Lecture 7 - PowerPoint PPT Presentation

Lecture 7 l.jpg
Download
1 / 45

Lecture 7 Tax Planning: Concept, Planning and Calculation LEGISLATION Income Tax Act 1967 Real Property Gains Tax Act 1976 Lembaga Hasil Dalam Negeri (LHDN) Inland Revenue Board (IRB) Corporatised on March 1, 1995 PERSONAL TAXATION Employment Sole Proprietorship Partnership

Related searches for Lecture 7

I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.

Download Presentation

Lecture 7

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Lecture 7 l.jpg

Lecture 7

Tax Planning:

Concept, Planning and Calculation


Legislation l.jpg

LEGISLATION

  • Income Tax Act 1967

  • Real Property Gains Tax Act 1976

  • Lembaga Hasil Dalam Negeri (LHDN)

  • Inland Revenue Board (IRB)

    • Corporatised on March 1, 1995


Personal taxation l.jpg

PERSONAL TAXATION

  • Employment

  • Sole Proprietorship

  • Partnership


Scope of charge l.jpg

SCOPE OF CHARGE

  • Territorial concept

  • Income of any person

    • Accruing in (right to receive)

    • Deriving from (who pays you – government and state government, payment from tax resident, charged as outgoing expenses)

    • Received in Malaysia

    • From outside Malaysia


Definition of person l.jpg

DEFINITION OF PERSON

  • Individual

  • Company

  • Body of persons

  • Corporation sole

  • Excluding partnership – only on personal income


Income received in malaysia from outside malaysia l.jpg

INCOME RECEIVED IN MALAYSIA FROM OUTSIDE MALAYSIA

  • Taxable Income

    • Resident individual/body of persons/corporation

    • Resident companies involving 4 specific industries: banking, insurance, shipping and air transport

  • Tax Exempted

    • Non-resident (under Schedule 6 para. 28)

    • Resident company - income tax (exemption)

    • Unit Trusts

    • Offshore Companies (LOBATA 1990)


Recent tax developments l.jpg

RECENT TAX DEVELOPMENTS

  • Historically

    • Preceding year basis (PYB)

    • 1/1/98 to 31/12/98

    • Year of assessment 1999


Change of assessment system l.jpg

CHANGE OF ASSESSMENT SYSTEM

  • Preceding year basis (PYB) to current year basis (CYB)

  • Effective date

    • Year ended 31/12/2000

    • Financial year in 2000


Basis period l.jpg

BASIS PERIOD

  • Current year basis

  • Calendar year 1/1/2000 to 31/12/2000

    • Year of assessment 2000

  • Financial year 1/7/1999 to 30/6/2000

    • Year of assessment 2000


Basis year 2000 l.jpg

BASIS YEAR 2000

  • Current year basis (CYB)

  • 1/1/1999 to 31/12/2000

    • Year of assessment 2000

  • 1/1/2000 to 31/12/2000

    • Year of assessment 2000


Tax implications shift to cyb l.jpg

TAX IMPLICATIONS – SHIFT TO CYB

  • Year of assessment 2000

    • 2 basis periods

  • Basis period in 1999

    • Tax waiver year

    • Income tax (amendment) Act 1999


Tax waiver year l.jpg

TAX WAIVER YEAR

  • Income earned in 1999

    • No tax payable

  • Exceptions

    • Dividend

    • Payment subject to withholding tax

    • Non-citizen/non-resident individuals who commence or cease employment in 1999


Self assessment l.jpg

SELF- ASSESSMENT

  • Effective Date

    • 1 January 2000

    • Year of assessment (YA) 2001

  • YA 2001 - Companies (220,000)

  • YA 2004 - Business, partnership and cooperatives (800,000)

  • YA 2004 – Employment (1,800,000)


Classes of income section 4 residents or non residents l.jpg

CLASSES OF INCOME – SECTION 4 (RESIDENTS OR NON-RESIDENTS)

  • Business

  • Employment

  • Dividends, interest or discounts

  • Rents, royalties or premium

  • Pensions, annuities or other periodical payments

  • Gains or profit outside of (a) to (e)


Special classes of income section 4a l.jpg

SPECIAL CLASSES OF INCOME – SECTION 4A

  • Recipients: Non-residents

  • Withholding tax – payment/credit

  • Services

    • use of property/rights

    • Installation/operation of plant + machinery

  • Technical advice/services/assistance/management/ administration

  • Rent – movable property


Payments to non resident withholding tax l.jpg

PAYMENTS TO NON-RESIDENT – WITHHOLDING TAX


Income vs capital l.jpg

INCOME VS CAPITAL


Slide21 l.jpg

* self, spouse + child

# self, spouse, child + parent


Computation of tax payable l.jpg

COMPUTATION OF TAX PAYABLE

  • Tax Payable

    = Chargeable Income X Relevant Tax Rate

  • Tax Rates

    • Resident individual/club/trade association/

      co-operative society

      • Scale rates : 0% to 28 %

    • Company Trust – 28 %

    • Non-resident individual – 28 %

      (total income = chargeable income)


Tax computation format l.jpg

TAX COMPUTATION FORMAT

Business XTOTAL INCOME XX

EmploymentXLess: Personal Reliefs (X)

Investment IncomeXChargeable Income XX

Other SourcesXTAX PAYABLE XX

Aggregate Income XXLess: Rebates (X)

Less: XX

Basis Year Loss (XX)Less: DTA Reliefs (X)

Approved Donation/Sec 110 Set-off (X)

Subscription (X)TAX PAYABLE/REPAYABLE XX

TOTAL INCOMEXX


Personal rebates l.jpg

PERSONAL REBATES

  • Set-off against tax payable

  • Chargeable income < RM35,000

  • Single (RM350)

  • Separate Assessment

    • Husband (RM350)

    • Wife (RM350)


Personal rebates26 l.jpg

PERSONAL REBATES

  • Combined assessment

    • Husband (RM350)

    • Wife (RM350)

  • Personal Computer

    • RM400 (every 5 years)

  • Employment Levy

  • Religious Payments

    • Zakat/Fitrah


Derivation section 13 2 l.jpg

DERIVATION – SECTION 13(2)

  • Exercised in Malaysia

  • Leave attributable to employment in Malaysia

  • Overseas duties incidental to employment in Malaysia

  • Director of resident company

  • Employment aboard ship/aircraft


Types of employment income l.jpg

TYPES OF EMPLOYMENT INCOME

  • Salary, wages, fee, bonus, remuneration, leave pay, commission, gratuity, perquisite, allowance

  • Benefits-in-kind

  • Living accommodation

  • Non-approved pension scheme/provident fund

  • Compensation payment


Gratuity l.jpg

GRATUITY

  • Tax exempt

    • ill health

    • 55 years + 10 years of service

  • Taxable

    • Period of employment

    • 6 years of assessment

    • Whichever is shorter


Assessment gratuity l.jpg

ASSESSMENT - GRATUITY

  • Gratuity – RM60,000

  • Employment period

    • 5 years

    • RM12,000/ for each YA

  • Employment period

    • 7 years

    • RM10,000 for each YA


Share options l.jpg

SHARE OPTIONS

  • Not-Taxable

    • Option not exercised

  • Taxable

    • Option exercised

    • Option date

    • Difference between market value and option market


Benefits in kind l.jpg

BENEFITS-IN-KIND

  • Motor vehicle

    • Private usage - RM1,200 to RM25,000

    • Fuel – RM600 to RM3,000

  • Driver – RM3,600

  • Accommodation (30% of actual)

  • Household furnishings

    • Barely-furnished, semi-furnished, fully-furnished, service charges, utilities payment etc.


Living accommodation l.jpg

LIVING ACCOMMODATION

  • Job requirement

    • Tax exempt

  • Hotel/hostel

    • 3% X Sec 13 (1) (a)

  • Apartment/house

    • Lower of

      • 30% Sec 13(1)(a) or

      • Actual rental (unfurnished accommodation)

  • Mobile phone, gardener, servants, school/tuition fees, club membership, staff loan


Living accommodation34 l.jpg

LIVING ACCOMMODATION

  • Salary RM100K

  • Defined value – unfurnished: RM36K/24K

    Assessability of Benefits

  • Salary RM100K

    Lower of

    • 30% X RM100K or

    • RM36K/24K RM30K/24K

      Gross Income RM130K/124K


Tax exempt bik l.jpg

TAX EXEMPT - BIK

  • Discounted goods and services

  • Subsidised food and drinks

  • Free transport

  • Child care benefits

  • Medical/dental

  • Leave passage

  • Group insurance policy


Approved fund scheme l.jpg

APPROVED FUND/SCHEME

  • EPF Contributions

    • 11% (Employee)

    • 12% (Employer)

    • Tax deductibility – 19%

  • Reduction in Cash Remuneration

    • Lower tax liability

    • Cash flow

    • Time value of money


Resident status individual section 7 l.jpg

RESIDENT STATUS – INDIVIDUAL :SECTION 7

  • > 182 days

  • <182 days but linked to another period of 182 days or more

    • Temporary absence

      • Incidental to employment, conference/study/seminar, ill health, social visits (<14 days)

  • 90 days – immediately preceding 3 years

  • < 90 days

    • immediately following year – resident

    • Immediately preceding 3 years - resident


Section 7 1 b l.jpg

SECTION 7(1)(B)

Aug.1999 Aug. 2000

AB

Period A- < 182 days

Period B- > 182 days

Period A link to Period B

Link - 31 Dec. to 1 Jan. in Malaysia

Period A qualifies as resident


Section 7 1 b39 l.jpg

SECTION 7(1)(B)

  • April 1999 March 2000

  • AB

  • Period A- > 182 days

  • Period B- < 182 days

  • Period A link to Period B

  • Link - 31 Dec. to 1 Jan. in Malaysia

  • Period B qualifies as resident


Section 7 1 c l.jpg

SECTION 7(1)(C)

YA

1999150 days

1998 92 days

1997RESIDENT

1996 15 days

1995 138 days

Qualifies as resident


Section 7 1 d l.jpg

SECTION 7(1)(D)

YA

1999Resident

1998 63 days

1997Resident

1996Resident

1995 Resident

Qualifies as resident


Capital gains l.jpg

CAPITAL GAINS

  • Real Property Gains Tax (RPGT) Act, 1976

  • Effective date – 7/11/1975

  • Disposal of real property or shares in a real property company

  • Replaced Land Speculation Tax Act 1974


Acquisition disposal date l.jpg

ACQUISITION/DISPOSAL DATE

  • Acquisition date = disposal date

  • Written agreement (S & P)

  • Completion date

    • Asset transferred

    • Full consideration paid or received

  • Conditional contract


Chargeable gain or allowable loss l.jpg

CHARGEABLE GAIN OR ALLOWABLE LOSS

  • Disposal Price > Acquisition Price

    = Chargeable Gain

  • Disposal Price < Acquisition Price

    = Allowable Loss


Tax rates l.jpg

TAX RATES


  • Login