactions referred to above shall be construed as a transaction
between—
 persons one of whom has control over the other;
 individuals who are relatives of each other; or
 persons both of whom are controlled by some other person

21

© Siva Nair 2015

TERMINOLOGY PRE-CONDITIONS FOR ELIGIBILITY
Surrendering company
A company having an adjusted loss in the basis
G  They must be related companies throughout the basis period for the year of
assessment (of claim) and the 12 months preceding.
period for a year of assessment BUT limited to 3
consecutive YAs
R  Both must have a paid-up share capital of more than RM2.5m at the
beginning of the basis period for the year of assessment (of claim).
 Both must be resident in Malaysia for the basis period for the year of
Claimant company
A company which is related to the surrendering O assessment (of claim).
company.  Both must be incorporated in Malaysia.
Related company
– 70% of the paid-up ordinary capital of the
U  Both must have a 12-month basis period ending on the same day.
 Both must be subject to tax at the full rate (not the reduced rate of 20%).
surrendering company is directly or indirectly
owned by the claimant company, or
P  Surrendering company must have commenced operations for ≥ 12 months

– 70% of the paid-up ordinary capital of the

claimant company is directly or indirectly
owned by the surrendering company, or R MUTUALLY EXCLUSIVE
 The company is a pioneer company, or has been granted approval for
– 70% of the paid-up ordinary capital of both the
surrendering company and the claimant E investment tax allowance.
 The company enjoys either a tax exemption in respect of a shipping
company are directly or indirectly owned by operation, or a ministerial exemption.
another company resident and incorporated in
Malaysia.
L  The company has made a claim for reinvestment allowance.
 The company has claimed a deduction for an approved food production
‘Indirectly owned’
– through the medium of other companies resident
and incorporated in Malaysia.
I project.
 The company has claimed a deduction for the cost of acquisition of
proprietary rights.
‘Ordinary share’
– any share other than one carrying the right to a
fixed percentage of the nominal value of the
E  The company has been granted a deduction for the cost of acquiring a
foreign-owned company.
 The company has claimed a deduction under any rules made under s.154
share or of the profits of the company.
F (a PU Order) which prohibit the application of group relief.

The surrendering company must The claimant company must Both companies must make an
have an adjusted loss in the BP have a defined aggregate irrevocable election to surrender or
for the YA (of claim). income for the YA (of claim). claim an amount of adjusted loss in
22 the return (Form C) furnished for
the YA (of claim).
22
© Siva Nair 2015
SECTION 13(1)(d) - REFUND FROM UNAPPROVED FUND /SCHEME
Approved Fund: EPF & any pension or provident fund, scheme or society
approved by the Director-General under Section 150 of the
Income Tax Act 1967

Employer’s portion Taxable

REFUND FROM

UNAPPROVED FUND Employee’s portion Not taxable

S13(1)(d)
employee’s – tax as interest income – S4(c)
Interest portion
employer’s - tax as interest income – S13(1)(d)

EXEMPTION FOR COMPENSATION FOR LOSS OF EMPLOYMENT /

RESTRICTIVE COVENANTS – PARAGRAPH 15 SCHEDULE 6
EXEMPTION

ILL-HEALTH OTHERS NON-SERVICE

DIRECTOR OF
CONTROLLED
COMPANY

RM 10,000 PER
COMPLETED YEAR
OF SERVICE
100% EXEMPTION NIL EXEMPTION

23

© Siva Nair 2015

 EMPLOYEE SHARE OPTION SCHEME (ESOS) BENEFIT
Circumstances in which benefit from ESOS can arise and the method of calculation of the
value of the benefit from ESOS
 An employee has the benefit from ESOS when the employer offers to him-
i. shares issued free of charge; and
ii. shares issued at a discount that is at a price lower than the market value.
 In short, the amount of benefit from ESOS which is to be assessed as a perquisite and
included in the employment income under paragraph 13(1)(a) of the Act is as follows:
the difference between the market price on the date the share
option is exercised or exercisable, whichever is the lower, and the
discounted price offered by the employer.
 Benefits from the grant of ESOS will arise and be taxed on the date the option is exercised.
 Any subsequent changes in the value of the shares such as :-
i. fluctuations in the value of the shares;
ii. changes in the share price resulting from the grant of bonus shares based on the
holding of ordinary shares by the employee; and
iii. gain or loss from the shares arising from the disposal of the shares;
will not influence or affect the taxable employment income.
 Where an employer instead of paying remuneration in cash, issues shares free of charge to its
employee, the shares constitute a perquisite under paragraph 13(1)(a) because
 The shares are convertible into money.
 Taxable amount is the market value of the shares at the date on which they are given to
the employee.
 subsequent fluctuations in the value of the shares are capital fluctuations and do not give
rise to any tax effects on the shareholder

SECTION 34D: DEDUCTION FOR EXPENDITURE ON TREASURY

SHARES
acquisition cost + brokerage
charges, commission, CDS
BP when the
charges, and interest IS
Treasury Shares employee
DEDUCTIBLE
repurchased, exercised his
redeemed or rights.
acquired COMPANY

not incurred any cost wholly and

Issuance of exclusively in the production of
New Shares its income & it is a movement in
its share capital account. – NOT
DEDUCTIBLE

TO FULFIL ITS OBLIGATIONS UNDER

24 AN ESOS
24 © Siva Nair 2015
 S 140C - EARNING STRIPPING RULES

Income Tax (Restriction on Deductibility of Interest) Rules 2019

With effect from 1/7/19 it restricts the interest deduction [20% of the tax-EBITDA]
from the gross income of a person for any financial assistance [which exceeds RM
0.5M] in a controlled transaction in respect of his business income for the basis
period for a year of assessment (YA).

―controlled transaction‖ ―interest expense‖ means

financial
between persons: interest on all forms of
assistance‖
 one has control over debt; or payments
includes loan,
the other; or economically equivalent
interest bearing
 between persons both to interest (excluding
trade credit
of whom are expenses incurred in
advances, debt or
controlled by some connection with the
the provision of
other person raising of finance).
any security or
guarantee;

EXCLUDES Individual, property developer, construction contractor, specified

banks, insurers, reinsurers, takaful and retakaful operators, development financial
institutions, & persons granted specific exemption under Para 127

Tax-EBITDA = A + B + C
A is the adjusted income of the person from his business sources
B is the total qualifying
C is the total interest expense subject to restriction

Unabsorbed interest expense can c/f & deducted in subsequent YA BUT subject to:
 same Tax-EBITDA formula
 substantial shareholding test

25

© Siva Nair 2015

26

© Siva Nair 2015

 Maximum 7 years

27

© Siva Nair 2015

28

© Siva Nair 2015

 SCOPE & DEFINITIONS: Real
ACQUIRE DISPOSAL Property
Gain
Acquire by way of purchase, Real Property sell, convey, transfer, assign, Gains
grant, exchange, gift, settlement settle alienate whether by Tax
or otherwise agreement or by force of law
Sales price less: gain other than gain or profit chargeable CURRENT YEAR BASIS
 Any land situated in
Expenditure for the purpose of with or exempted from income tax under OF ASSESSMENT
Malaysia and any
enhancing or preserving the value the income tax law; or
 interest,
of the asset in the case of a unit trust, gain not treated Disposal price
 option or
 Expenditure incurred in as income under the income tax law
 other right
establishing, preserving or
in or over such land.
defending his title to, or to a right
(Acquisition price)
over, the asset
Incidental cost Chargeable gain / (loss)
LAND  Incidental costs
Payment to surveyor, valuer,
 the surface of the earth and Purchase price accountant, agent, legal adviser
all substances forming that (Exemptions)
Add: Incidental costs Costs of transfer (including stamp
surface Less: duty)
 the earth below the surface Compensation for damage Costs of advertising to find a seller Chargeable gain after
and substances therein Insurance compensation (acq) / buyer (dis) exemption
 buildings on land and Deposit forfeited valuation to ascertaining market
anything attached to land or value (dis) Apply rates (%)
permanently fastened to For disposal of a RP acquired prior
anything attached to land to 1/1/2013 which is subject to Real property gains tax
 standing timber, trees, crops RPGT its acquisition price is the
and other vegetation growing market value of the property as at EXCLUDED EXPENSES (in arriving at adjusted income)
on land 1/1/2013  Expenses allowable as a deduction for income tax purposes
 land covered by water  expenses which would have been allowable for income tax purposes but for
an exemption or insufficiency of gross income
Higher of RM 10,000 or 10% of the
chargeable Disposal by a co-  expenses incurred on or in respect of assets used as fixed capital of a
proprietor of his share of the business, the profits of which are subject to income tax
chargeable asset shall not be  GST as input tax paid by disposer if he is liable to be registered for GST but
regarded as a part disposal failed to do so, or if he can claim it as input tax; and
 GST paid or to be paid borne by the disposer if he is or liable to be
registered for GST

RATES OF TAX Co Non-citizen & non-PR (indiv / the deceased person for estates) Others
Disposal within 3 years after the dt of acq 30 30 30
Disposal in the 4th year after the dt of acq 20 30 20
Disposal in the 5th year after the dt of acq 15 30 15
Thereafter 10 10 5

29
 DATE OF ACQUISITION & DISPOSAL SPECIAL CASES
Generally date of acquisition coincides with date of disposal  Gift on death
Therefore the date of disposal Acquisition date: date of transfer of asset
 where there is an written agreement it is the date of agreement Acquisition price: m. v. at date of transfer
 where there is no written agreement, it is the date of completion of  Legatee accepting an asset in place of money legacy
disposal Acquisition date: date of transfer of asset
Earlier of:-
 date of transfer of ownership,or
Acquisition price: lower of money legacy
 the date when full consideration for the or m.v. at date of transfer
transfer has been received by the  Transfer to a legatee
disposer Acquisition date: date of transfer of asset
 Conditional contracts the time the contract was made, Acquisition price: m. v. at date of transfer
UNLESS  Disposal to a person (other than legatee), for the
(a) it requires the approval by the Govt/State Govt - the date of such approval; or
(b) if the approval is conditional, - the date when the last of all such conditions is executor:-
satisfied. Acquisition date: date of death
Acquisition price: m. v. at date of death
 Co-proprietor disposing his share of the asset
Director-General will determine the market value if:- subsequent to partition
 the parties cannot agree on the value Acquisition date: date of transfer of asset
 There is only one party to the disposal Acquisition price: the price paid by him for his undivided
 Director-General is of the opinion that agreed value is incorrect share as co-proprietor.
Transactions deemed to be at market value - acquisition or  Acquisition with financing facility provided by an
disposal of an asset: Islamic bank in accordance with the Syariah
 Otherwise than at arm's length particularly gift Acquisition date: date of the agreement between acquirer and
 for a consideration that cannot be valued person other than bank or where the asset
 In connection with one's loss of office or employment or is owned by the bank then date of
diminution of emoluments agreement with bank
 In consideration for or recognition of one's services or past Acquisition price: the price paid by him to the disposer of
services in any office or employment or of any other service the asset, if asset owned by the bank then
rendered or to be rendered the amount paid to the bank
 As trustee, acquisition of or transfer to creditors of any person, an
EXCHANGES
asset in full or part satisfaction of any debt due from or to that
 Disposal by exchange - the market value of the asset
person
received by the disposer shall be taken as the consideration
 Transfer of a business for a lump sum consideration
for the disposal:
 Anti-avoidance provisions (where s25(2) applies)
 if the asset received by the disposer has no market value,
 Transfer of assets into stocks - deemed to be a disposal of
the DG may take the market value of the asset disposed
chargeable asset @ the market value at that date
of as the consideration for the disposal.

30
NO GAIN NO LOSS TRANSACTIONS

Para 17 Schedule 2

(a) Deceased (e) Gifts made to the government, state government, a local CONDITION 1: Transferee company must be MR
to authoritytoor a charity exempt from income tax
Executor
to a) The asset is b) An asset is c) An asset is
Beneficiary transferred for transferred for distributed by a
(d) Transfer by greater any liquidator of a
way of security efficiency in consideration company and the
operation & the between liquidation of the
consideration is companies in company was made
(f) Compulsory NOT < 75% any scheme of under a scheme of
acquisition shares & the reorganisation, reorganisation,
Paragraph 3 balance in cash reconstruction, reconstruction or
(c) Individual & / wife Nominee / or amalgamation
(absolutely entitled trustee amalgamation
Schedule 2 as against the nominee (resident)
(b) Transfer of assets
between spouses / trustee)
[must be owned by CONDITION 2: Prior approval by DG.
Malaysian citizens]
For b) and c) should show that the scheme in compliance with
government policy on capital participation in industry.
(g) Disposal of RP
(b)[must be owned by Malaysian citizens] pursuant to
Individual Wife Individual Individual, wife & financing approved Director-General may withdraw the approval within 3
& wife connected person by BNM / SC years if:
under principles of
Syariah but not It appears to him that that the transfer was made wholly or partly
required under for some other purpose.
Company controlled by them other schemes of For a) above, the transferee company ceases to be in the same
financing group of companies
Where the asset is subsequently The transferee company ceases to be a resident in Malaysia
transfer RP to a company controlled taken into the trading stock of
by him/her/them the transferee company - deemed
consideration is NOT < 75% shares For transfers involving restructuring in compliance with
& the balance in cash
disposal of Real Property
government policy on capital participation
 under paragraph 34 schedule 2, these shares are Acquisition date. = acquisition date .
deemed to be chargeable assets (transferee co.) (transferor co.)

31
 Allowable Loss on Disposal
FOR NO GAIN NO LOSS TRANSACTIONS  allowed as a deduction to reduce the
total chargeable gain of a person for a
TRANSFEROR TRANSFEREE THIRD PARTY YA in which the disposal was made
NGNL RPGT  by reason of an insufficiency or
absence of total chargeable gain for the
YA in which the allowable loss arose,
Price Variance effect cannot be given or cannot be
given in full the allowable loss which
has not been so allowed shall be
Date Variance allowed as a deduction to reduce the
total chargeable gain of a person for the
first subsequent year of assessment for
Except for which there is total chargeable gain and
Para 17 b) & c) Date Variance so on for subsequent years of
assessment until the whole amount of
For subsequent disposal by the transferee, his acquisition price is deemed to be equal to the allowable loss to be allowed has
the acquisition price of the transferor plus the permitted expenses incurred by the been allowed.
transferor  Any allowable loss suffered in a year of
assessment shall not be allowed as a
deduction from the chargeable gains
accruing in any earlier year of
assessment

GIFTS - Para 12 Schedule 2

 The disposal shall be deemed to be at market value
 No gain no loss situation if donor (must be citizen) and recipient are: -
 husband & wife
 parent & child
 grandparent & grandchild
 Acquisition price for the recipient shall be deemed to equal to the acquisition price paid by the donor plus the permitted expenses incurred by the
donor.

32
EXEMPTIONS
Ministerial exemption –S26
Private residence - Schedule 3  The tax paid or payable by any person
 Applicable to individuals who are citizens or permanent residents may be remitted, wholly or in part
 Definition  on grounds of poverty, by the DG
 building or part of a building in Malaysia owned by an individual & occupied or certified fit for  on grounds of undue hardship or
occupation as a place of residence justice and equity, by the Minister
 If the building is only partly occupied as a private residence, then only that part qualifies for exemption of Finance
 Apportionment of gain or loss is:
 if the building is divided into self-contained units, the gain/loss is divided equally to all the units
 where the building is not divided, apportion on floor area basis / other equitable method.
 Conditions: Schedule 4 exemption
 once a lifetime
 an election has to be made in writing
 Gain accruing on disposals before 7/11/75
 irrevocable  ONLY 4 INDIVIDUALS
Higher of:
where a part of the land attaching to the private residence as its gardens and grounds is  RM 10,000 or
disposed without the residence then the acquisition price of the land disposed is  10% of the chargeable gain
Part disposal of chargeable asset
Land was A× C
originally acquired B
where
without the residence with the residence A is part of the area of the chargeable asset disposed;
B is the total area of the chargeable asset;
AP of the land X Disposed area C is RM 10,000
(without residence) Total area of land OR
10% of the chargeable gain
whichever is higher
> 1 acre </= 1 acre  disposal by a co-proprietor of his share of the
1/3 AP of the Disposed area Chargeable Gain = chargeable asset shall not be regarded as a part
land (with x ------------------------- Disposal Disposed area disposal
residence) Total area of that land price X --------------------------  Gain accruing to
Total area of that land  government
 state government, or
For acquisition before 1/1/2013, use mv @ 1/1/2013  local authority
 Gain in respect of the disposal of a chargeable asset
REAL PROPERTY GAINS TAX (EXEMPTION) ORDER 2018 to settle estate duty provided DG is satisfied that the
disposer was compelled to dispose the property in
Exemption of RPGT for an individual who is a citizen or permanent order to pay the estate duty
resident, on the CG accruing on the disposal of a chargeable asset,
other than shares, on or after 1 January 2019 provide of the chargeable
asset is not more than RM200,000.00
33
 It owns real property
CONTROLLED or shares in another
OPTION COMPANY RPC and the defined
It has not more value of real
Grant of an option is the disposal of a chargeable asset, namely the option than 50 members property and shares
Sums received for the grant of the option will therefore represent a chargeable and it is controlled in other RPCs is not
gain by not more than 5
Where an option is exercised & later the asset is disposed to the same person members
RP less than 75% of the
value of its total
 the grant & the disposal will be regarded as one transaction C tangible assets
 amount paid for the option shall be deemed to be part of the consideration
for the disposal of the asset
where a right under an option is disposed of at a loss, it is NOT allowable as it is an RPC on 21 October Once an RP share, its status
a loss, UNLESS the right is subsequently exercised by the person acquiring 1988 or subsequently becomes remains as an RP share even if
the right, or his successors one through acquisition of real the company becomes a non
property or shares in another RPC. The status is evaluated
RPC again only upon disposal of the
share

RP SHARES ARE CHARGEABLE ASSETS THEREFORE GAIN ON DISPOSAL ARE SUBJECT TO RPGT
ACQUISITION DATE & PRICE
LEASE
Para 25(1): The grant of a lease is the disposal of an asset, namely the lease REAL ACQUISITION ACQUISITION PRICE
 generally applicable when a lessee sub-leases the land for which a premium has PROPERTY DATE
been paid COMPANIES
Para 25(2): Where a lessee transfers a lease for which he has paid a premium, the Where the the date of Purchase price + incidental costs
acquisition price will be computed as follows: company is an acquisition of
 No. of years of the unexpired term RPC the chargeable
--------------------------------------- X Premium Paid to original lessor asset
Full term of the lease Where the the date the A X C
 Para 21(3) - For a sub-lease of a part of the land, the acquisition price which is company company B
proportionate to the duration and area of the sublease. subsequently becomes an RPC A - the number of shares deemed to be a
If the transfer is for nil or nominal consideration - the above formula is not becomes an chargeable asset
applicable RPC B - the total number of issued shares in the
relevant company at the date of acquisition of
On the expiration of the lease the relevant interest reverts to the owner the chargeable asset
 he landowner is NOT entitled to deduct any expenditure incurred by the lessee on C - the defined value of the real property or
the land shares or both owned by the relevant
company at the date of acquisition of the
chargeable asset

34
 ADMINISTRATION
 Submission of returns- Disposer & Acquirer shall within 60 days from the date of the disposal / acquisition (or as
extended by the DG) make a return
(a) specifying the gain or loss on the disposal;
(b) furnishing all information necessary to determine the acquisition & disposal price of the asset disposed of; and
(c) where the market value of the asset is to be taken, submit a written valuation of the asset by a valuer.
 Where a person makes a return under section 13(1), the Director General may accept the return and make an
assessment accordingly or make any adjustments
 the tax payable under an assessment shall, on the service of the notice of assessment on the person assessed, be due
and payable at the place specified in that notice whether or not that person appeals against the assessment.
 The Director General shall send a certificate of non-chargeability to the disposer in the prescribed form where he is
satisfied that no chargeable gain has arisen.
 no assessment shall be made on disposals made by a deceased person before his death more than 3 years after the end of
the YA in which the DG is informed in writing by the executor of the death of that chargeable person in a form prescribed
under this Act
 tax unpaid within 30 days after the service of that notice (or within such longer period as may be allowed by the
Director General), shall be increased by a sum equal to 10% of the tax so unpaid, and that sum shall be recoverable as
if it were tax due and payable under this Act:
 Income tax return – should declare whether or not he has made a disposal of chargeable assets in the YA
 Where the consideration consists wholly or partly of money, the acquirer shall retain lower of the whole of that money
or a sum not exceeding 3% (if disposer is NC & NPR, or company NOT incorporated in Malaysia, then 7%) of the
total value of the consideration i.e. a WHT
 pay to the DG within 60 days after the date of such disposal (can apply for extension of time)
 Non-compliance by the acquirer – 10% penalty
 Amount + penalty-debt due to Govt .
 for any good cause shown, DG will remit the whole or any part of that sum & if paid, can get refund
 Refundable amounts under ITA ’67 / PITA’ 67 / RPGT ’76 can be used to settle tax payable under the other Acts
 A person who disposes of a chargeable asset and such disposal is not subject to tax or exempt from the payment of tax
under this Act may furnish to the DG together with the return a notification (to that effect) in a prescribed form
 it should also be served to the acquirer within 60 days from the date of the disposal so that no WHT is necessary
 However if acquirer fails to retain and remit the WHT and the failure is by reason of an incorrect or wrong
notification 10% penalty of the tax payable [tax charged on the chargeable gain excluding any allowable loss] is
assessed on the disposer

35