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KOLEJ UNIVERSITI TUNKU ABDUL RAHMAN

FACULTY OF ACCOUNTANCY, FINANCE & BUSINESS


ACADEMIC YEAR 2013/2014
BACHELOR OF ACCOUNTING (HONOURS
BBFT2013 T!"!#$%&
T'#%($!) 1 * I&#(%+',#$%& #% M!)!-.$!& T!"!#$%& & T!" R/.$+/&,/ %0 I&+$1$+'!).
Suggested answer to Q1
Income is not defined under the Income Tax Act 1967. Therefore, based on case
law and judicial recedent is rele!ant in determinin" whether receits or "ains are
income or caital in nature.
In CIT V Shaw Wallace, income was defined to be #periodical monetary returns
coming in with a sort of regularity, from a definite source excluding anything in the
nature of a mere windfall.
$enerall%, if the receits or "ains are connected with the wor&in" caital of a trade, it
has been held to be income and if the% are connected with fixed assets, ma% be
caital in nature.
Suggested answer to Q2
Direct taxes
Income tax
'eal roert% "ains tax
(etroleum income tax
)abuan offshore business acti!it% tax
*tam dut%
Suggested answer to Q3(a)
+lasses of income on which tax are char"eable under the Income Tax Act ,ITA-
Indirect Taxes
*ales tax
*er!ice tax
.ntertainment tax
$amin" tax
+ustoms duties
Imort duties
.xort duties
.xcise duties
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1967 are/
Section of ITA
19!
Sources of inco"e
0,a- $ains or rofits from a business
0,b- $ains or rofits from an emlo%ment
1"eneral
1ublic ser!ant
0,c-
2i!idends
Interest
2iscount
0,d- 'ent
'o%alties
(remiums
0,e- (ension
Annuities or other eriodical a%ments not fallin" under an% of the
fore"oin" ara"rahs3
0,f- $ains or rofits not fallin" under an% of the fore"oin" ara"rah
Section #A of the Inco"e Ta$ Act 19!
4otwithstandin" the ro!isions of *ection 0 and subject to this Act, the income of a
person not resident in Malaysia for the basis %ear for a 5ear of Assessment in
resect of1
,i- Amount aid in consideration of ser!ices rendered b% the person or his
employee in connection with the use of %ro%ert& or rights 'elonging to, or the
installation or o%eration of an& %lant( "achiner& or other a%%aratus
%urchased fro", such erson3
,ii- Amount aid in consideration of technical ad)ice, assistance or ser)ice
rendered in connection with technical "anage"ent or ad"inistration of an&
scientific( industrial or co""ercial underta*ing )enture( %ro+ect or sche"e3
or
,iii- ,ent or other %a&"ents, made under an% a"reement or arran"ement for the
use
of an% moveable property which is derived from Malaysia is char"eable to tax
under the Income Tax Act 1967.
Suggested answer to Q3(')
2
6ased on *ection 7 of the Income Tax Act 1967, income tax is char"ed for a %ear of
assessment uon the income of an% erson accruing in or derived from Malaysia
or receiving in Malaysia from outside Malaysia.
Suggested answer to Q#
A resident erson is char"ed to tax on income accrued in or deri!ed from 8ala%sia
and income recei!ed into 8ala%sia from outside 8ala%sia under *ection 7 of the
Income Tax Act ,ITA- 1967.
9owe!er, income recei)ed - re"itted into .ala&sia from outside 8ala%sia, i.e.
forei"n income ,or o!erseas income- for resident person will be exemted from tax
b% !irtue of (ara"rah :; of *chedule of the ITA 1967.
<hile a 8ala%sian tax resident company carr%in" on business of banking,
insurance( sea and air transport will be char"ed to tax on income arisin" from
8ala%sia and outside 8ala%sia, i.e. tax on world scope basis.
Suggested answer to Q/
Chargea'le %ersons
.ala&sian source of
inco"e (,.)
0oreign source of inco"e
(,.)
.nci& Ali ,'esident-
'81=,=== is accrued in
8ala%sia and taxable based
on territorial basis.
'8:;,=== received in
8ala%sia is tax exemted under
(ara :; of *ch 6 of the ITA
1967.
8s. >anet
,4on1resident-
'87=,=== is accrued in
8ala%sia and tax based on
territorial basis.
'8?6,=== received in
8ala%sia is not taxable as the
income is not deri!ed or
accrued from 8ala%sia.
*atu *dn 6hd
,'esident co. but Not
in secialised
business-
'81:=,=== is accrued in
8ala%sia and taxable based
on territorial basis.
'8:==,=== received in
8ala%sia is tax exemted under
(ara :; of *ch 6 of the ITA
1967.
$old 6erhad ,'esident
co. in secialised
business-
'877=,=== is accrued in
8ala%sia and taxable based
on world scope basis.
'8;==,=== not accrued and
not received in 8ala%sia but
taxable based on world scope
basis.
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Suggested answer to Q
,a- The inherited amount of '8; million recei!ed b% 8r. Tan from his late father@s
estate is not subjected to income tax as it does not fall within the meanin" of
income under *ection 0,a- to 0,f- of ITA 1967. It is considered as a gift from his
late father to 8r. Tan.

,b- The "ain A rofit of '81 million made b% A+ 6erhad from the disosal of land is to
be considered as a caital "ain from its in!estment. It is NOT a revenue gain from
carr%in" out its business. Therefore, it will not be subject to income tax but real
property gains tax (R!T". B'($T was exemted from 1 Aril :==7 to
71 2ecember :==9C.
9owe!er, if A+ 6erhad is a property developer coman% whose business is
sellin" roerties or lands ,tradin" stoc&- then the "ains it made will be
considered as revenue gains and it will be subjected to income tax instead of
'($T.

,c- The contest riDe of '81==,=== won b% Am% is considered a windfall ,i.e. caital
"ain-. It does not fall within the meanin" of income under *ections 0,a- to 0,f- of
the ITA1967.
,d- 2i!idend income of '87=,=== recei!ed b% E5 *dn 6hd is subjected to income
tax under *0,c- of the ITA 1967 as it is recurrence and reetiti!e.
The caital "ain of '86==,=== from the disosal of shares is not taxable as it
does not fall within the meanin" of income under an% of *ections 0,a- to 0,f- of
ITA1967.
Suggested answer to Q!(a)
8r. )ee will be subjected or assessed to 8ala%sian tax as follows/
Section of
the ITA 19! T&%e of inco"e
1ear of
Assess"ent 2asis %eriod
0,a- 6usiness :=17 1.7.:=17 to 71.1:.:=17
0,b- .mlo%ment :=17 1.1.:=17 to 71.1:.:=17
0,c- 2i!idend :=17 1.1.:=17 to 71.1:.:=17
0,d- 'ental :=17 1.1.:=17 to 71.1:.:=17
The transmission or remission of the foreign interest income into 8ala%sia is tax
exemt under Paragraph 28 of chedule ! of the Income Tax Act ,ITA- 1967.
Suggested answer to Q!(')
4
*atu 6erhad will be subjected to 8ala%sian tax as follows/
Section of
the ITA 19! T&%e of inco"e
1ear of
Assess"ent 2asis %eriod
0,a- 6usiness :=17 1.7.:=1: to 7=.6.:=17
0,c- Interest :=17 1.7.:=1: to 7=.6.:=17
0,c- 2i!idend :=17 1.7.:=1: to 7=.6.:=17
As for the remittance of the forei"n rental income of '87=,=== from *in"aore, it will
be exemted from 8ala%sian tax under Paragraph 28 of chedule ! of the ITA
1967.
Suggested answer to Q3
The differences that influenced the tax liabilit% between a resident and a non1resident
indi!idual are as follows/1
4o5 ,esident 4on6,esident
1 6usiness income under
*0,a-
Taxable if deemed deri!ed
from 8ala%sia under *1:
Fnl% taxable if carr%in" on
business in 8ala%sia or throu"h a
(ermanent .stablishment.
Alicable where 2ouble Taxation
A"reements between 8ala%sia
and treat% countries exist
: .mlo%ment income
deri!ed from 8ala%sia
Taxable, irresecti!e of the
number of da%s.
Tax exemt if the indi!idual
satisfies 6= da%s test under
(ara"rah :1 of *chedule 6, ITA
1967.
7 Indi!idual tax relief under
*06 to *?=, ITA 1967
.ntitled to the ersonal
relief deduction.
4ot entitled, excet in cases
where non resident relief is
entitled to claim the double
taxation relief.
0 Income tax rate *cale rate from =G to :6G Hlat rate of :6G
? 'ebates under *6A I
*6+, ITA 1967
.ntitled to the rebate
claims.
'ebates not "ranted.
6 'o%alties from literar% or
artistic wor&
Tax exemted under (ara
7:, 7:A I 7:6 of *ch 6,
ITA 1967.
4o tax exemtion.
7 Income from cultural
erformance aro!ed b%
8inister
Tax exemted under (ara
7:+ of *ch 6, ITA 1967.
4o tax exemtion.
; Income from musical
comosition
Tax exemted under (ara
7:2 of *ch 6, ITA 1967.
4o tax exemtion.
9 <ithholdin" tax on
interest, ro%alt%, technical
fees, other *0A a%ment
and contract a%ment
4ot alicable. *ubject to withholdin" tax, rate
ran"in" from 1=G to 1?G or 1=G
J 7G.
1= Interest income recei!ed
from licensed financial
institution in 8ala%sia
(rior to 7=.;.:==;, interest
income is subject to ?G
withholdin" tax under
*1=9+. .ffecti!e from
Tax exemted under (ara 77 of
*chedule 6.
5
7=.;.:==;, interest income
is exemted from tax
under Income Tax
,.xemtion- ,4o. 7- Frder
:==;.
Suggested answer to Q9(a)
1A 7eriod of sta& in
.ala&sia
4o5 of
da&s
,esidence
Status ,easons
:==9 :7.=9.:==9 to
71.1:.:==9
1== 4on1
'esident
It does not fulfilled an% conditions
under *7,1-,a- to ,d-.
:=1= 1.11.:=1=to
71.1:.:=1=
6: 'esident
under *7,1-
,b-
*ta% less than 1;: da%s in :=1=and
the eriod lin#ed to a eriod of 1;:
da%s or more consecuti!e da%s in
:=11
The temorar% absence ,social !isit
of 17 da%s in Korea- will form art of
the consecuti!e da%s.
:=11 =1.=1.:=11 to
71.=7.:=11
10.=0.:=11to
71.=7.:=11
9=
1=9
199
'esident
under *7,1-
,a-
*ta% for a eriod of at least 1;: da%s
or more.
:=1: =1.=?.:=1:to
71.=7.:=1:
9: 'esident
under *7,1-
,c-
In 8ala%sia at least 9= da%s and
three out of the four immediate
recedin" %ears.
.ither resident in :=1=and :=11 or in
8ala%sia for 9= da%s or more in :==9
:=17 4ot in 8ala%sia = 'esident
under *7,1-
,d-
'esident in 8ala%sia for three %ears
of assessment immediatel% recedin"
%ear ,i.e. :=1= to :=1:- and resident
in the followin" %ear ,i.e. :=10-.
Suggested answer to Q9(')
Te"%orar& a'sence under *ection 7,1-,b- constitutes/
,i- in connection with his A her ser!ice in 8ala%sia and owin" to ser!ice matters or
attendin" conferences or seminar or stud% abroad3
,ii- owin" to ill health in!ol!in" himself A herself or a member of immediate famil%3
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and
,iii- social !isits not exceedin" 10 da%s in the a""re"ate.
Suggested answer to Q9(c)
The tax residence status can affect an indi!idual@s tax liabilit% in the followin" wa%s/1
,i- 'esident indi!idual is eli"ible for personal reliefs ,i.e. self, wife, children, contribution
to aro!ed schemes I life insurance remiums, boo&s, comuter and etc.-. 4on1
resident will not be "ranted tax relief deductions.
,ii- Tax at gradual " scale rates ran"in" from =G to :6G where a non1resident is taxed
at a flat rate of :6G .
,iii- 'esident indi!idual is entitled tax rebate of #M$%% on char"eable income less than
'87?,===, Da&at, fitrah or an% other Islamic reli"ious due a%ment of which is
obli"ator% and emlo%ment A !isit A wor& ass.
,i!- &mployment of a non resident will be exemted ,(ara"rah :1 of *chedule 6- from
tax if the indi!idual is emlo%ed for 6= da%s or less.
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