lecture 7
Download
Skip this Video
Download Presentation
Lecture 7

Loading in 2 Seconds...

play fullscreen
1 / 45

Lecture 7 - PowerPoint PPT Presentation


  • 240 Views
  • Uploaded on

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

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

PowerPoint Slideshow about 'Lecture 7' - Jimmy


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
Lecture 7

Tax Planning:

Concept, Planning and Calculation

legislation
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
PERSONAL TAXATION
  • Employment
  • Sole Proprietorship
  • Partnership
scope of charge
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
DEFINITION OF PERSON
  • Individual
  • Company
  • Body of persons
  • Corporation sole
  • Excluding partnership – only on personal income
income received in malaysia from outside malaysia
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
RECENT TAX DEVELOPMENTS
  • Historically
    • Preceding year basis (PYB)
    • 1/1/98 to 31/12/98
    • Year of assessment 1999
change of assessment system
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
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
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
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
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
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
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
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
slide21
* self, spouse + child

# self, spouse, child + parent

computation of tax payable
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
TAX COMPUTATION FORMAT

Business X TOTAL INCOME XX

Employment X Less: Personal Reliefs (X)

Investment Income X Chargeable Income XX

Other Sources X TAX PAYABLE XX

Aggregate Income XX Less: 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 INCOME XX

personal rebates
PERSONAL REBATES
  • Set-off against tax payable
  • Chargeable income < RM35,000
  • Single (RM350)
  • Separate Assessment
    • Husband (RM350)
    • Wife (RM350)
personal rebates26
PERSONAL REBATES
  • Combined assessment
    • Husband (RM350)
    • Wife (RM350)
  • Personal Computer
    • RM400 (every 5 years)
  • Employment Levy
  • Religious Payments
    • Zakat/Fitrah
derivation section 13 2
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
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
GRATUITY
  • Tax exempt
    • ill health
    • 55 years + 10 years of service
  • Taxable
    • Period of employment
    • 6 years of assessment
    • Whichever is shorter
assessment gratuity
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
SHARE OPTIONS
  • Not-Taxable
    • Option not exercised
  • Taxable
    • Option exercised
    • Option date
    • Difference between market value and option market
benefits in kind
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
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
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
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
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
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
SECTION 7(1)(B)

Aug.1999 Aug. 2000

A B

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
SECTION 7(1)(B)
  • April 1999 March 2000
  • A B
  • 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
SECTION 7(1)(C)

YA

1999 150 days

1998 92 days

1997 RESIDENT

1996 15 days

1995 138 days

Qualifies as resident

section 7 1 d
SECTION 7(1)(D)

YA

1999 Resident

1998 63 days

1997 Resident

1996 Resident

1995 Resident

Qualifies as resident

capital gains
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
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
CHARGEABLE GAIN OR ALLOWABLE LOSS
  • Disposal Price > Acquisition Price

= Chargeable Gain

  • Disposal Price < Acquisition Price

= Allowable Loss

ad