Address 7.

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Barring organization just on individual pay. Salary RECEIVED IN MALAYSIA FROM OUTSIDE ... YA 2004 - Business, association and cooperatives (800,000) ...
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Address 7 Tax Planning: Concept, Planning and Calculation

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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

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PERSONAL TAXATION Employment Sole Proprietorship Partnership

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SCOPE OF CHARGE Territorial idea Income of any individual Accruing in (right to get) Deriving from (who pays you – government and state government, installment from duty inhabitant, charged as friendly costs) Received in Malaysia From outside Malaysia

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DEFINITION OF PERSON Individual Company Body of people Corporation sole Excluding association – just on individual pay

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INCOME RECEIVED IN MALAYSIA FROM OUTSIDE MALAYSIA Taxable Income Resident individual/assortment of people/organization Resident organizations including 4 particular ventures: keeping money, protection, delivering and air transport Tax Exempted Non-occupant (under Schedule 6 para. 28) Resident organization - pay charge (exclusion) Unit Trusts Offshore Companies (LOBATA 1990)

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RECENT TAX DEVELOPMENTS Historically Preceding year premise (PYB) 1/1/98 to 31/12/98 Year of appraisal 1999

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CHANGE OF ASSESSMENT SYSTEM Preceding year premise (PYB) to ebb and flow year premise (CYB) Effective date Year finished 31/12/2000 Financial year in 2000

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BASIS PERIOD Current year premise Calendar year 1/1/2000 to 31/12/2000 Year of evaluation 2000 Financial year 1/7/1999 to 30/6/2000 Year of evaluation 2000

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BASIS YEAR 2000 Current year premise (CYB) 1/1/1999 to 31/12/2000 Year of evaluation 2000 1/1/2000 to 31/12/2000 Year of appraisal 2000

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TAX IMPLICATIONS – SHIFT TO CYB Year of appraisal 2000 2 premise periods Basis period in 1999 Tax waiver year Income charge (revision) Act 1999

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TAX WAIVER YEAR Income earned in 1999 No duty payable Exceptions Dividend Payment subject to withholding charge Non-national/non-inhabitant people who initiate or stop work in 1999

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SELF-ASSESSMENT Effective Date 1 January 2000 Year of appraisal (YA) 2001 YA 2001 - Companies (220,000) YA 2004 - Business, organization and cooperatives (800,000) YA 2004 – Employment (1,800,000)

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CLASSES OF INCOME – SECTION 4 (RESIDENTS OR NON-RESIDENTS) Business Employment Dividends, premium or rebates Rents, eminences or premium Pensions, annuities or other periodical installments Gains or benefit outside of (a) to (e)

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SPECIAL CLASSES OF INCOME – SECTION 4A Recipients: Non-occupants Withholding charge – installment/credit Services utilization of property/rights Installation/operation of plant + hardware Technical guidance/administrations/help/administration/organization Rent – portable property

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* self, mate + tyke # self, mate, youngster + guardian

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COMPUTATION OF TAX PAYABLE Tax Payable = Chargeable Income X Relevant Tax Rate Tax Rates Resident individual/club/exchange affiliation/co-agent society Scale rates : 0% to 28 % Company Trust – 28 % Non-occupant individual – 28 % (total wage = chargeable pay)

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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

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PERSONAL REBATES Set-off against expense payable Chargeable pay < RM35,000 Single (RM350) Separate Assessment Husband (RM350) Wife (RM350)

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PERSONAL REBATES Combined appraisal Husband (RM350) Wife (RM350) Personal Computer RM400 (like clockwork) Employment Levy Religious Payments Zakat/Fitrah

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DERIVATION – SECTION 13(2) Exercised in Malaysia Leave owing to job in Malaysia Overseas obligations coincidental to job in Malaysia Director of occupant organization Employment on board ship/air ship

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TYPES OF EMPLOYMENT INCOME Salary, compensation, expense, reward, compensation, leave pay, commission, tip, perquisite, recompense Benefits-in-kind Living convenience Non-endorsed annuity plan/provident asset Compensation installment

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GRATUITY Tax excluded sick wellbeing 55 years + 10 years of administration Taxable Period of occupation 6 years of appraisal Whichever is shorter

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ASSESSMENT - Gratuity – RM60,000 Employment period 5 years RM12,000/for each YA Employment period 7 years RM10,000 for each YA

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SHARE OPTIONS Not-Taxable Option not practiced Taxable Option practiced Option date Difference between business sector worth and choice business sector

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BENEFITS-IN-KIND Motor vehicle Private use - RM1,200 to RM25,000 Fuel – RM600 to RM3,000 Driver – RM3,600 Accommodation (30% of real) Household furniture Barely-outfitted, semi-outfitted, completely outfitted, administration charges, utilities installment and so forth

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LIVING ACCOMMODATION Job necessity Tax absolved Hotel/lodging 3% X Sec 13 (1) (an) Apartment/house Lower of 30% Sec 13(1)(a) or Actual rental (empty settlement) Mobile telephone, plant specialist, hirelings, school/educational cost charges, club enrollment, staff advance

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LIVING ACCOMMODATION Salary RM100K Defined quality – unfurnished : RM36K/24K Assessability of Benefits Salary RM100K Lower of 30% X RM100K or RM36K/24K RM30K/24K Gross Income RM130K/124K

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TAX EXEMPT - BIK Discounted merchandise and administrations Subsidised nourishment and beverages Free transport Child care advantages Medical/dental Leave entry Group protection approach

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APPROVED FUND/SCHEME EPF Contributions 11% (Employee) 12% (Employer) Tax deductibility – 19% Reduction in Cash Remuneration Lower charge risk Cash stream Time estimation of cash

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RESIDENT STATUS – INDIVIDUAL :SECTION 7 > 182 days <182 days however connected to another time of 182 days or more Temporary nonappearance Incidental to job, meeting/study/course, sick wellbeing, social visits (<14 days) 90 days – promptly going before 3 years < 90 days instantly taking after year – inhabitant Immediately going before 3 years - inhabitant

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SECTION 7(1)(B) Aug.1999 Aug. 2000 A B Period A -< 182 days Period B -> 182 days Period A connection to Period B Link -31 Dec. to 1 Jan. in Malaysia Period A qualifies as occupant

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SECTION 7(1)(B) April 1999 March 2000 A B Period A -> 182 days Period B -< 182 days Period A connection to Period B Link -31 Dec. to 1 Jan. in Malaysia Period B qualifies as inhabitant

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SECTION 7(1)(C) YA 1999 150 days 1998 92 days 1997 RESIDENT 1996 15 days 1995 138 days Qualifies as occupant

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SECTION 7(1)(D) YA 1999 Resident 1998 63 days 1997 Resident 1996 Resident 1995 Resident Qualifies as occupant

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CAPITAL GAINS Real Property Gains Tax (RPGT) Act, 1976 Effective date – 7/11/1975 Disposal of genuine property or shares in a genuine property organization Replaced Land Speculation Tax Act 1974

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ACQUISITION/DISPOSAL DATE Acquisition date = transfer date Written understanding (S & P) Completion date Asset exchanged Full thought paid or got Conditional contract

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CHARGEABLE GAIN OR ALLOWABLE LOSS Disposal Price > Acquisition Price = Chargeable Gain Disposal Price < Acquisition Price = Allowable Loss

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