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Income Tax Act 1967- Part 2

(b) subsection (1) shall not apply to a debt owing to the relevant person in respect of any such dividend: 

Provided that, where this subsection has applied to a dividend which has been credited, it shall not apply to that dividend when paid.

(5) Subject to section 3, where in the relevant period any gross interest first becomes receivable by the relevant person, then, if the debenture, mortgage or other source to which the interest relates forms or has formed in or before the relevant period part of the stock in trade of a business carried on by or on behalf of the relevant person, or if the interest is in respect of a loan granted in or before the relevant period in the course of carrying on the business of lending of money and the business is one which is licensed under any written law--

(a) the interest shall be treated as gross income of the relevant person from the business for the relevant period if the business is carried on at any time in the relevant period; and

(b) subsection (1) shall not apply to a debt owing to the relevant person in respect of any such interest. 

(6) Where in the relevant period any article, product, produce or other thing is exported from Malaysia in the course of carrying on a business in such circumstances that subsection 12(1) applies thereto in relation to the business-

(a) subsection (2) shall not apply with respect to that article, product, produce or other thing or to any gross income received in respect thereof; and

(b) the amount equal to the market value of the article, product, produce or other thing deemed under subsection 12(1) to be gross income derived from the business shall be treated as gross income of the relevant person from the business for the relevant period. 

(7) Where this section applies to any particular item of gross income, nothing in sections 25 to 29 and nothing in section 30 shall apply to that item.

(8) This section shall not apply to income under section 4A.

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53,,/25.Basis period to which gross income from an employment is related

25. Basis period to which gross income from an employment is related

(1) Subject to subsection (1A) or (2A), where gross income from an employment--

(a) is not receivable in respect of any particular period; and

(b) first becomes receivable in the relevant period, it shall when received be treated as gross income of the relevant person for the relevant period.

(1A) The gross income from an employment in respect of any right to acquire shares in a company of the kind to which paragraph 13(1)(a) applies, shall where the right is exercised, assigned, released or acquired in the relevant period be treated as gross income of the relevant person for that relevant period.

(2) Subject to section 3 and subsections (2A) and (5), where gross income from an employment is receivable in respect of the whole of the relevant period (or, except in a case to which subsection (4) applies, in respect of any part of the relevant period), it shall when received be treated as gross income of the relevant person for the relevant period.

(2A) Where gross income from an employment in relation to director's fee or bonus is receivable in respect of the whole or part of the relevant period, that gross income shall, when received in any relevant period, be treated as the gross income of the relevant person for the second mentioned relevant period.

(3) Subject to section 3 and subsection (5), where gross income falls to be treated under subsection (1), (2) or (2A) as gross income for the relevant period, then, if its receipt first becomes known to the Director General on a day more than four years after the end of the relevant period, it shall whenever necessary be treated as gross income of the relevant person for the basis period for the year of assessment which began four years before the beginning of the year of assessment which includes that day.

(4) Subject to section 3 and subsection (5), where gross income from an employment is receivable in respect of a period (in this subsection referred to as the overlapping period) which overlaps the relevant period, that gross income when received shall be apportioned between the part of the overlapping period which overlaps the relevant period and the remaining part of the overlapping period (the apportionment, unless the Director General having regard to the facts of any particular case otherwise directs, being made in the proportion that the number of days of the overlapping period that fall into the relevant period bears to the total number of days of the overlapping period) and so much of that gross income as is apportioned to the overlapping part of the overlapping period shall be treated as gross income of the relevant person from the employment for the relevant period:

Provided that--

(a) where the employment ceases in the basis period for a year of assessment and, at or about the time of the cessation of the employment, gross income from the employment becomes receivable as a lump sum by way of gratuity, deferred pay or otherwise but excluding any amount which by virtue of paragraph 13(1)(d) or (e) is included in his gross income from the employment, then, for the purposes of this subsection--

(i) that sum, notwithstanding subsection (1), shall be treated as accruing evenly over and receivable in respect of an accrual period consisting of the period of the employment (including, where the employment was employment by a company, any particular period during which the relevant person was employed by another company in the same group, being a group of which that first-mentioned company was a member at the time of the cessation of the employment) or, if the period of employment (including any such particular period) commenced more than four years before the commencement of that basis period, an accrual period consisting of that basis period and the basis periods for the four years of assessment immediately preceding that year;

(ii) so much of that sum as by virtue of subparagraph (i) is treated as accruing evenly over and receivable in respect of any such particular period during which the relevant person was employed by any such other company shall be deemed to be income from the source consisting of his employment by that other company and not from the source consisting of the employment by that first-mentioned company; and

(iii) that accrual period shall be treated as the overlapping period;

(b) where the overlapping period in respect of which that gross income is receivable partly elapsed more than four years before the day on which the receipt of that gross income first became known to the Director General, then, for the purposes of this subsection, that gross income shall whenever necessary be deemed to have been receivable in respect of and to have accrued evenly over that part of the overlapping period which did not so elapse and, if that part falls wholly into the relevant period, shall whenever necessary be deemed to be gross income of the relevant person from the employment for the relevant period;

(c) where the overlapping period in respect of which that gross income is receivable wholly elapsed more than four years before the day on which the receipt of that gross income first became known to the Director General, that gross income shall whenever necessary be treated as gross income for the basis period for the year of assessment which began four years before the beginning of the year of assessment which includes that day. 

(5) Where gross income from an employment first becomes receivable in the relevant period and is in respect of--

(a) a period which commences after the end of the relevant period; or

(b) a period which overlaps the relevant period and which partly elapsed after the end of the relevant period, subsections (2) to (4) shall not apply and that gross income shall when received be treated as gross income of the relevant person for the relevant period:

Provided that, where the relevant period wholly elapsed more than four years before the day on which the receipt of that gross income first became known to the Director General, that gross income shall whenever necessary be treated as gross income of the relevant person for the basis period for the year of assessment which began four years before the beginning of the year of assessment which includes that day.

(6) Notwithstanding the foregoing subsections, where the Director General is satisfied that--

(a) an employee has left or will be leaving Malaysia in the basis year for the year of assessment to which the relevant period relates (that year of assessment being in this subsection referred to as the relevant year) and will not be resident for the basis year for the following year of assessment;

(b) no pension derived from Malaysia will be receivable by the employee for the basis period for that following year; and

(c) gross income from the employee's employment will cease to be derived from Malaysia on the expiration of a period of leave following the employee's departure from Malaysia, any gross income from the employment which but for this subsection would by virtue of any of the foregoing subsections be receivable for the basis period for the year of assessment following the relevant year shall be treated as receivable for the relevant period unless the employee in making his return of income for the relevant year (or within such period after the making of that return as the Director General may allow) makes a written request to the Director General that this subsection shall not apply in relation to his gross income from the employment.

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53,,/26.Basis period to which gross income in respect of dividend is related

26. Basis period to which gross income in respect of dividend is related

(1) Subject to subsection (2), where gross income from a source consists of a dividend deemed to be derived from Malaysia by virtue of section 14, all gross income from that source paid, credited or distributed in the relevant period shall be taken to be gross income of the relevant person for the relevant period:

Provided that, where this section has applied to a dividend which had been credited, it shall not apply to that dividend when paid.

(2) In relation to gross income to which subsection (1) applies, where the relevant period overlaps the basis period for the immediately preceding year of assessment, the gross income in relation to the part of the relevant period which overlaps that basis period shall not be taken to be the gross income of the relevant person for the relevant period.

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53,,/27.Basis period to which gross income in respect of interest, etc., is related

27. Basis period to which gross income in respect of interest, etc., is related

(1) Subject to this section where gross income from a source in Malaysia of the relevant person--

(a) consists of any interest, discount, rent or royalty or of any pension, annuity or other periodical payment to which paragraph 4(e) applies; and

(b) first becomes receivable in the relevant period, it shall when it has been received be treated as gross income of the relevant person for the relevant period.

(1A) Where gross income from a source in Malaysia of a company consists of any amount of discount or premium from the subscription or issuance of bond, as the case may be, and first becomes receivable in the relevant period, that amount shall be deemed to accrue over the whole period of the bond and the gross income of the company for the relevant period that relates to the period of the bond shall be a sum to be determined in accordance with the following formula:

where A is the number of days in the relevant period that falls within the period of the bond;

B is the total number of days of the whole period of the bond; and

C is the total amount of discount or premium in respect of the bond:

Provided that the Director General may allow the company to consistently apply any other formula which is in accordance with the generally accepted accounting principles applicable during the relevant period.

(2) Where gross income from a source of the relevant person is gross income to which subsection (1) or (1A) applies and is receivable in respect of a period (in this subsection referred to as the overlapping period) which overlaps the relevant period, that gross income when received shall be apportioned between the part of the overlapping period which overlaps the relevant period and the remaining part of the overlapping period (the apportionment, unless the Director General having regard to the facts of any particular case otherwise directs, being made in the proportion that the number of days of the overlapping period that fall into the relevant period bears to the total number of days of the overlapping period) and so much of that gross income as is apportioned to the overlapping part of the overlapping period shall be treated as gross income of the relevant person from that source for the relevant period:

Provided that--

(a) where that gross income is in respect of an amount of interest calculated for two or more periods of accrual which together make up the overlapping period, the gross income in respect of the interest in respect of each period of accrual shall be ascertained and--

(i) if any such period of accrual falls into the relevant period, subsection (1) shall apply to the gross income so ascertained in respect of that period of accrual;

(ii) if any such period of accrual overlaps the relevant period, this subsection (without this paragraph of this proviso) shall apply to the gross income so ascertained in respect of that period of accrual as if that period of accrual were the overlapping period and as if that last-mentioned gross income were gross income receivable in respect of the overlapping period;

(b) where the overlapping period in respect of which that gross income is receivable partly the elapsed more than four years before the day on which the receipt of that gross income first became known to the Director General, then, for the purposes of this subsection, that gross income shall whenever necessary be deemed to have been receivable in respect of and to have accrued evenly over that part of the overlapping period which did not so elapse and, if that part falls wholly into the relevant period, shall whenever necessary be deemed to be gross income of the relevant person from that source for the relevant period;

(c) where the overlapping period in respect of which that gross income is receivable wholly elapsed more than four years before the day on which the receipt of that gross income first became known to the Director General, that gross income shall whenever necessary be treated as gross income of the relevant person for the basis period for the year of assessment which began four years before the beginning of the year of assessment which includes that day. 

(3) Where gross income mentioned in subsection (1) or (1A) becomes receivable in the relevant period and is in respect of--

(a) a period which commences after the end of the relevant period; or

(b) a period which overlaps the relevant period and which partly elapsed after the end of the relevant period, subsection (2) shall not apply and that gross income shall when received be treated as gross income of the relevant person for the relevant period:

Provided that, where the relevant period wholly elapsed more than four years before the day on which the receipt of that gross income first becomes known to the Director General, that gross income shall whenever necessary be treated as gross income of the relevant person for the basis period for the year of assessment which began four years before the beginning of the year of assessment which includes that day.

(4) In subsection (2) "period of accrual" means a period throughout which there is no change in the rate of interest or in the principal sum in respect of which interest is payable.

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53,,/28.Basis period to which gross income not provided for by sections 24 to 27 is related

28. Basis period to which gross income not provided for by sections 24 to 27 is related

Subject to this Act, where in the relevant period there is received by the relevant person from a source any gross income to which sections 24 to 27 do not apply, the amount of that income (or, where the income consists of something having a market value, the amount of its market value at the time of its receipt) shall be treated as gross income of the relevant person from that source for the relevant period.

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53/29.Basis period to which income obtainable on demand is related

29. Basis period to which income obtainable on demand is related

(1) Notwithstanding anything in sections 23 to 28, where the circumstances are such that the relevant person is entitled to any gross income (other than gross income to which section 24 or 26 applies) accruing in or derived from Malaysia and is able to obtain the receipt thereof on demand, that gross income shall be treated as being received by him at the time those circumstances arise.

(2) The reference in subsection (1) to gross income the receipt of which the relevant person is able to obtain on demand includes a reference to gross income the receipt of which he would be able to obtain on demand but for the fact that it is lawfully receivable by a receiver of any kind.

(3) For the purposes of this section, where gross income from a source in Malaysia of the relevant person consists of interest that relates to a loan--

(a) between persons one of whom has control over the other;

(aa) between individuals who are relatives of each other; or

(b) between persons both of whom are controlled by some other person, the relevant person is deemed to be able to obtain on demand the receipt of such interest when such interest is due to be paid to the relevant person in the relevant period.

(4) Subject to subsection (3) and for the purposes of this section, where a relevant person is entitled to any gross income--

(a) accruing in or derived from Malaysia to which section 25, section 27 other than subsection 27(1A), or section 28 applies;

(b) the amount of which relates to any transactions--

(i) between persons one of whom has control over the other;

(ii) between individuals who are relatives of each other; or

(iii) between persons both of whom are controlled by some other persons;and

(c) the amount of which first becomes receivable to the relevant person in the relevant period, the relevant person is deemed to be able to obtain on demand the receipt of such amount in the basis period immediately following the relevant period.

(5) In this section, "relative" and "transaction" have the meanings assigned to them under subsection 140(8).

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53,,/30.Special provisions applicable to gross income from a business

30. Special provisions applicable to gross income from a business

(1) Where a deduction has been made under subsection 34(2) in ascertaining the adjusted income of the relevant person from a business for the basis period for a year of assessment, that basis period being prior to the relevant period, then--

(a) if the deduction has been made in respect of a debt estimated to have become wholly irrecoverable, any sum recovered on account of the debt by that person in the relevant period shall be treated as gross income of the relevant person from the business for the relevant period; and

(b) if the deduction has been made in respect of a debt estimated to have become partly irrecoverable and there has been received by that person in respect of the debt a sum (or an aggregate of sums) in excess of the amount of that part of the debt not estimated to have become irrecoverable, so much of that excess as is recovered by him in the relevant period shall be treated as gross income of the relevant person from the business for the relevant period. 

(2) Where during the relevant period any sum is refunded to the relevant person--

(a) on account of payroll tax paid by him in respect of remuneration paid by him to any person employed by him in the production of his gross income from a business for the relevant period or any basis period ending prior to the relevant period; or

(b) on account of turnover tax paid by him in respect of the turnover of the business, the sum refunded shall be treated as gross income of his from the business derived from Malaysia for the relevant period.

(3) Where during the relevant period--

(a) recovered expenditure (within the meaning of Schedule 2) is recovered by or on behalf of the relevant person in connection with a business of his which includes the working of a mine; and

(b) the total recovered expenditure so recovered exceeds the aggregate of--

(i) the residual expenditure (within the meaning of that Schedule) at the date on which that period begins; and

(ii) the qualifying mining expenditure (within the meaning of that Schedule) incurred by him during that period, the amount of the excess shall be treated as gross income of the relevant person from the business for the relevant period. 

(4) Where--

(a) a deduction has been made under subsection 33(1) in computing the adjusted income of the relevant person from a business for the basis period for a year of assessment (that basis period being prior to the relevant period) in respect of any outgoing or expense (including any sum payable, rent payable or expense incurred of the kind described in paragraph 33(1)(a), (b) or (c)); or

(b) any allowance or aggregate amount of allowances has been made under section 42 in computing the statutory income of the relevant person from a business for the basis period for a year of assessment (that basis period being prior to the relevant period) in respect of any expenditure incurred under Schedule 3, and the whole or any part of a debt in respect of any such outgoing, expense, sum, rent or expenditure is released in the relevant period the amount released shall be treated as gross income of the relevant person from that business for the relevant period.

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53,,/31.Special provisions applicable to gross income from a business

31. Special provisions applicable to gross income from a business

(Deleted by Act 624).

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53,,/32.Special provisions applicable to gross income from an employment

32. Special provisions applicable to gross income from an employment

(1) Where in the relevant period there has been the use or enjoyment by the relevant person of any benefit or amenity of the kind to which paragraph 13(1)(b) applies, the amount in respect thereof to be included in his gross income from the employment for the relevant period shall be an amount equal to the value of that use or enjoyment as ascertained by whatever method is just and reasonable in the circumstances.

(1A) (a) Where in the relevant period a relevant person acquired any right to acquire shares in a company of the kind to which paragraph 13(1)(a) applies, under his name or in the name of his nominee or agent, the amount in respect thereof to be included in his gross income from the employment shall be--

(i) the market value of the shares where the right shall be exercised, assigned, released or acquired on a specified date or where the right shall be exercised, assigned, released or acquired within a specified period, the first day of that period; or

(ii) the market value of the shares on the date of the exercise, assignment, release or acquisition of the right, whichever is the lower less the amount paid for the shares.

(b) In this subsection, "market value" means--

(i) in the case of a company listed on any stock exchange , the average price of the shares which is ascertained by averaging the highest and the lowest price of the shares for the day; or

(ii) in any other case, the net asset value of the shares for the day.

(2) Where in the relevant period there has been the use or enjoyment by the relevant person of living accommodation of the kind to which paragraph 13(1)(c) applies, then, subject to subsection (3), the amount in respect thereof to be included in his gross income from the employment for the relevant period shall be--

(a) an amount equal to the defined value of the living accommodation for the relevant period or an amount equal to thirty per cent of the gross income which by virtue of paragraph 13(1)(a) and section 25 or 28 falls to be included in his gross income from the employment for the relevant period, whichever is the less; or

(b) where the living accommodation is provided in--

(i) a hotel, hostel or similar premises;

(ii) any premises on a plantation or in a forest; or

(iii) any premises which, although in a rateable area, are not subject to public rates, an amount equal to three per cent of the gross income which by virtue of paragraph 13(1)(a) and section 25 or 28 falls to be included in his gross income from the employment for the relevant period. 

(3) Notwithstanding subsection (2), where in the relevant period there has been the use and enjoyment by the relevant person of living accommodation of the kind to which paragraph 13(1)(c) applies, then--

(a) where the relevant person's employer is a company and the relevant person at any time during the relevant period is a director of the company (not being a service director) while the company is a controlled company, then, whether or not he is a director at the time of the use and enjoyment, the amount to be included in his gross income for the relevant period shall be the defined value of the accommodation for the relevant period or, if the accommodation is wholly or partly shared with other employees, such proportion of the defined value as is just and reasonable;

(b) where the living accommodation is provided for only a part of the relevant period, the amount to be included in his gross income for the relevant period under subsection (2) or this subsection shall be reduced in such a proportion, if any, as is just and reasonable having regard to all the circumstances;

(c) where the living accommodation (except in a case to which paragraph (a) or paragraph (2)(b) applies) is provided in such circumstances that--

(i) it is to be wholly or partly shared with other employees;

(ii) the relevant person is required by the employer to reside therein; or

(iii) the relevant person is required or expected by the employer to use it for the advancement of the employer's interests by the provision of hospitality or otherwise and, in order that it may be so used, it is larger or more valuable accommodation than the relevant person would otherwise need, the amount to be included in his gross income for the relevant period under paragraph (2)(a) shall be so much of the defined value of the accommodation for the relevant period as is just and reasonable or thirty per cent of the gross income which by virtue of paragraph 13(1)(a) and section 25 or 28 falls to be included in his gross income from the employment for the relevant period, whichever is the less (that amount being reduced in any case to which paragraph (b) applies in such a proportion, if any, as is just and reasonable having regard to all the circumstances). 

(4) For the purposes of this section, the amount of gross income from the employment mentioned in paragraphs (2)(a), (b) and (3)(c) shall not include the amount of gross income in respect of any right to acquire shares in a company ascertained under subsection (1A).

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53/33.Adjusted income generally

Part III ASCERTAINMENT OF CHARGEABLE INCOME

Chapter 4--Adjusted income and adjusted loss

33. Adjusted income generally

(1) Subject to this Act, the adjusted income of a person from a source for the basis period for a year of assessment shall be an amount ascertained by deducting from the gross income of that person from that source for that period all outgoings and expenses wholly and exclusively incurred during that period by that person in the production of gross income from that source, including--

(a) subject to subsection (2), any sum payable for that period (or for any part of that period) by way of interest upon any money borrowed by that person and--

(i) employed in that period in the production of gross income from that source; or

(ii) said out on assets used or held in that period for the production of gross income from that source;

(b) rent payable for that period (or for any part of that period) by that person in respect of any land or building or part thereof occupied by him in that period for the purpose of producing gross income from that source;

(c) expenses incurred during that period for the repair of premises, plant, machinery or fixtures employed in the production of gross income from that source or for the renewal, repair or alteration of any implement, utensil or article so employed, other than implements, utensils, articles (the expenditure on which would be qualifying plant expenditure for the purposes of Schedule 3) or any means of conveyance, excluding the cost of reconstructing or rebuilding--

(i) any premises, buildings, structures or works of a permanent nature;

(ii) any plant or machinery; or

(iii) any fixtures; and

(d) such other deductions as may be prescribed. 

(2) Where a person, being a person to whom paragraph (1)(a) applies in relation to gross income from a business of his for the basis period for a year of assessment and in relation to borrowed money, has made (otherwise than for the purpose of producing that gross income) any loan of money or any investment in movable or immovable property, and the loan or any part thereof is outstanding at any time in that period or the investment or any part thereof is held by him at any time in that period and it appears to the Director General that the loan or any part thereof or the investment or any part thereof has been financed wholly or partly or directly or indirectly out of the borrowed money--

(a) the total sum payable for that period or any part thereof by way of interest on that borrowed money shall be deemed to accrue evenly over that period or part thereof, and so much of that sum as is thus found to accrue during each calendar month shall be taken to be the monthly figure for the purposes of this subsection;

(b) if at the end of any calendar month the aggregate of--

(i) the amount of the loan then outstanding if any; and

(ii) the cost of so much of the investment as is held by him at that time if any, is less than the amount of that borrowed money, the monthly figure for that month shall be reduced by an amount which bears to that monthly figure the same proportion as that aggregate bears to the amount of that borrowed money or by an amount which in the opinion of the Director General is just and reasonable in all the circumstances;

(c) if at the end of any calendar month the aggregate mentioned in the preceding paragraph is more than the amount of that borrowed money, the monthly figure for that month shall be reduced to nil or to an amount which in the opinion of the Director General is just and reasonable in all the circumstances; and

(d) the amount of the deduction to be made for that period in respect of that borrowed money shall be an amount consisting of the aggregate of--

(i) the monthly figures for all calendar months to which paragraph (b) or (c) applies, as reduced by either of those paragraphs; and

(ii) the monthly figures for the other calendar months.

(3) In subsection (2) "calendar month", in relation to a basis period or part thereof, means a period which is included in that basis period or part thereof and is either--

(a) one of the twelve months of the Gregorian calendar; or

(b) where that basis period or part thereof includes a part, but not the whole, of such a month, that part of that month. 

(4) For the purposes of paragraph (1)(a) and subsection (2), where any sum payable for a basis period for a year of assessment is not due to be paid in that period, the sum shall when it is due to be paid be deducted in arriving at the adjusted income of a person for that period.

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53,,/34.Special provisions applicable to adjusted income from a business

34. Special provisions applicable to adjusted income from a business

(1) In ascertaining the adjusted income of a person from a business for the basis period for a year of assessment, deductions shall be made from the gross income from the business for that period in accordance with the following subsections (the person, business, period and gross income in question being referred to in those subsections as the relevant person, the business, the relevant period and the relevant gross income respectively).

(2) There shall be deducted in the case of any debt as defined in subsection (3)--

(a) if at the end of the relevant period the debt is reasonably estimated in all the circumstances of the case to be wholly irrecoverable, an amount equal to the amount of the debt;

(b) if at the end of the relevant period the debt is reasonably estimated in all the circumstances of the case to be partly irrecoverable, an amount equal to so much of the debt as is estimated to be irrecoverable, the deduction being in either case reduced by the amount of any deduction made under this subsection in respect of the debt for the basis period for a year of assessment prior to the year of assessment to which the relevant period relates.

(3) In subsection (2) "debt" means--

(a)a debt arising in respect of any matter referred to in subsection 24(1) or in respect of interest of the kind referred to in subsection 24(5), where the amount of any such debt has been included in the relevant gross income or in the gross income of the relevant person from the business for the basis period for a year of assessment prior to the year of assessment to which the relevant period relates; or

(b) a debt arising in respect of a loan of the kind mentioned in subsection 24(5) granted in the course of carrying on the business in the relevant period or in the basis period for any such prior year of assessment. 

(3A) The reference to the debt which is partly irrecoverable under paragraph (2)(b), shall be deemed, in the case of a bank, to include all interest in respect of a loan or credit facility accrued from the date that such loan or facility is classified as non-performing loan in accordance with the relevant guidelines issued by the Central Bank.

(3B) For the purpose of subsection (3A), "bank" means a bank or a finance company or a banking and finance company licensed or deemed to be licensed under the Banking and Financial Institutions Act 1989 [Act 372] or Islamic Banking Act 1983 [Act 276], or an institution prescribed under the Development Financial Institutions Act 2002 [Act 618].

(4) Where in the relevant period the relevant person has made a contribution to an approved scheme in respect of an employee of his, then--

(a) if the employee's remuneration as determined under the rules, regulations, by-laws or constitution of that scheme for the period for which the contribution is made (that period being a period which coincides with or overlaps the relevant period) is deductible as a whole, or in parts aggregating the whole, in computing the adjusted income from the business for any basis period or periods for a year or years of assessment in relation to the business, there may be deducted from the relevant gross income an amount equal to the contribution or nineteen per cent of the employee's remuneration as so determined for the period for which the contribution is made, whichever is the less;

(b) if only a part or parts of that remuneration is or are so deductible, there may be deducted from the relevant gross income an amount equal to so much of the contribution or of that percentage of the remuneration (whichever of those amounts is the less) as bears to the whole of the contribution or to that percentage of the remuneration, as the case may be, the same proportion as that part or the aggregate of those parts, as the case may be, bears to the whole of that remuneration. 

(5) Where on the first establishment of a scheme of the kind referred to in subsection (4) a special contribution thereto is made in the relevant period by the relevant person whereby any of his employees engaged in activities relating to the production of the relevant gross income or gross income of the relevant person from the business for the basis period for a year of assessment (that basis period being prior to the relevant period) may qualify for the benefits under that scheme, the Director General may when approving that scheme authorize deductions in respect of that special contribution of such amounts (being amounts which in total are equal to or less than the special contribution) from the gross income of the relevant person from the business for the basis periods for such years of assessment as he thinks fit.

(6) There may be deducted from the relevant gross income--

(a) an amount equal to any payroll tax paid by the relevant person in the relevant period in respect of any remuneration paid by him to any person employed by him in the production of gross income of his from the business;

(b) an amount equal to any turnover tax in respect of the turnover of the business paid by the relevant person in the relevant period;

(c) where any part of the relevant gross income is derived from the working of a mine, such amounts in respect of capital expenditure as may be allowed for the relevant period pursuant to Schedule 2;

(d) where any part of the relevant gross income is derived from the working of a farm relating to cultivation of crops, an amount equal to any expense (not being an expense which is qualifying expenditure or qualifying agriculture expenditure for the purposes of Schedule 3 or incurred in the acquisition of land or anything growing thereon) incurred by the relevant person in the relevant period in replanting the farm for the purposes of cultivation of crops or in effecting any improvement of the farm or any part of the farm in connection with such replanting;

(e) an amount equal to the amount of expenditure incurred by the relevant person in the relevant period on the provision of any equipment, or on the alteration or renovation of premises, necessary to assist any disabled person employed by him in the production of gross income of his from the business;

(f) an amount equal to the expenditure incurred by the relevant person in the relevant period in respect of translation into or publication in the national language of cultural, literary, professional, scientific or technical books approved by the Dewan Bahasa dan Pustaka;

(g) an amount equal to the expenditure incurred by the relevant person in the relevant period on the provision of library facilities which are accessible to the public and in respect of contributions to public libraries and libraries of schools and institutions of higher education:

Provided that the amount that may be deducted shall not exceed one hundred thousand ringgit;

(h) an amount equal to the expenditure incurred by the relevant person in the relevant period on  he provision of services, public amenities and contributions to a charity or community project pertaining to education, health, housing, conservation or preservation of environment, enhancement of income of the poor, infrastructure and information and communication technology, approved by the Minister:

Provided that where a deduction has been made under this paragraph, no further deduction of the same amount shall be allowed under subsection 44(6);

(ha) an amount equal to the expenditure incurred by a company on the provision of infrastructure in relation to its business which is available for public use, subject to the prior approval of the Minister:

Provided that where a deduction has been made under this paragraph, no further deduction of the same amount shall be allowed under subsection 44(6);

(i) an amount equal to the expenditure incurred, not being capital expenditure on land, premises, buildings, structures or works of a permanent nature or on alterations, additions or extensions thereof or in the acquisition of any rights in or over any property, by the relevant person in the relevant period on the provision and maintenance of a child care centre for the benefit of persons employed by him in his business;

(j) an amount equal to the expenditure incurred by the relevant person in the relevant period in establishing and managing a musical or cultural group approved by the Minister;

(k) an amount equal to the expenditure incurred by the relevant person in the relevant period for sponsoring any arts, cultural or heritage activity approved by the Minister of Information, Communication and Culture: 

Provided that the amount deducted in respect of expenditure incurred for sponsoring those activities shall not in aggregate exceed five hundred thousand ringgit of which the amount deducted in respect of expenditure incurred in sponsoring foreign arts, cultural or heritage activity shall not exceed two hundred thousand ringgit;

(l) an amount equal to the expenditure incurred by the company in the relevant period on the provision of a scholarship to a student for any course of study leading to an award of a diploma, or degree (including a degree at a Masters or Doctorate level) or the equivalent of a diploma or degree undertaken at a higher educational institution established or registered under the laws regulating such establishment or registration in Malaysia or authorized by any order made under section 5A of the Universities and University Colleges Act 1971 [Act 30]:

Provided that the scholarship--

(a) shall only be given to a student--

(i) who is receiving full-time instruction at such higher educational institution;

(ii) who has no means of his own; and

(iii) the total monthly income of whose parents or guardian, as the case may be, does not exceed five thousand ringgit; and

(b) shall not include payments other than payments required by such higher educational institution relating to the course of study, and educational aids and reasonable cost of living expenses during the student's period of study at such higher educational institution;

(m) an amount equal to the expenditure, not being capital expenditure, incurred by a company in the relevant period for the purpose of obtaining accreditation for a laboratory or a certification body, as evidenced by a certificate issued by the Department of Standards Malaysia:

Provided that the expenditure incurred in the relevant period shall be deemed to be incurred by that company in the basis period for the year of assessment in which the certificate is issued;

(ma) an amount twice the amount of the expenditure, not being capital expenditure, incurred by a company in the relevant period for the purpose of obtaining certification for recognized quality systems and standards, and halal certification, evidence by a certificate issued by a certification body as determined by the Minister:

Provided that the expenditure incurred in the relevant period shall be deemed to be incurred by that company in the basis period for the year of assessment in which the certificate is issued;

(n) an amount equal to the expenditure incurred by a person in the relevant period on the provision of practical training in Malaysia, in relation to his business, to an individual who is--

(i) resident in the basis year for a year of assessment; and

(ii) not an employee of that person; and

(o) an amount eq ual to the expenditure incurred by a company in a relevant period for participating in international standardization activities approved by the Department of Standards Malaysia. 

(7) There may be deducted from the relevant gross income any expenditure, not being capital expenditure incurred on plant, machinery, fixtures, land, premises, buildings, structures or works of a permanent nature or on alterations, additions or extensions thereof or in the acquisition of any rights in or over any property, incurred by the relevant person during the relevant period on scientific research related to the business and directly undertaken by him or on his behalf.

(8) Where any deduction in respect of any matter is capable of being made under this section, no deduction or allowance in respect of that matter shall be made under section 33 or Schedule 3, as the case may be.

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53,,/34A.Special deduction for research expenditure

34A. Special deduction for research expenditure

(1) Subject to this section, in ascertaining the adjusted income of a person from a business for the basis period for a year of assessment, a deduction shall be made, as specified in subsection (4), from the gross income from the business for that period in respect of expenditure, not being capital expenditure incurred on plant, machinery, fixtures, land, premises, buildings, structures or works of a permanent nature or on alterations, additions or extensions thereof or in the acquisition of any rights in or over any property, incurred by that person during that period on research approved by the Minister.

(a) (Deleted by Act 693);

(b) (Deleted by Act 693). 

(2) The Minister in approving the research pursuant to subsection (1) may impose such conditions as he thinks fit or may specify the period or periods for the purpose of deduction under this section.

(3) (Deleted by Act 693).

(4) The amount of deduction to be made under subsection (1) shall be twice the amount of expenditure, not being capital expenditure, referred to in that subsection:

Provided that where subsection (4A) applies, the amount of deduction to be made shall be the amount of expenditure incurred.

(4A) A pioneer company may, in a return of income for the year of assessment in which the expenditure referred to in subsection (1) had been incurred, elect that the amount of that expenditure be deducted in the first basis period in respect of its post-pioneer business for a year of assessment.

(5) Where any deduction in respect of expenditure on research is made under this section, no deduction in respect of that expenditure shall be made under section 33 or 34.

(6) For the purposes of this section, the words "pioneer company" and "post-pioneer business" have the respective meanings assigned to them under the Promotion of Investments Act 1986.

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53,,/34B.Special deduction for contribution to an approved research institute or payment for use of services of an approved research institute or company

34B. Special deduction for contribution to an approved research institute or payment for use of services of an approved research institute or company

(1) Subject to this section, in ascertaining the adjusted income of a person from a business for the basis period for a year of assessment, a deduction shall be made, as specified in subsection (2), from the gross income from the business for that period in respect of expenditure, not being capital expenditure, incurred by that person during that period in respect of--

(a) contribution in cash to an approved research institute;

(b) payment for the use of the services of an approved research institute or an approved research company; or

(c) payment for the use of the services of a research and development company or a contract research and development company. 

(2) The amount of deduction to be made under subsection (1) shall be twice the amount of expenditure, not being capital expenditure, referred to in that subsection:

Provided that no deduction in respect of that expenditure shall be made under this section to a person being a related company of a research and development company which has been given approval under subsection 27D(1) of the Promotion of Investments Act 1986 and whose period as prescribed under paragraph 29E(2)(b) of that Act has not ended.

(3) Where any deduction in respect of expenditure referred to in subsection (1) is made under this section, no deduction in respect of that expenditure shall be made under section 33, 34 or 34A.

(4) In this section--

(a) an "approved research institute" means an institute, including a company licensed under section 24 of the Companies Act 1965, approved by the Minister to mainly carry on research in an industry specified in the approval and to commercially exploit the benefit of such research thereof;

(b) an "approved research company" means a company, other than a company licensed under section 24 of the Companies Act 1965, approved by the Minister to mainly carry on research in an industry specified in the approval and to commercially exploit the benefit of such research thereof;

(c) a "contract research and development company" and a "research and development company" have the same meaning assigned thereto in section 2 of the Promotion of Investments Act 1986 and fulfills the conditions specified by the relevant Ministry;

(d) a "related company" has the meaning assigned to it in section 2 of the Promotion of Investments Act 1986.

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53,,/34C.Special provision applicable to adjusted income from a discount or premium

34C. Special provision applicable to adjusted income from a discount or premium

(1) Notwithstanding section 33 but subject to this section, in ascertaining the adjusted income of a company from a source consisting of discount or premium, any expenses in respect of the discount or premium incurred on bond issued or subscribed, as the case may be, by that company is deemed to accrue to the company over the whole period of the bond and the amount to be deducted from the gross income from that source for the basis period for a year of assessment that relates to the period of the bond shall be a sum to be determined in accordance with the following formula:

where A is the number of days in the basis period for the year of assessment that falls within the period of the bond;

B is the total number of days of the whole period of the bond; and

C is the total amount of discount or premium incurred in respect of the bond:

Provided that the Director General may allow the company to consistently apply any other formula which is in accordance with the generally accepted accounting principles applicable during the basis period.

(1A) For the purpose of subsection (1), where by reason of an insufficiency or absence of gross income of a company from a source consisting of discount or premium for the basis period for a year for a year of assessment, effect cannot be given or cannot be given in full to any amount of discount failing to be deducted to that company for that basis period in relation to that source, the amount which has not been so deducted shall be allowed as a deduction in arriving at the adjusted income of that company from any source or sources consisting of a business for that basis period:

Provided that the proceeds from the issuance of the bond that relates to that amount are utilized wholly by that company for the production of gross income from any source consisting of that business.

(1B) This section shall not apply for a year of assessment the bond issued or subscribed forms part of the stock in trade of a business of a company.

(2) Where any deduction in respect of expenditure referred to in subsection (1) or (1A) is made under this section, no deduction in respect of that expenditure shall be made under section 33, 34, 34A or 34B.

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53,,/34D.Special deduction for expenditure on treasury shares

34D. Special deduction for expenditure on treasury shares

(1) Notwithstanding section 33 but subject to this section, in ascertaining the adjusted income of a company from a business for the basis period for a year of assessment, a deduction shall be made from the gross income for that period any expenses incurred by that company in acquiring treasury shares.

(2) The amount of deduction referred to in subsection (1)--

(a) shall be the cost of acquiring the treasury shares which are transferred to its employee less any amount payable by that employee for such treasury shares; and

(b) shall be allowed in the basis period for a year of assessment where the employee exercised his rights to acquire such treasury shares. 

(3) For the purpose of subsection (2), the cost of acquiring treasury shares which are transferred to its employee shall be determined on the basis that the treasury shares acquired by the company at an earlier point in time are deemed to be transferred first.

(4) Where any amount payable by an employee for any treasury shares transferred to him exceeds the cost to the company of acquiring the treasury shares transferred as provided under subsection (3), the amount of the excess shall be credited to an account to be kept by the company for the purpose of this section.

(5) Where there is any balance in the account kept by the company under subsection (4) and any treasury shares are subsequently transferred by the company to any employee under subsection (1), the cost to the company of acquiring the treasury shares as determined under subsection (3) shall be reduced--

(a) where the amount of the balance is equal to or exceeds the amount of the cost, to zero; or

(b) where the amount of the balance is less than the amount of the cost, by the amount of the balance, and the amount of reduction shall be debited to the account.

(6) For the purpose of this section, a company transfers treasury shares held by it to an employee when the employee acquires the legal and beneficial interest in the treasury shares.

(7) Where a company transfers treasury shares held by it to any employee employed at any time by a subsidiary company of the holding company who has the right to acquire such shares--

(a) no deduction shall be allowed to the holding company under subsection (1);

(b) if any amount is paid or payable by the subsidiary company to the holding company for the transfer of the treasury shares, there shall be allowed to the subsidiary company, on the date of the transfer of the shares or of the payment to the holding company for the shares, whichever is the later, a deduction under subsection (1) for the amount, or an amount equal to the cost to the holding company of acquiring the treasury shares transferred to the employee of the subsidiary less any amount payable by that employee for the treasury shares, whichever is less. 

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53,,/35.Stock in trade

35. Stock in trade

(1) Notwithstanding any other provision of this Part, in ascertaining the adjusted income of a person from a business for the basis period for a year of assessment, the value of the stock in trade of the business at the beginning and at the end of that period shall be taken into account in accordance with the following subsections (that person, business, period and stock in trade being referred to in those subsections as the relevant person, the business, the relevant period and the stock respectively).

(2) Where the value of the stock at the end of the relevant period exceeds the value of the stock at the beginning of the relevant period, the total of all amounts otherwise deductible under this Act in ascertaining the adjusted income of the relevant person from the business for the relevant period shall be reduced by the amount of the excess; and, where the value of the stock at the beginning of the relevant period exceeds the value of the stock at the end of the relevant period, the total of all amounts otherwise so deductible shall be increased by the amount of the excess.

(3) Subject to subsections (4) and (5)--

(a) the value of any particular item of the stock at the end of the relevant period shall be taken to be--

(i) an amount equal to its market value at that time; or

(ii) if the relevant person so elects and that item is physically tangible, an amount equal to the total cost to him of acquiring that item (or any materials used in its manufacture, preparation or construction) and bringing it to its condition and location at that time:

Provided that in the case of any item of the stock consisting of immovable properties, stocks, shares or marketable securities, the value thereof at the end of the relevant period shall be taken to be an amount equal to its cost price to that relevant person or its market value at that time, whichever is the lower;

(b) the value of any particular item of the stock at the beginning of the relevant period (except where the business was commenced by the relevant person in the relevant period) shall be taken to be an amount equal to its value as ascertained under paragraph (a) at the end of the basis period for the year of assessment immediately preceding the year of assessment to which the relevant period relates. 

(4) Where--

(a) by virtue of section 41 this Chapter applies in relation to the business as if an accounting period were the relevant period; and

(b) a previous period for which the accounts of the business were made up ended immediately prior to that accounting period, the reference in paragraph (3)(b) to the basis period for the year of assessment immediately preceding the year of assessment to which the relevant period relates shall be construed as a reference to that previous period.

(5) Where during the relevant period the relevant person permanently ceases to carry on the business, then--

(a) if--

(i) at or about the time he so ceases any of what was the stock in trade of the business is sold or transferred for valuable consideration by that person to another person and that other person intends to use that transferred stock in the business or in another business of his; and

(ii) the cost of that transferred stock to that other person is deductible as an expense in computing that other person's adjusted income for the basis period for a year of assessment from the business or from that other business of his, the value of that transferred stock at the time he so ceases shall be taken to be an amount equal to the price paid on the sale or to the value of the consideration, as the case may be, and shall be taken to be the value of that stock at the end of the relevant period;

(b) the value of any of what was at the time he so ceases the stock in trade of the business to which paragraph (a) does not apply shall be taken to be an amount equal to its market value at the time he so ceases and shall be taken to be the value thereof at the end of the relevant period;

(c) for the purposes of paragraph (a)--

(i) where any of the stock in trade is sold or transferred for a consideration in cash or its equivalent with other assets of the business, the total consideration given for that transferred stock in trade and those assets shall be apportioned in such manner as is just and reasonable;

(ii) where any of the stock in trade is transferred (with or without other assets) for a consideration other than cash or its equivalent, the value of the consideration shall be taken to be an amount equal to the market value of the consideration at the date of the transfer and, if that stock in trade is transferred with other assets, that amount shall be apportioned in such manner as is just and reasonable; and

(iii) where any of the stock in trade is transferred (with or without other assets) for a consideration which partly does and partly does not consist of cash or its equivalent, the value of the consideration shall be taken to be an amount equal to that cash or its equivalent together with the market value of the rest of the consideration and, if that stock in trade is transferred with other assets, that amount shall be apportioned in such manner as is just and reasonable; and

(d) where any stock in trade is sold or transferred to another person in a case to which paragraph (a) applies, the cost to that other person of that stock in trade shall in computing the adjusted income of that person from the business (or from any other business of his in which he uses or intends to use any of that stock in trade) be taken to be an amount equal to its value as ascertained under that paragraph. 

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53,,/36.Power to direct special treatment in the computation of business income in certain cases

36. Power to direct special treatment in the computation of business income in certain cases

(1) Notwithstanding any other provision of this Part, where the Director General is satisfied that there is a need for some treatment in computing--

(a) the gross income from a business with respect to--

(i) a hire-purchase transaction;

(ii) a transaction under which a debt is payable by instalments;

(iii) a lease transaction in respect of moveable property;

(iv) any other transaction involving a debt or stock in trade; or

(v) such other transaction as may be prescribed; and

(b) the adjusted income and statutory income from the business, he may give directions and formulate regulations to be published in the Gazette for special treatment with respect to any such transaction, either in relation to a particular business or in relation to any business having any such transaction:

Provided that no such directions and regulations shall have effect in relation to a business for any year of assessment with respect to which an assessment wholly or partly relating to income from that business has become final and conclusive or is the subject of an appeal which has been sent forward to the Special Commissioners.

(2) Any direction given under subsection (1) with respect to the gross income, adjusted income and statutory income from a business or businesses may--

(a) provide that the gross income to which it relates (or any part thereof) shall be taken to be gross income for such basis period or periods for such year or years of assessment with respect to that business or those businesses as may be specified in the direction;

(b) provide for special treatment with respect to the ascertainment of the adjusted income and statutory income from that business or those businesses for the basis period or periods for any year or years of assessment. 

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53,,/37.Power to direct special treatment in the computation of business income in certain cases

37. Power to direct special treatment in the computation of business income in certain cases

(Deleted by Act 624).

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53,,/38.Special provisions applicable to adjusted income from an employment

38. Special provisions applicable to adjusted income from an employment

(1) Subject to this section--

(a) where an employee's gross income from an employment includes for the basis period for a year of assessment any amount ascertained in accordance with subsection 32(1) in respect of any benefit or amenity consisting of furniture provided by or on behalf of his employer in conjunction with living accommodation, there may be deducted from that gross income the amount of any rent payable by that employee for that period for that accommodation and furniture, less the amount of any deduction made in respect of that rent under paragraph (b); and

(b) where an employee's gross income from an employment includes for the basis period for a year of assessment any amount ascertained in accordance with subsection 32(2) or (3) in respect of living accommodation provided by or on behalf of his employer, there may be deducted from that gross income expenses of the following kind:

(i) the amount of any public rates or insurance premiums payable by the employee in respect of that accommodation for that period;

(ii) any expenses incurred for the repair or maintenance of the premises (excluding expenses of a capital nature and expenses incurred in connection with the upkeep of land attached to the premises for use by way of amenity as garden or grounds) which the employee, pursuant to the terms on which that accommodation is so provided, is legally bound to meet in respect of that accommodation during that period;

(iii) where the accommodation is provided unfurnished, any rent payable by the employee for that accommodation for that period;

(iv) where the accommodation is provided furnished and is held by or on behalf of the employer on lease at what would be an economic rent if so much of the rent as relates to the furniture were to be disregarded, so much of any rent payable by the employee for that period as bears to the whole of the rent so payable the same proportion as the economic rent of the accommodation bears to the rent payable by or on behalf of the employer for that period; and

(v) where the accommodation is provided furnished and subparagraph (iv) does not apply, so much of any rent payable by the employee for that period as bears to the whole rent so payable the same proportion as the defined value of the accommodation bears to the aggregate of the economic rent for that period and the rent for that period appropriate to the market value of the furniture provided in conjunction with that accommodation.

(2) Where living accommodation is provided for only part of a basis period, the expenses referred to in paragraph (1)(b) shall be restricted to such of those expenses as are payable for that part under that subsection or as are bound to be met during that part under that subsection, as the case may be.

(3) The total amount deducted under this section from an employee's gross income from an employment for the basis period for a year of assessment shall not exceed the total of the amounts included in that gross income--

(a) by virtue of subsection 32(1) in respect of any benefit or amenity consisting of furniture provided by or on behalf of an employer in conjunction with living accommodation; and

(b) by virtue of subsection 32(2) or (3). 

(4) Where an employee's gross income from an employment includes for the basis period for a year of assessment any amount ascertained in accordance with subsection 32(2) or (3) in respect of living accommodation provided by or on behalf of his employer, any expense to which subparagraph (1)(b)(ii) applies in relation to that basis period (or a part of that basis period) shall, if it is payable for a period which overlaps that basis period or that part, be apportioned in the manner provided by subsection (6); and for the purposes of this section regard shall be had only to so much of that expense as is so apportioned to that basis period or that part.

(5) Where any amount is included in gross income--

(a) by virtue of subsection 32(1) in respect of any benefit or amenity consisting of furniture provided by or on behalf of an employer in conjunction with living accommodation; or

(b) by virtue of subsection 32(2) or (3), no deduction shall be made under section 33 in respect of any outgoings and expenses incurred or which might be included as incurred in the production of that part of the gross income consisting of that amount.

(6) In the application of subsection (4) in relation to a person's gross income from his employment where the expenses, to which subparagraph (1)(b)(ii) applies is payable for a period (in this subsection referred to as the "overlapping period") which overlaps the basis period or part of the basis period, the amount of the expense to be deducted from that gross income shall be determined in accordance with the following formula:

where A is the number of days living accommodation is provided in the basis period or part of the basis period that falls in the overlapping period;

B is the total number of days in the overlapping period; and

C is the amount of expenses to which subparagraph (1)(b) (ii) applies.

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53,,/38A.Limitation on deduction of entertainment expenses

38A. Limitation on deduction of entertainment expenses

Where an employee's gross income from an employment under subsection 13(1) includes for the basis period for a year of assessment any entertainment allowance, the amount of expenses deductible under subsection 33(1) in respect of entertainment by the employee, shall not exceed the amount of such entertainment allowance included in that gross income.

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53/39.Deductions not allowed

39. Deductions not allowed

(1) Subject to any express provision of this Act, in ascertaining the adjusted income of any person from any source for the basis period for a year of assessment no deduction from the gross income from that source for that period shall be allowed in respect of--

(a) domestic or private expenses;

(b) any disbursements or expenses not being money wholly and exclusively laid out or expended for the purpose of producing the gross income;

(c) any capital withdrawn or any sum employed or intended to be employed as capital;

(d) any amount in respect of any payment to any pension, provident, savings, widows, widowers and orphans or other similar fund or society which is not an approved scheme;

(e) any expenditure incurred in relation to a business, being expenditure which is--

(i) qualifying mining expenditure for the purposes of Schedule 2;

(ii) qualifying expenditure, qualifying agriculture expenditure or qualifying forest expenditure for the purposes of Schedule 3; or

(iii) qualifying prospecting expenditure for the purposes of Schedule 4, and which but for this paragraph would be deductible in ascertaining the adjusted income from the business;

(f) interest or royalty derived from Malaysia from which tax is deductible under section 109, if tax has not been deducted therefrom and paid to the Director General in accordance with subsection (1) of that section:

Provided that --

(i) this paragraph shall not apply if the payer has paid the amount referred to in subsection (2) of that section; and

(ii) where such tax is deducted or such amount is paid after the due date for furnishing of a return for a year of assessment that relates to such payment, the tax or amount so paid shall not pejudice the imposition of penalty under subsection 113(2) if a deduction on such payment is made in such return or is claimed in the information given to the Director General in arriving at the adjusted income or the payer;

(g) any sum, by whatever name called, payable (otherwise than to a State Government or with the approval of the Minister, a statutory authority, or other body the capital or fund of which is wholly or substantially owned by a State Government or a statutory authority) for the use of a licence or permit to extract timber from a forest in Malaysia;

(h) (Deleted by Act 619);

(i) any contract payment from which tax is deductible under section 107A, if tax has not been deducted therefrom and paid to the Director General in accordance with subsection (1) of that section:

Provided that -- 

(i) this paragraph shall not apply if the payer has paid the amount referred to in subsection (2) of that section; and

(ii) where such tax is deducted or such amount is paid after the due date for the furnishingof a return for a year of assessment that relates to such payment, the tax or amount so paid shall not prejudice the imposition of penalty under subs e ct ion 113(2) if a deduction on such payment is made in such return or is claimed in the information given to the Director General in arriving at the adjusted income of the payer;

(j) any payments from which tax is deductible under section 109B or 109F, if tax has not been deducted therefrom and paid to the Director General in accordance with subsection (1) of that section:

Provided that --

(i) this paragraph shall not apply if the payer has paid the amount referred to in subsection (2) of that section; and

(ii) where such tax is deducted or such amount is paid after the due date for furnishing of a return for a year of assessment that relates to such payment, the tax or amount so paid shall not pejudice the imposition of penalty under subsection 113(2) if a deduction on such payment is made in such return or is claimed in the information given to the Director General in arriving at the adjusted income or the payer;

(k) any sum paid by way of rentals in respect of a motor vehicle, other than a motor vehicle licensed by the appropriate authority for commercial transportation of goods or passengers, in excess of fifty thousand ringgit

Provided that if the motor vehicle has not been used by any person for any purpose prior to the rental and the total cost of the motor vehicle does not exceed one hundred and fifty thousand ringgit, any sum paid by way of rental in excess of one hundred thousand ringgit:

Provided further that the maximum amount of deduction in respect of the rentals of such motor vehicle in the year of assessment and subsequent years of assessment shall not in the aggregate exceed fifty thousand ringgit or one hundred thousand ringgit, as the case may be, in respect of that motor vehicle;

(l) a sum equal to fifty percent of any expenses incurred in the provision of entertainment including any sums paid to an employee of that person for the purpose of defraying expenses incurred by that employee in the provision of entertainment:

Provided that this paragraph shall not apply to the following expenses:

(i) the provision of entertainment to his employees except where such provision is incidental to the provision of entertainment for others;

(ii) the provision of entertainment by a person who carries on a business which consists of or includes the provision for payment of entertainment to clients or customers of that business and that entertainment is provided for payment by the clients or customers in the ordinary course of that business;

(iii) the provision of promotional gifts at trade fairs or trade or industrial exhibitions held outside Malaysia for the promotion of exports from Malaysia;

(iv) the provision of promotional samples of products of the business of that person;

(v) the provision of entertainment for cultural or sporting events open to members of the public, wholly to promote the business of that person;

(vi) the provision of promotional gifts within Malaysia consisting of articles incorporating a conspicuous advertisement or logo of the business; or

(vii) the provision of entertainment which is related wholly to sales arising from the business of that person; or

(viii) the provision of a benefit or amenity to an employee consisting of a leave passage to facilitate a yearly event within Malaysia which involves the employer, the employee and the immediate family members of that employee;

(m) notwithstanding subparagraph (l)(i) and subject to subparagraph (l) (viii), any expenditure incurred in the provision of a benefit or amenity to an employee consisting of a leave passage within or outside Malaysia; or

(n) any remuneration or any similar payment paid to a partner of a limited liability partnership where such remuneration or payment is not specified or provided in the limited liability partnership agreement made in accordance with section 9 of the Limited Liability Partnerships Act 2012. 

(1A) Notwithstanding any provision of this Act, where a person is required under section 81 to furnish to the Director General any information within the time specified in a notice or such other time as may be allowed by the Director General, and that information concerns wholly or in part a deduction claimed by that person in arriving at the adjusted income of that person from any source for the basis period for a year of assessment, no deduction from the gross income from that source for that period shall be allowed in respect of such claim if the person fails to provide such information within the time specified in that notice or such extended time as allowed by the Director General.

(2) It is hereby declared that section 33, except in so far as it relates to expenses of the kind specified in paragraphs (1)(a) to (d) thereof, is not an express provision of this Act within the meaning of this section.

(3) Paragraphs (1)(f), (i) and (j) shall not apply if for a year of assessment a person is exempt under paragraph 127(3)(b) or subsection 127(3A) or the Promotion of Investments Act 1986, in respect of all income of that person from all sources not being exemption on income equal to capital expenditure incurred.

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53,,/40.Adjusted loss

40. Adjusted loss

Subject to this Act, where but for an insufficiency of gross income of a person from a business for the basis period for a year of assessment there would have been an amount of adjusted income of that person from the business for that period, the amount by which the total of all such deductions as would then have been allowed under the foregoing provisions of this Chapter in ascertaining that adjusted income exceeds his gross income from the business for that period shall be taken to be the amount of his adjusted loss from the business for that period.

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53,,/41.Ascertainment of adjusted income or adjusted loss from a business for an accounting period

41. Ascertainment of adjusted income or adjusted loss from a business for an accounting period

(1) Subject to this section, where for the purposes of this Act it is necessary to ascertain the adjusted income or adjusted loss of a person from a business for the basis period for a year of assessment (that basis period being in this section referred to as the relevant period) and accounts of the business have not been made up for the relevant period--

(a) that person's adjusted income or adjusted loss from the business shall be ascertained for any accounting period for which accounts of the business have been made up (being a period which either falls into or overlaps the relevant period) by applying Chapters 3 and 4, whenever and as often as may be necessary, as if that accounting period were the basis period for that year of assessment;

(b) such apportionment of the adjusted income or adjusted loss for any such accounting period, and such aggregation of the adjusted income or adjusted loss for any such accounting period (or of any apportioned part thereof) with the adjusted income or adjusted loss (or any apportioned part thereof) for any other such accounting period, shall be made as is necessary to arrive at the adjusted income or the adjusted loss for the relevant period; and

(c) the adjusted income or the adjusted loss so arrived at shall constitute the adjusted income or the adjusted loss, as the case may be, from the business for the relevant period. 

(2) The apportionment referred to in paragraph (1)(b) shall be made in relation to any accounting period which overlaps the relevant period, the apportionment being made, unless the Director General having regard to the circumstances of any particular case otherwise directs, in the proportion that the number of days of the overlapping period that fall into the relevant period bears to the total number of days of the overlapping period.

(3) This section shall not apply if there is any part of the relevant period for which no accounts of the business have been made up.

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53,,/42.Statutory income

Part III ASCERTAINMENT OF CHARGEABLE INCOME

Chapter 5--Statutory income

42. Statutory income

(1) Subject to this Act, the statutory income (if any) of a person from a source for a year of assessment (that year of assessment being in this section referred to as the relevant year) shall consist of--

(a) the amount of his adjusted income (if any) from that source for the basis period for the relevant year; and

(b) the amount of--

(i) any balancing charge or the aggregate amount of the balancing charges;

(ii) any agriculture charge or the aggregate amount of the agriculture charges; and

(iii) any forest charge or the aggregate amount of the forest charges, falling to be made for the relevant year under Schedule 3 in relation to that source, reduced by the amount of any allowance or the aggregate amount of the allowances falling to be made for the relevant year under that Schedule in relation to that source.

(2) Where the basis period for the relevant year overlaps the basis period for the immediately preceding year of assessment, the amount of adjusted income for the basis period for the relevant year shall be taken to be reduced by a sum determined in accordance with the formula--

where A is the amount of the adjusted income for the basis period for the relevant year;

B is the length of the period of the overlap; and

C is the length of the basis period for the relevant year.

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53,,/43.Aggregate income

Part III ASCERTAINMENT OF CHARGEABLE INCOME

Chapter 6--Aggregate income and total income

43. Aggregate income

(1) Subject to this Act, the aggregate income of a person for a year of assessment (that person and year of assessment being in this section referred to as the relevant person and the relevant year respectively) shall consist of--

(a) the aggregate of his statutory income, if any, for the relevant year from each of his sources consisting of a business, reduced by any deduction falling to be made for the relevant year pursuant to subsection (2);

(b) the aggregate of his statutory income, if any, for the relevant year from each of his other sources; and

(c) any additions falling to be made for the relevant year pursuant to Schedule 4. 

(2) Subject to subsections (3) and (5), there shall be deducted under paragraph (1)(a) pursuant to this subsection from the aggregate of the relevant person's statutory income from each of his sources consisting of a business for the relevant year the amount ascertained under subsection 44(4) or (5) for any particular year of assessment preceding the relevant year or, where that amount exceeds that aggregate, so much of that amount as is equal to that aggregate:

Provided that, where a deduction has been made or may be made pursuant to this subsection from the aggregate of the relevant person's statutory income from each of his sources consisting of a business for a year of assessment following the particular year in question or for more than one year of assessment following that particular year and in either such case ending prior to the relevant year, then, for the purposes of the application of this subsection for the relevant year, there shall be substituted in place of the amount ascertained under subsection 44(4) or (5) for that particular year so much, if any, of that amount as has not been deducted for the year of assessment following that particular year or, as the case may be, for those years of assessment following that particular year and ending prior to the relevant year.

(3) For the purposes of subsection (2), the reference to the amount ascertained under subsection 44(4) or (5) for a particular year shall, whenever necessary, be taken to be a reference to the aggregate of--

(a) that amount for the particular year; and

(b) so much of any such amount for a year of assessment preceding the particular year as has not been deducted pursuant to subsection (2) from the aggregate of the relevant person's statutory income from each of his sources consisting of a business for the particular year or for a year of assessment preceding the particular year. 

(4) For the purposes of subsection (1), a person who for a year of assessment has no statutory income from a source of his or no aggregate statutory income of the kinds referred to in paragraphs (1)(a) and (b) shall be regarded as having for that year a statutory income of zero from that source or, as the case may be, an aggregate statutory income of the kind referred to in paragraph (1)(a) or the kind referred to in paragraph (1)(b), as the case may be, of zero.

(5) (Deleted by Act 661).

(6) A reference in this section to the aggregate of the relevant person's statutory income from each of his sources consisting of a business or from each of his other sources shall where he has only one source consisting of a business or only one other source, be construed as a reference to his statutory income from that one source consisting of a business or from that one other source, as the case may be.

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53,,/∗44.∗Total income

*44.* Total income

(1) The total income of a person for a year of assessment (that person and year of assessment being in this section referred to as the relevant person and the relevant year respectively) shall consist of the amount of his aggregate income for the relevant year reduced--

(a) first, by any deduction falling to be made for the relevant year pursuant to subsection (2);

(b) next, by any deduction falling to be so made pursuant to Schedule 4 or 4B ;

(c) next, by any deduction falling to be so made pursuant to subsection (6) or (6A);

(d) next, by any deduction falling to be so made pursuant to subsection (8), (9), (10), (11), (11A), (11B) or (11C);

(e) next, by any deduction falling to be so made pursuant to section 44A; and

(f) thereafter, by any deduction falling to be so made pursuant to section 44B. 

(2) Subject to subsections (3) and (5), there shall be deducted pursuant to this subsection from the aggregate income of the relevant person for the relevant year the amount of any adjusted loss from a source of his for the basis period for the relevant year or, where there is an adjusted loss from each of two or more sources of his for the appropriate basis period for each source for the relevant year, the aggregate of the adjusted loss from each of those sources for its appropriate basis period for the relevant year.

(3) For the purposes of subsection (2), where in relation to a source the basis period for the relevant year overlaps the basis period for the immediately preceding year of assessment, the amount of the adjusted loss from that source for the basis period for the relevant year shall be taken to be reduced by a sum which bears the same proportion to that amount as the length of the period of the overlap bears to the length of the basis period for the relevant year and the amount of that loss as so reduced shall be taken to be the amount of the adjusted loss from that source for the basis period for the relevant year.

(4) Where the relevant person has no aggregate income for the relevant year, there shall be ascertained for the purposes of section 43 the amount of any adjusted loss from a source of his for the basis period for the relevant year or the aggregate of any adjusted loss from each of his sources for its appropriate basis period for the relevant year, as the case may be, which would have fallen to have been deducted pursuant to subsection (2) but for the absence of aggregate income.

(5) Where the amount referred to in subsection (4) exceeds the relevant person's aggregate income for the relevant year, so much of that amount as is equal to that aggregate income shall be deducted pursuant to subsection (2) and there shall be ascertained for the purposes of section 43 the amount of that excess.

(5A) The amount ascertained under subsection (4) or (5) for any relevant year in respect of a company shall be disregarded for the purposes of section 43 unless the Director General is satisfied that the shareholders of that company on the last day of the basis period for that relevant year in which such amount is ascertained were substantially the same as the shareholders of that company on the first day of the basis period for the year of assessment in which such amount would otherwise be deductible under that section and such amount disregarded shall not be allowed as a deduction in subsequent years of assessment.

(5B) For the purpose of subsection (5A)--

(a) the shareholders of the company at any date shall be substantially the same as the shareholders at any other date if on both those dates--

(i) more than fifty per cent of the paid-up capital in respect of the ordinary share of the company is held by or on behalf of the same persons; and

(ii) more than fifty per cent of the nominal value of the alloted shares in respect of ordinary share in the company is held by or on behalf of the same persons; and

(b) shares in the company held by or on behalf of another company shall be deemed to be held by the shareholders of the last mentioned company. 

(5C) In subsection (5B), "ordinary share" means any share other than a share which carries only a right to any dividend which is of--

(a) a fixed amount or at a fixed rate per cent of the nominal value of the shares; or

(b) a fixed rate per cent of the profits of the company. 

(5D) Where there is a substantial change in the shareholders of a company referred to in subsection (5A), the Minister may under special circumstances exempt that company from the provisions of that subsection.

(5E) Where a partnership or a company is converted into a limited liability partnership in accordance with section 29 or 30 of the Limited Liability Partnerships Act 2012, the amount ascertained under subsection 44(4) or (5) for any relevant year in respect of that partnership or company shall be allowed for the purposes of ascertaining the aggregate income of that limited liability partnership for a year of assessment following the relevant year.

(6) Subject to subsection (12), there shall be deducted pursuant to this subsection from the aggregate income of a person for the relevant year reduced by any deduction falling to be made for that year in accordance with subsection (1) an amount equal to any gift of money made by him in the basis year for that year to the Government, a State Government, a local authority or an institution or organization approved for the purposes of this section by the Director General on the application of the institution or organization concerned:

Provided that the amount to be deducted from the aggregate income for the relevant year in respect of any gift of money made to any institution or organization approved for the purposes of this section by the Director General shall not exceed--

(a) in the case of a person other than a company, seven per cent of the aggregate income of that person in the relevant year; or

(b) in the case of a company, ten per cent of the aggregate income of that company in the relevant year. 

(6A) Subject to subsection (12), there shall be deducted pursuant to this subsection from the aggregate income of a person for the relevant year reduced by any deduction falling to be made for that year in accordance with subsection (1) an amount equal to the value, as determined by the Department of Museums Malaysia or the National Archives of any gift of artefact, manuscript or painting made by him in the basis year for that year to the Government or State Government.

(6B) Where an institution or organization is aggrieved by the decision of the Director General in respect of an application made under subsection (6), the institution or organization may, within thirty days after being informed of the decision, appeal to the Minister and the Minister may make any decision as he considers fit.

(7) In subsection (6)--

"institution"

means an institution in Malaysia which is not operated or conducted primarily for profit and which is--

(a) a hospital;

(b) a public or benevolent institution;

(c) a university or other educational institution;

(d) a public authority or society engaged solely in research or other work connected with the causes, prevention or cure of disease in human beings;

(e) a Government-assisted institution engaged in socio-economic research; or

(f) a technical or vocational training institution; 

"organization"

means an organization in Malaysia which is not operated or conducted primarily for profit and which is--

(a) an organization established and maintained exclusively to administer and augment a public or private fund established or held for the sole purpose of the establishment, enlargement or improvement of an institution or solely for the provision of a scholarship, exhibition or prize for an individual for educational work, research work or other similar work in an institution or in what would be an institution if it were in Malaysia;

(aa) an organization established and maintained exclusively to administer and augment a public or private fund established or held for the sole purpose of carrying out the objective in which the institution is operated or conducted;

(b) an organization established and maintained exclusively to administer and augment a public fund established or held solely for the relief of distress among members of the public;

(c) an organization established and maintained exclusively to administer and augment a public fund established and held solely for the purposes of religious worship or the advancement of religion and such fund is to be used--

(i) for the construction, improvement, purchase or maintenence of a building in Malaysia which is--

(A) intended to be used (and, when constructed or purchased, is used) exclusively for those purposes; and

(B) intended to be open (and, when constructed or purchased, is open) to any member of the public for those purposes; or

(ii) to provide facilities to carry on the activity related to those purposes; or

(iii) to provide for the management of the activity related to those purposes.

(d) an organization which maintains or assists in maintaining a zoo, museum, art gallery or similar undertaking or is engaged in or in connection with the promotion of culture or the arts;

(e) an organization engaged in or in connection with the conservation or protection of animals;

(f) a Government-assisted organization engaged solely in addressing problems relating to industrial and commercial development and promoting and enhancing the relationship between the public sector and the private sector;

(g) a Government-assisted organization established and maintained exclusively to administer and augment a fund established or held solely for promoting national unity;

(h) an organization established exclusively for the conservation or protection of the environment;

(i) an international organization as defined under the International Organization (Privileges and Immunities) Act 1992 [Act 485] carrying out such charitable activities as determined by the Minister;

(j) an organization established and maintained exclusively to administer or augment a fund established or held for the purpose of carrying out projects towards the acculturation of the community in information and communication technology, approved by the Minister; or

(k) a benevolent fund or trust account established or held for the sole purpose of providing relief or aid to an individual who has no, or insufficient means, or in the case of a dependent individual whose parents or guardian has no, or insufficient means, to pay for the cost of the medical treatment required by such individual to treat a serious disease as defined in subsection 46(2). 

(7A) An institution or organization referred to in subsection (7)--

(a) may apply not more than twenty-five per cent of its accumulated funds as at the beginning of the basis period for the year of assessment for the carrying on of, or participation in, a business: 

Provided that the profits or income derived therefrom shall be used solely for charitable purposes or for the primary purpose for which the institution or organization was established; or

(b) may carry out charitable activities outside Malaysia with the prior consent of the Minister. 

(7B) The reference to the carrying on of, or participation in, a business in paragraph (7A)(a) shall not include the carrying on of a business by an institution or organization where--

(a) the business is carried on in the course of the actual carrying out of the primary purpose of the institution or organization; or

(b) the work in connection with the business is mainly carried on by persons for whose benefit the institution or organization was established. 

(8) Subject to subsection (12), there shall be deducted pursuant to this subsection from the aggregate income of a person to whom paragraph 34(6)(g) does not apply, for the relevant year reduced by any deduction for that year in accordance with subsection (1) an amount equal to any gift of money made by him in the basis year for that year, for the provision of library facilities which are accessible to the public, to public libraries and libraries of schools and institutions of higher education, not exceeding twenty thousand ringgit.

(9) There shall be deducted pursuant to this subsection from the aggregate income of a relevant person who is an individual for the relevant year reduced by any deduction for that year in accordance with subsection (1) an amount equal to any gift of money or contribution in kind (the value to be determined by the relevant local authority) made by him in the basis year for that year for the provision of facilities in public places for the benefit of disabled persons.

(10) There shall be deducted pursuant to this subsection from the aggregate income of a relevant person who is an individual for the relevant year reduced by any deduction for that year in accordance with subsection (1) an amount equal to any gift of money or the cost or value (as certified by the Ministry of Health) of any gift of medical equipment made by him in the basis year for that year to any healthcare facility approved by that Ministry, and that amount shall not exceed twenty thousand ringgit.

(11) Subject to subsection (12), there shall be deducted pursuant to this subsection from the aggregate income of a relevant person for the relevant year reduced by any deduction for that year in accordance with subsection (1) an amount equal to the value of any gift of painting (to be determined by the National Art Gallery or any state art gallery) made by him in the basis year for that year to the National Art Gallery or any state art gallery.

(11A) There shall be deducted pursuant to this subsection from the aggregate income of a person other than an offshore company excluding chargeable offshore company and individual for the relevant year reduced by any deduction for that year in accordance with subsection (1) an amount equal to the payment of zakat perniagaan which is paid in the basis period for that relevant year to an appropriate religious authority established under any written law or any person authorized by such religious authority:

Provided that the amount to be deducted pursuant to this subsection shall not exceed one-fortieth of the aggregate income of that person in the relevant year.

(11B) There shall be deducted from the aggregate income of a relevant person for the relevant year reduced by any deduction for that year in accordance with subsection (1) an amount equal to any gift of money or cost of contribution in kind made by the relevant person in the basis period for that year for any sports activity approved by the Minister or to any sports body approved by the Commissioner of Sports appointed under the Sports Development Act 1997 [Act 576]:

Provided that the amount to be deducted pursuant to this subsection shall not exceed--

(a) in the case of a person other than a company, the difference between the amount of seven per cent of the aggregate income of that person in the relevant year and the total amount that has been deducted pursuant to the proviso to subsections (6) and (11C) for that relevant year; or

(b) in the case of a company, the difference between the amount of ten per cent of the aggregate income of that company in the relevant year and the total amount that has been deducted pursuant to the proviso to subsections (6) and (11C) for that relevant year. 

(11C) There shall be deducted from the aggregate income of a relevant person for the relevant year reduced by any deduction for that year in accordance with subsection (1) an amount equal to any gift of money or cost of contribution in kind made by the relevant person in the basis period for that year for any project of national interest approved by the Minister:

Provided that the amount to be deducted pursuant to this subsection shall not exceed--

(a) in the case of a person other than a company, the difference between the amount of seven per cent of the aggregate income of that person in the relevant year and the total amount that has been deducted pursuant to the proviso to subsections (6) and (11B) for that relevant year; or

(b) in the case of a company, the difference between the amount of ten per cent of the aggregate income of that company in the relevant year and the total amount that has been deducted pursuant to the proviso to subsections (6) and (11B) for that relevant year. 

(12) In subsections (6), (6A), (8) and (11), references to basis year in relation to a company, trust body or co-operative society shall be construed as references to the basis period for the year of assessment of that company, trust body or co-operative society.

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53,,/44A.Group relief for companies

44A. Group relief for companies

(1) Subject to this section, a company (referred to in this section as a "surrendering company") may surrender not more than seventy per cent of its adjusted loss in the basis period of a year of assessment to one or more related companies (referred to in this section as a "claimant company"):

Provided that the surrendering company and the claimant company shall be resident in the basis year for that year of assessment and incorporated in Malaysia.

(2) Subsection (1) shall apply if for any year of assessment--

(a) the surrendering company and the claimant company--

(i) are related companies throughout the basis period for that year of assessment and the twelve months period immediately preceding that basis period;

(ii) have paid-up capital in respect of ordinary share of more than two million five hundred thousand ringgit at the beginning of the basis period for that year of assessment;

(iii) have twelve months basis period ending on the same day;

(iv) make an irrevocable election to surrender or claim an amount of adjusted loss in the return furnished for that year of assessment under section 77A; and

(v) are subject to tax at the appropriate rate as specified in paragraph 2 of Part I of Schedule 1; and

(b) the claimant company has a defined aggregate income for that year of assessment. 

(3) For the purpose of this section, a surrendering company and claimant company are related companies if at least--

(a) seventy per cent of the paid-up capital in respect of ordinary shares of the surrendering company is directly or indirectly (through the medium of other companies resident and incorporated in Malaysia) owned by the claimant company;

(b) seventy per cent of the paid-up capital in respect of ordinary shares of the claimant company is directly or indirectly (through the medium of other companies resident and incorporated in Malaysia) owned by the surrendering company; or

(c) seventy per cent of the paid-up capital in respect of ordinary shares of the surrendering company and claimant company are directly or indirectly owned by another company resident and incorporated in Malaysia. 

(4) Subject to subsection (5), any amount of adjusted loss surrendered under this section for any year of assessment--

(a) shall be the amount or aggregate amount of the adjusted loss or the excess of that amount of the surrendering company for that year of assessment as ascertained under subsection 44(4) or (5);

(b) shall be allowed to a claimant company as a deduction in ascertaining the total income of the claimant company in accordance with subsection 44(1); and

(c) shall not exceed the defined aggregate income of the claimant company for that year of assessment. 

(5) Where the amount of adjusted loss is--

(a) surrendered to more than one claimant company, the adjusted loss shall be fully deducted in accordance with subsection (4) to the first claimant company before any excess of the adjusted loss is surrendered and deducted in accordance with that subsection to the second claimant company and so on; or

(b) claimed by a claimant company from more than one surrendering company, the adjusted loss surrendered from the first surrendering company shall be deducted in accordance with subsection (4) to that claimant company before the adjusted loss is surrendered from the second surrendering company be deducted in accordance with that subsection to that claimant company and so on. 

(6) For the purpose of subsection (5), the surrendering company and the claimant company shall ascertain the order of priority in respect of the adjusted loss surrendered or claimed but if that loss cannot be effected in accordance with the order of priority specified by any surrendering company or claimant company the amount of adjusted loss surrendered or claimed shall be dealt with in such manner as the Director General thinks reasonable and proper.

(7) Notwithstanding that a company to which subsection (3) applies, owns at least seventy per cent of the paid-up capital in the other company, it shall not be treated to have satisfied that subsection unless additionally in the year of assessment the first mentioned company is beneficially entitled to at least seventy per cent of--

(a) any residual profits of the other company, available for distribution to that other company's equity holders; and

(b) any residual assets of the other company, available for distribution to that other company's equity holders on a winding up. 

(8) Notwithstanding any other provision of this section, where--

(a) a claimant company has made an election under subsection (2), that company shall not in that year elect to surrender its adjusted loss to any other claimant company; or

(b) a surrendering company has made an election under subsection (2), that company shall not in that year elect to claim any adjusted loss from any other surrendering company. 

(9) Where--

(a) in the basis year for a year of assessment the Director General discovers that the adjusted loss as mentioned in subsection (4) ought not to have been deducted in arriving at the total income of the claimant company, the Director General may in that year or within five years after its expiration make an assessment or additional assessment in respect of that company in order to make good any loss of tax; or

(b) the surrendering company gives an incorrect information in the return furnished under section 77A in respect of the amount of adjusted loss surrendered, the Director General may, by a notice in writing, require the surrendering company to pay a penalty equal to the amount of tax which had or would have been undercharged by the claimant company in consequence of the incorrect information and where the surrendering company is dissatisfied with the penalty, the surrendering company may within thirty days of being notified appeal to the Special Commissioners as if the notice were a notice of assessment and the provision of this Act relating to appeals shall apply accordingly with any necessary modifications. 

(10) The provisions of this section shall not apply to a company for a basis period for a year of assessment where the period during which that company--

(a) is a pioneer company or has been granted approval for investment tax allowance under the Promotion of Investments Act 1986;

(b) is exempt from tax on its income under section 54A, paragraph 127(3)(b) or subsection 127(3A);

(c) has made a claim for a reinvestment allowance under Schedule 7A;

(d) has made a claim for deduction in respect of an approved food production project under the Income Tax (Deduction for Investment in an Approved Food Production Project) Rules 2006;

(e) has made a claim for deduction under the Income Tax (Deduction for Cost of Acquisition of Proprietary Rights) Rules 2002;

(f) has been granted a deduction under the Income Tax (Deduction for Cost of Acquisition of a Foreign Owned Company) Rules 2003; or

(g) has made a claim for deduction under any rules made under section 154 and those rules provide that this section shall not apply to that company. 

(11) For the avoidance of doubt--

(a) the amount of adjusted loss surrendered under this section shall be disregarded for the purpose of ascertaining the aggregate income of the surrendering company under section 43; and

(b) the provisions of this Act shall apply to any adjusted loss of the surrendering company which is not surrendered under this section. 

(12) In this section--

"commercial loan"

means any borrowing which entitles the creditor to any return which is of only--

(a) a fixed amount or at a fixed rate per cent of the amount of the borrowing; or

(b) of a fixed rate per cent of the profits of the company; 

"defined aggregate income",

in relation to a year of assessment, means the aggregate income of a claimant company for that year reduced by a deduction made pursuant to paragraphs 44(1)(a), (b),(c) and (d);

"equity holder"

means any holder of ordinary share in the claimant or surrendering company or any creditor of that company in respect of any non-commercial loan;

"non-commercial loan"

means any borrowing other than a commercial loan;

"ordinary share"

means any share other than a share which carries only a right to any dividend which is of--

(a) a fixed amount or at a fixed rate per cent of the nominal value of the shares; or

(b) a fixed rate per cent of the profits of the company; 

"residual assets"

means net assets of the claimant or surrendering company after distribution made to--

(a) creditors of that company in respect of commercial loans; and

(b) holders of shares other than ordinary share, and where that company has no residual asset, a notional amount of one hundred ringgit is deemed to be the residual assets of the company;

"residual profits"

means profits of the claimant or surrendering company after deducting any dividend which is of--

(a) a fixed amount or at a fixed rate per cent of the nominal value of the shares of that company; or

(b) a fixed rate per cent of the profits of that company, but before deducting any return due to any non-commercial loan creditor which is not of--

(i) a fixed amount or at a fixed rate per cent of the amount of the borrowing; or

(ii) a fixed rate per cent of the profits of that company,and where that company has no residual profit, a notional amount of one hundred ringgit is deemed to be the residual profits of that company.

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53,,/44B.Carry-back losses

44B. Carry-back losses

(1) In this section--

"adjusted loss"

means the amount or aggregate amount of the adjusted loss of a person from a source of his or the excess of that amount for the basis period for a year of assessment as ascertained under subsection 44(4) or 44(5).

"defined aggregate income",

in relation to a year of assessment, means the aggregate income of the person for that year reduced by any deduction made pursuant to paragraphs (a), (b), (c), (d), and (e) of subsection 44(1);

"immediately preceding",

in relation to a year of assessment, means--

(a) for the year of assessment 2009, the year of assessment 2008; and

(b) for the year of assessment 2010, the year of assessment 2009. 

(2) Subject to subsection (6), this section shall apply if-

(a) the basis period of a person for the year of assessment 2009 or 2010 and the basis period for the year of assessment immediatly preceding the year of assessment 2009 or 2010 ends onthe same day; and

(b) that person is subject to tax at the appropriate rate as specified in paragraph 1, 1A, 2 or 2A of Part I of Schedule 1. 

(3) Subject to this section, where a person has made an irrevocable election under subsection (4), the amount of the adjusted loss of that person from a source of his for the basis period for a year of assessment 2009 or 2010, other than the adjusted loss surrendered by that person pursuant to section 44A, shall be allowed as a deduction in ascertaining the total income of that person for a year of assessment immediately preceding the year of assessment 2009 or 2010, in accordance with subsection 44(1).

(4) For the purpose of subsection (3), a person shall make an irrevocable election, either for the year of assessment 2009 or 2010, in the return furnished for the year of assessment 2009 or 2010 to deduct an amount of the adjusted loss from a source of his for the basis period for that year of assessment in ascertaining the total income of that person for the year of assessment immediately preceding the year of assessment 2009 or 2010.

(5) The amount of adjusted loss of a person from a source of his for the basis period for a year of assessment 2009 or 2010 to be deducted pursuant to subsection (3) --

(a) shall not exceed one hundred thousand ringgit; or

(b) where the amount of the defined aggregate income for the year of assessment immediately preceding the year of assessment 2009 or 2010 is less than one hundred thousand ringgit, shall not exceed the amount of the defined aggregate income. 

(6) The provisions of this section shall not apply to a person if during the basis period for a year of assessment 2009 or 2010 and the basis period for a year of assessment immediately preceding the year of assessment 2009 or 2010, that person--

(a) is a pioneer company or has been granted approval for investment tax allowance under the Promotion of Investments Act 1986;

(b) is exempt from tax on its income under section 54A, paragraph 127(3)(b) or subsection 127(3A), or tax paid or payable by that person for that year of assessment is remitted under section 129;

(c) has made a claim for a reinvestment allowance under Schedule 7A;

(d) has made a claim for deduction in respect of an approved food production project under the Income Tax (Deduction for Investment in an Approved Food Production Project) Rules 2006 [P.U.(A) 55[#8260]2006 ];

(e) has made a claim for deduction under the Income Tax (Deduction for Cost of Acquisition of Proprietary Rights) Rules 2002 [P.U.(A) 62[#8260]2002];

(f) has made a claim for deduction under the Income Tax (Deduction for Cost of Acquisition of a Foreign Owned Company) Rules 2003 [P.U.(A) 310[#8260]2003];

(g) has made a claim for deduction under any rules made under section 154, other than the rules specified in paragraphs(d), (e) and (f) , and those rules made under section 154 provide that this section shall not apply to that person;

(h) is an investment holding company under section 60FA;

(i) carries on insurance business under section 60, inward re-insurance business under section 60A or offshore insurance business under section 60B;

(j) carries on takaful business under section 60AA; or