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Income Tax Act 1967- Part 8

  • (c) (Deleted by Act 578); 

    (d) for the basis period during which that company, notwithstanding the repeal of the Investment Incentives Act 1968--

    (i) has been given approval under section 5, 12A or 12B of that Act and whose tax relief period has not ended; or

    (ii) has been given approval under section 26 of that Act and incurs capital expenditure which qualifies for investment tax credit; or

    (e) for the basis period for which the company has been granted approval under section 31C of the Promotion of Investments Act 1986 prior to the coming into operation of section 37 of the Promotion of Investments (Amendment) Act 2007 [Act A1318] in respect of a manufacturing activity or manufactured product for the period prescribed under paragraph 31E(2)(b)of that Act.

    (f) (Deleted by Act 683).

    8. In this Schedule, "qualifying project" means--

    (a) a project undertaken by a company, in expanding, modernizing or automating its existing business in respect of manufacturing of a product or any related product within the same industry or in diversifying its existing business into any related product within the same industry; 

    (b) (Deleted by Act 693); 

    (c) an agricultural project undertaken by a company in expanding, modernizing or diversifying its cultivation and farming business excluding the business of rearing chicken and ducks; or 

    (d) (Deleted by Act 755)

    9. In this Schedule--

    "capital expenditure", in relation to an agricultural project referred to in paragraphs 1A and 1C, means capital expenditure incurred in respect of--

    (a) the clearing and preparation of land; 

    (b) the planting of crops; 

    (c) the provision of irrigation or drainage systems; 

    (d) the provision of plant and machinery; 

    (e) the construction of access roads including bridges; 

    (f) the construction or purchase of buildings (including those provided for the welfare of persons or as living accommodation for persons) and structural improvements on land or other structures; or 

    (g) (Deleted by Act 755) for the purposes of any of the following activities:

    (aa) cultivation of rice and maize; 

    (bb) cultivation of vegetables, tuber and roots; 

    (cc) cultivation of fruits; 

    (dd) livestock farming; 

    (ee) (spawning, breeding or culturing of aquatic products; 

    (ff) any other activities approved by the Minister; and 

    (gg) (Deleted by Act 755)

    "disposed of" means sold, conveyed, transferred, assigned, or alienated with or without consideration;

    "factory" means portion of the floor areas of a building or an extension of a building used for the purposes of qualifying project to place or install plant or machinery or to store any raw material, or goods or materials manufactured prior to sale: Provided that in respect of portion of the building or extension of the building used for the storage of raw material, or goods or materials, or both, it shall not be more than one-tenth of the total floor areas of that building or extension;

"Eastern Corridor of Peninsular Malaysia" (Deleted by Act 742)

"incurred" has the same meaning assigned thereto in paragraphs 46 and 55 of Schedule 3;

"manufacturing" means--

(a) conversion by manual or mechanical means of organic or inorganic materials into a new product by changing the sizeshape, composition, nature or quality of such materials; 

(b) assembly of parts into a piece of machinery or products; or

(c) mixing of materials by a chemical reaction process including biochemical process that changes the structure of a molecule by the breaking of the intra molecular bonds or by altering the spatial arrangement of atom in the molecule, but does not include--

(aa) the installation of machinery or equipment for the purpose of construction;

(bb) a simple packaging operations such as bottling, placing in boxes, bags and cases;

(cc) a simple fixing;

(dd) a simple mixing of any products;

(ee) a simple assembly of parts;

(ff) any activity to ensure the preservation of products in good condition during transportation and storage;

(gg) any activity to facilitate shipment and transportation;

(hh) any activity of packaging or presenting goods for sale; or

(ii) any activity that may be prescribed by the Minister, notwithstanding the above interpretation; 

"operation" means an activity which consists of the carrying on of a business referred to in paragraph 8;

"simple" generally describes an activity which does not need special skills, machines, apparatus or equipment especially produced or installed for carrying out the activity.

10. Except for paragraphs 1 and 5, this Schedule shall also apply to an agro-based co-operative society (within the meaning assigned to it under the Farmers' Organization Act 1973 [Act 109]), an Area Farmers' Association, a National Farmers' Association, a State Farmers' Association (within the meanings assigned to them under the Farmers' Organization Act 1973), an Area Fishermen's Association, a National Fishermen's Association and a State Fishermen's Association (within the meanings assigned to them under the Fishermen's Association Act 1971 [Act 44]).

11. For the purpose of paragraph 1C, where--

(a) a company or a partnership (hereinafter referred to in this subparagraph as "new partnership") commences to carry on a business of rearing chicken and ducks; and

(b) that business is a continuation of a business carried out by a sole proprietor or a partnership (hereinafter referred to in this subparagraph as "old partnership") for a period of not less than thirty-six months prior to that commencement, that period, in relation to that company and the new partnership, shall be taken into account in ascertaining the period of not less than thirty-six months referred to in that paragraph:

Provided that the sole proprietor or any of the partners in the old partnership holds any share in that company or is the partner of the new partnership, as the case may be.

12. Where a person has a source within the meaning of sections 55 to 58, the rules prescribed under paragraph 74 of Schedule 3 shall apply, mutatis mutandis, in ascertaining the allowance to be made to that person for a year of assessment under this Schedule.

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53,,/Schedule 7B

Schedule 7B

[Section 133a]

Investment Allowance for Service Sector

1. Where a company which is resident in Malaysia for the basis year for a year of assessment has incurred in the basis period for that year of assessment capital expenditure for the purpose of an approved service project, there shall be given to the company for that year of assessment an investment allowance of an amount approved by the Minister, such allowance being not less than sixty per cent of that expenditure.

2. The Minister may grant approval in respect of an application made in writing for an investment allowance under this Schedule on such terms and conditions as he deems fit.

3. An allowance for expenditure given under paragraph 1 shall be given in respect of expenditure incurred within five years from the date from which the approval is to take effect.

4. Where an allowance is given to a company under paragraph 1 for a year of assessment, so much of the statutory income of the business of the company in respect of an approved service project for that year of assessment as is equal to the amount of the allowance (or to the aggregate amount of any such allowance, as the case may be) shall be exempt from tax and the amount so exempt shall not exceed seventy per cent (or any other rate as the Minister may determine) of the statutory income of that business of the company for that year of assessment.

5. Where, by reason of an absence or insufficiency of statutory income of a company from a business for the basis period for a year of assessment, effect cannot be given or cannot be given in full to any allowance or allowances to which the company is entitled to under this Schedule for that year in relation to the source consisting of that business, then, notwithstanding the foregoing paragraphs, so much of the allowance or allowances in question as cannot be given for that year shall be deemed to be an allowance to be given to the company under this Schedule for the first subsequent year of assessment for the basis period for which there is statutory income from that business, and so on for subsequent years of assessment until the company has received the whole of the allowance or allowances to which it is so entitled.

6. Paragraphs 5 and 6 of Schedule 7a shall apply as if any reference in those paragraphs to any income exempted or which has become exempted under paragraph 3 of that Schedule were a reference to income credited to the exempt account under paragraph 4.

7. This Schedule shall not apply to a company for the period during which the company has been granted exemption under section 127.

8. For the purposes of this Schedule any expenditure incurred in relation to an approved service project prior to the commencement of the business, shall be deemed to be incurred on the day when the business commences.

9. For the purposes of this Schedule--

"approved service project" means a project in the service sector in relation to transportation, communications, utilities or any other sub-sector as approved by the Minister;

"capital expenditure", in relation to approved service project, means capital expenditure incurred on plant, machinery, fixtures, premises, buildings, structures or works of a permanent nature and shall not include capital expenditure incurred on buildings, plant or machinery which are provided wholly or partly for the use of a director or an individual who is a member of the management, administrative or clerical staff;

"incurred" has the same meaning assigned to it in paragraphs 46 and 55 of Schedule 3.

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53,,/Schedule 8

Schedule 8

[Section 155]

Repeals

No. and year

Short title

Extent of repeal

29 of 1956

Income Tax Ordinance 1956 of Sabah

The whole

13 of 1960

Inland Revenue Ordinance 1960 of Sarawak

The whole

M.U. 48 of 1947

Income Tax Ordinance 1947

The whole

F.M. 62 of 1950

Housing Trust Ordinance 1950

The words "and income tax" and "or income tax" in subsection 35(1) and the words "Income Tax" in the marginal note to section 35

F.M. 36 of 1954

Petaling Jaya Ordinance 1954

The words "and income tax" and "or income tax" in section 29 and the words "and income tax" in the marginal note to that section

F.M. 20 of 1956

Land Development Ordinance 1956

The words "and income tax" and "or income tax" in subsection 63(1)

F.M. 61 of 1958

Central Bank of Malaysia Ordinance 1958

The words "from the provisions of any law relating to income taxation or company taxation, and" in section 50 and the words "taxation and" in the marginal note to that section

F.M. 10 of 1961

Racing (Totalizator Board) Act 1961

Subsection 19(2)

F.M. 25 of 1962

Sarawak Electricity Supply Corporation 1962

Section 32

 

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53,,/Schedule 9

Schedule 9

[Section 156]

Transitional and Saving Provisions

PART I

General

Interpretation

1. (1) In this Schedule--

"pre-basis period", in relation to a pre-year of assessment, means the period which would have been the basis period for that year if that year had been a year of assessment in relation to which this Act has effect by virtue of subsection 1(3);

"pre-basis year", in relation to a pre-year of assessment, means the calendar year immediately preceding that pre-year of assessment;

"previous tax" means any tax imposed by a repealed law;

"pre-year of assessment" means a calendar year preceding the year of assessment 1968;

"repealed laws" means the Sabah Ordinance, the Sarawak Ordinance and the West Malaysian Ordinance, and "repealed law" means any of those Ordinances;

"Sabah Ordinance" means the Income Tax Ordinance 1956, of Sabah;

"Sarawak Ordinance" means the Inland Revenue Ordinance 1960, of Sarawak;

"West Malaysian Ordinance" means the Income Tax Ordinance 1947, of West Malaysia.

(2) In the marginal note to any paragraph of this Schedule--

(a) a reference to any specific Part, section or Schedule is a reference to the Part or section of this Act, or Schedule to this Act, to which that paragraph relates; and

(b) a reference to a specific Schedule followed by a colon and a number or numbers is a reference to the paragraph or paragraphs of that Schedule bearing that number or those numbers. 

(3) This Part of this Schedule shall be subject in its operation to Parts II, III and IV thereof.

Power to make further transitional or saving provisions

2. (1) The Minister at any time may by statutory order make such further transitional or saving provisions as he considers necessary or expedient (including provisions amending any of the paragraphs of this Schedule except this paragraph).

(2) Any order made under subparagraph (1) shall be laid before the Dewan Rakyat.

Repealed laws saved for certain purposes

3. (1) Subject to subparagraph (2) and the other provisions of this Schedule, each of the repealed laws shall remain in force for all purposes in relation to the year of assessment 1967 under the law in question and to previous years of assessment under that law.

(2) Any function of a public officer under a repealed law may for the purposes of subparagraph (1) be exercised by any public officer referred to in section 134 whose office substantially corresponds to that of an officer by whom the function was exercisable under that law or by any public officer so referred to who is designated in that behalf by the Director General.

(3) Subsections 136(2) to (5) shall not apply to the exercise of the Director General's functions under subparagraph (2).

References to repealed law

4. Unless the context otherwise requires, a reference in a written law to any provision of a repealed law shall be construed in relation to the year of assessment 1968 and subsequent years of assessment as a reference to the corresponding provision (if any) of this Act.

References to Malaysia before 1968

5. Subject to any express provision of this Act, references in this Act to Malaysia shall be construed, in relation to any time before 1 January 1968, as references to the territories comprised in Malaysia on that date or any one or more of those territories.

Section 7

6. References in section 7 to years of assessment preceding a particular year of assessment and to the basis years for those preceding years include references to pre-years of assessment and pre-basis years respectively.

Section 8

7. Where a company or body of person falls to be treated as resident in Sabah, Sarawak or Peninsular Malaysia under the appropriate repealed law for a year of assessment under that law coinciding with the calendar year 1966 or 1967, then, for the purposes of subsection 8(2)--

(a) if the calendar year in question is 1966, it shall be presumed until the contrary is proved that the company or body was resident in Malaysia for the purposes of this Act for the basis years for the year of assessment 1968 and every subsequent year of assessment;

(b) if the calendar year in question is 1967, it shall be taken to have been established as between the Director General and the company or body that the company or body was resident in Malaysia for the basis year for the year of assessment 1968. 

Section 10

8. References in section 10 to years of assessment preceding a particular year of assessment and to the basis years for those preceding years including references to pre-years of assessment and pre-basis years respectively.

Section 13

9. In subsections 13(2) and (3) "period" includes a period which elapsed or began before 1 January 1968.

Section 21

10. (1) In subsections 21(2) and (3) "financial year" and "accounting period" include, in relation to the year of assessment 1968, a financial year or accounting period, as the case may be, beginning before 1 January 1967.

(2) Where under subsection 28(2) of the Sabah Ordinance, subsection 25(2) of the Sarawak Ordinance or subsection 31(2) of the West Malaysian Ordinance a direction has been given (or purports to have been given) with respect to the years of assessment 1967 and 1968 under the Ordinance in question, the period which the direction indicates (or purports to indicate) with respect to the year of assessment 1968 under that Ordinance shall be taken to be the basis period for the year of assessment 1968 under this Act unless the Director General having regard to the circumstances of any particular case directs that some other period shall be taken to be the basis period for that year of assessment under this Act.

(3) Where the accounts for the financial year of a company or the accounts of a business were made up for a period of twelve months to some day in the calendar year 1966 other than 31 December and accounts were not made up to the corresponding day in the calendar year 1967, the Director General may act under subsection 21(3) in relation to the years of assessment 1968 and 1969 under this Act and, where appropriate, may act under any of the provisions of the repealed laws mentioned in subparagraph (2) in relation to the year of assessment 1967 under any repealed law.

Section 23

11. (1) In paragraph 23(c) "any tax" includes previous tax deducted in paying, crediting or distributing any gross income--

(a) if that previous tax was deducted in the calendar year 1967; or

(b) if part of the basis period for the year of assessment 1968 elapsed before 1 January 1967, and that previous tax was deducted in that part of that basis period from gross income which is gross income for that basis period. 

(2) In paragraph 23(d) "tax", in relation to a dividend, includes previous tax--

(a) if the dividend was paid or credited in the calendar year 1967; or

(b) if part of the basis period for the year of assessment 1968 elapsed before 1 January 1967, and the dividend, being gross income for that basis period, was paid or credited in that part of that basis period. 

(3) Where a dividend was paid or credited or distributed in specie in the year of assessment 1966 or 1967 under the Sarawak Ordinance by a company resident in Sarawak by virtue of that Ordinance for the year of assessment in which the dividend was paid, credited or distributed, section 23 shall operate in relation to the dividend so that, for the purposes of sections 24 to 28, it shall be deemed to have been paid, credited or distributed after deduction of tax at the rate in force for corporation profits tax in Sarawak for the year of assessment in question and to be of such a gross amount as after deduction of tax at that rate would be equal to--

(a) the amount of the dividend so paid or credited; or

(b) where the dividend consists of property other than money, the amount of the market value of that property at the time of the dividend's distribution. 

Section 24

12. (1) An amount treated under any repealed law as income from a source other than a source consisting of a business shall not be treated as gross income under this Act if it is a debt arising in the manner described in paragraph 24(1)(c) .

(2) In subsection 24(4) "dividend" does not include any dividend which is treated under any repealed law as income from a source other than a source consisting of a business, and in subsection 24(5) "interest" does not include any interest which is so treated under any repealed law.

PART III

13. Where, in the application of Chapters 3 and 4 of Part III to a person and a source of his, regard is to be had to any particular period commencing prior to the basis period for a year of assessment, regard may be had to that particular period notwithstanding that it commenced prior to the basis period for the year of assessment 1968.

Sections 30 and 34

14. Where--

(a) a person is chargeable to previous tax in respect of the income or assessable profits from a business of his or would have been so chargeable but for an insufficiency of any such income or profits; and

(b) this Act is applicable to him in respect of gross income from that business for the basis period for the year of assessment 1968 or any subsequent year of assessment, any provision of this Act which is necessary for the proper application of subsections 30(1) and (4) and 34(2) to him, to that business and to any such year of assessment may be deemed to have been applicable to him and that business for the pre-basis period, in relation to that business, for any pre-year of assessment.

Section 33

15. Where any particular part of the subject matter of any particular deduction which but for this paragraph would fall to be made under subsection 33(1) in computing the adjusted income of a person from a source for the basis period for a year of assessment has formed the whole or part of the subject matter of a deduction under any corresponding provision of a repealed law, that particular deduction, if the amount from which it was deducted is not gross income for the basis period for that year of assessment, shall be reduced in the application of subsection 33(1) to that year of assessment by so much thereof as relates to that particular part.

Section 34

16. Where any particular part of the subject matter of any particular deduction which but for this paragraph would fall to be made under subsection 34(1) in accordance with subsection (4), (6) or (7) of that section in computing the adjusted income of a person from a business for the basis period for a year of assessment has formed the whole or part of the subject matter of a deduction under any corresponding provision of a repealed law, that particular deduction, if the amount from which it was deducted is not gross income for the basis period for that year of assessment, shall be reduced in the application of subsection 34(1) and those subsections to that year of assessment by so much thereof as relates to that particular part.

Section 35

17. Where the relevant period for the purposes of section 35 is a basis period for the year of assessment 1968, paragraph (3)(b) of that section shall be so modified that 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--

(a) to be an amount equal to the value which would be arrived at if paragraph (3)(a) were applied at the beginning and not at the end of the relevant period; or

(b) if a value in respect of that item was had regard to for the purposes of any repealed law at the end of an accounting period ending immediately before the relevant period, to be an amount equal to that value: 

Provided that, where the value of an item to which subparagraph (b) applies was had regard to as mentioned in that subparagraph for the purposes of two or more repealed laws, regard shall be had for the purposes of that subparagraph to such one of those laws as the relevant person may elect by notice in writing given to the Director General within three months after the beginning of the year of assessment 1968 (or within such further period as the Director General may allow) or, if the relevant person fails so to elect, as the Director General may direct.

Section 43

18. (1) Where a person has incurred, in relation to a source of his, a loss of a kind deductible under any repealed law, there shall be ascertained the amount thereof, if any, unallowed after the application of that law to all years of assessment under that law for which that law was in force:

Provided that, if in the application of this subparagraph to a person and a loss in relation to a source an amount is so ascertained under the Sabah Ordinance and if under that Ordinance that loss is one incurred anywhere, this subparagraph shall not apply to any part of that loss in relation to any repealed law other than that Ordinance.

(2) Where an amount has been ascertained under subparagraph (1) in its application to a person and a source, then, in the application of section 43 to that person, that amount (in subparagraph (3) referred to as the specified amount) shall be treated as the amount ascertained under subsection 44(4) for the pre-year of assessment 1967, which shall be treated as the particular year of assessment preceding the relevant year for the purposes of subsection 43(2).

(3) Where the proviso to subparagraph (1) is applicable to a person and that person is not ordinarily resident for the basis year for the relevant year to which regard is had in the application of section 43, subsection 43(5) shall apply in order to ascertain how much of the specified amount is to be taken to be the amount of the Malaysian loss for the purposes of paragraph 43(5)(a) and the proportion thereof to be substituted for the purposes of paragraph 43(5)(b).

Section 44

19. (1) Where a loss has been deducted in calculating the assessable income or the assessable profits (as the case may be) for the year of assessment 1967 under a repealed law no part of that loss shall be taken into account for the purposes of section 44.

(2) Where approval has been given for the purposes of any of the repealed laws to an institution of a public character, the approval, if it was still effective on 31 December 1967, shall be deemed to have been given (subject to any conditions effective on that date) under section 44.

Section 54

20. (1) Where a person has incurred, in relation to a source of his consisting of a business of a kind to which subsection 54(2) applies, a loss of a kind deductible under any repealed law, there shall be ascertained the amount thereof, if any, unallowed after the application of that law to all years of assessment under that law for which that law was in force.

(2) Subparagraph (1) shall apply to a depreciation allowance to which regard is had under a repealed law as it applies to a loss.

(3) Where an amount has been ascertained under subparagraph (1) or (2) or both in respect of a person and a source, then, in the application of paragraph 54(4)(a) to that person, that amount (or, where an amount has been ascertained under either or both of those subparagraph in relation to more than one repealed law, the aggregate of the amounts so ascertained) shall be treated as the amount ascertained under paragraph 54(4)(b) for the pre-year of assessment 1967, which shall be treated as a year of assessment preceding the relevant year for the purposes of paragraph 54(4)(a).

(4) Paragraph 18 shall not apply to a loss to which this paragraph applies.

Section 60

21. In the application of subparagraphs 60(5)(a)(v) and (6)(a)(v) to the general business of an insurer for the basis period for the year of assessment 1968, subsection 60(9) shall not apply and for the amount of his reserve fund for unexpired risks regard shall be had to the amount taken by him to be the reserve for unexpired risks at the end of the basis period for the year of assessment 1967 under a repealed law or, where two or more repealed laws apply, the aggregate of the amounts taken by him to be the reserves for unexpired risks at the end of the basis period for the year of assessment 1967 under each of those laws.

Section 68

22. Where an appointment has been made under any repealed law of any person to be the agent of any other person for any of the purposes of that law, the appointment, if it was still effective on 31 December 1967, shall be deemed to have been made under section 68 for any purposes of this Act similar to those first-mentioned purposes.

Section 74

23. In subsections 74(5) and (6) "tax" includes previous tax.

Section 75

24. In subsection 75(2) the references to tax, this Act and section 107 include references to previous tax, any repealed law and any provision of a repealed law corresponding to section 107; and subsection 75(3) shall be construed accordingly.

PART VII

25. Part VII (except sections 108, 109 and 110) shall apply, with any necessary modifications, for the recovery of and otherwise in relation to any previous tax which is the subject of an assessment made under a repealed law on or after 1 January 1968, and any sum due in connection with any such previous tax.

Section 104

26. In section 104 the references to tax, sums and debts include references to previous tax and to sums and debts of a corresponding kind under the repealed laws.

Section 107

27. Where a direction has been given for the year of assessment 1968 under the Deduction of Income Tax (Employments) Rules 1948 of West Malaysia [G.N. 3305[#8260]1948], the direction shall be deemed to have been given under the Income Tax (Deduction from Emoluments: West Malaysia) Rules 1967 [P.U. 636[#8260]1967].

Section 108

28. (1) Where subsection 108(4) applies to a company for the year of assessment 1968--

(a) any tax which the company is entitled to deduct (or which is deemed to be deducted by the company) under the Sabah Ordinance or the West Malaysian Ordinance from a dividend paid or distributed in the calendar year 1967, and any tax deemed to be deducted by the company under paragraph 29 from a dividend paid, credited or distributed in that calendar year, shall be disregarded in arriving at the compared total for the purposes of subsection 108(4); and

(b) the reference in subsection 108(4) to "the balance (if any)" shall be construed-- 

(i) as a reference to the balance (if any) which would have been carried forward under subsection 40(5) of the West Malaysian Ordinance or subsection 37(5) of the Sabah Ordinance if the said section 40 or the said section 37, as the case may be, was applicable to the company for the year of assessment 1967 under the West Malaysian Ordinance or the Sabah Ordinance and would have been so applicable for the year of assessment 1968 under the West Malaysian Ordinance or the Sabah Ordinance but for the repeal of the Ordinance in question; or

(ii) if the company was resident in Sarawak for the year of assessment 1967 under the Sarawak Ordinance, as a reference to such a balance (if any) as is ascertained under paragraph 29.

(2) In the application of subsection 108(8) to any case to which subparagraph (1) applies, the references in the said subsection 108(8) to a year of assessment, any assessment and any repayment of tax shall be deemed to include references to a year of assessment, any assessment and any repayment of tax under any repealed law.

(3) For the avoidance of doubt it is declared that--

(a) any reference in section 108 to a company entitled to deduct tax from dividends includes a company entitled to declare itself a resident of Malaysia under paragraph 3 of Article VII of the Double Taxation Relief (Singapore) Order 1968 [P.U.(A) 518[#8260]68]; and

(b) any reference in subsection 108(8) to repayment of tax includes payment of the Sabah credit, Sarawak credit or West Malaysian credit, as the case may be, which payment shall be deemed to have been made in the year of assessment in which the company became entitled to the credit. 

(4) Where--

(a) a company, which is entitled to a Sabah credit, Sarawak credit or West Malaysian credit, is a non-resident company the payment of the Sabah credit, Sarawak credit or West Malaysian credit, as the case may be, to the company; or

(b) any of the provisos to subparagraphs 69(1), 85(1) and 109(1) applies to a non-resident company, the payment to a transferee company of the Sabah credit, Sarawak credit or West Malaysian credit, as the case may be, to which the non-resident company would have been entitled but for that proviso, shall not be deemed to be a repayment of tax under subsection 108(8).

(5) For the purposes of subparagraph (4), a non-resident company refers to a company which is not resident in the basis year for the year of assessment 1967 but does not include a company which is entitled to declare itself a resident of Malaysia under paragraph 3 of Article VII of the Double Taxation Relief (Singapore) Order 1968.

Section 108

29. (1) Where subsubparagraph 28(1)(b)(ii) applies to a company--

(a) any dividend paid, credited or distributed by the company in any of the years of assessment 1964 to 1967 inclusive for which the company was resident in Sarawak under the Sarawak Ordinance (any such years for which the company was so resident being in this paragraph referred to as the residential years) shall be deemed to have been paid, credited or distributed after deduction of Sarawak tax at the rate in force for the year in question and to be of such a gross amount as after deduction of Sarawak tax at that rate would be equal to-- 

(i) the amount of the dividend so paid or credited; or

(ii) where the dividend consists of property other than money, the amount of the market value of that property at the time of the dividend's distribution,and a sum equal to the difference between that gross amount and the amount of the dividend so paid, credited or distributed shall be deemed to be the amount of the Sarawak tax deducted from that dividend;

(b) for the first of the residential years there shall be ascertained the excess, if any, of the amount of the federal tax payable by the company for that first year (that amount being computed after giving any relief due to the company for that first year by virtue of section 59 or 61 of the Sarawak Ordinance or the corresponding provisions of the Sabah Ordinance or the West Malaysian Ordinance) over the total of all amounts so deemed to have been deducted from dividends paid, credited or distributed by the company in that first year;

(c) for each of the residential years subsequent to that first year there shall be ascertained the excess, if any, of the aggregate of the federal tax payable by the company for that subsequent year, and the excess, if any, for the latest of the residential years preceding that subsequent year (as ascertained under this subparagraph or, where this subsubparagraph does not apply to that preceding year, under subparagraph (b)) over the total of all amounts so deemed to have been deducted from dividends paid by the company in that subsequent year; and

(d) the excess ascertained under subparagraph (c) (or, where subparagraph (c) does not apply, under subparagraph (b) ) for the year of assessment 1967 in relation to the company shall be deemed to be the balance. 

(2) Where this paragraph has applied to a dividend which has been credited, it shall not apply to that dividend when paid.

Section 108

30. In paragraph 29--

"federal tax" means any one or more of the following, that is to say, the income tax imposed by the Sabah Ordinance, the corporation profits tax imposed by the Sarawak Ordinance and the income tax imposed by the West Malaysian Ordinance, but does not include tin profits tax or development tax imposed under any repealed law;

"Sarawak tax" means the corporation profits tax imposed by the Sarawak Ordinance, but does not include development tax imposed by that Ordinance;

"year of assessment", in relation to Sarawak tax, means a year of assessment for the purposes of the Sarawak Ordinance, and in relation to federal tax means a year of assessment for the purposes of any one or more of the repealed laws.

Section 110

31. (1) Subject to subparagraph (2), in the application of section 110, other than subsections (8), (9), (10) and (12) thereof, any reference to tax shall include a reference--

(a) to any previous tax deducted from any dividend or interest paid in the calendar year 1967; or

(b) where part of the basis period for the year of assessment 1968 elapsed before 1 January 1967, to any previous tax deducted in that part of that basis period from any dividend or interest which is gross income for that basis period. 

(2) Subparagraph (1) shall not apply to any tax imposed under the West Malaysian Ordinance or the Sabah Ordinance and deducted from any dividend or interest if by virtue of subparagraph 12(2) that dividend or interest is not to be included as gross income for the basis period for a year of assessment.

(3) Where an amount of previous tax is deemed by virtue of subparagraph 11(3) to have been deducted from a dividend and the dividend is included in the gross income of a person from a source for the basis period for a year of assessment, that amount shall be deemed for the purposes of section 110 to be tax deducted under section 108.

Section 115

32. In subsection 115(1) the references to tax, sums and debts include references to previous tax and sums and debts of a corresponding kind under the repealed laws.

Section 127

33. Any exemption from any previous tax or from any provision of a repealed law shall, if it was made under a repealed law and was effective on 31 December 1967, be deemed to have been made by an order under section 127 in relation to tax imposed by this Act or in relation to the corresponding provision of this Act, as the case may be:

Provided that this paragraph shall not apply in relation to--

(a) any such exemption for which provision is made, with or without modification, in this Act; or

(b) subsection 44(3) of the Sarawak Ordinance. 

Section 131

34. In subsection 131(3) the references to tax, years of assessment and assessments include references to previous tax and to years of assessment and assessments under any repealed law.

Section 134

35. (1) With effect from 1 January 1968--

  • (a)

    the person holding on 31 December 1967, the office of Director General of Inland Revenue shall become Director General of Inland Revenue within the meaning of subsection 134(1); 

    (b) all other persons holding on 31 December 1967, federal public offices in the Inland Revenue Department shall become federal public officers for the purposes of subsection 134(2); and 

    (c) the Director General may with the concurrence of the Director General of Establishments make such changes (if any) in the designation of the offices held by those other persons as he considers necessary and appropriate in order to implement and conform with subsection 134(2): 

Provided that nothing in this paragraph shall be construed as altering any officer's terms of service.

(2) Subsections 136(2) to (5) shall not apply to the exercise of the Director General's functions under subsubparagraph (1)(c).

(3) To such extent as may be necessary for the proper application of this Act in relation to the year of assessment 1968, subparagraph (1) shall have effect as if any references therein to 1 January 1968, and 31 December 1967, were references to 28 September 1967, and 27 September 1967, respectively.

Section 138

36. Where for the purposes of any repealed law a person has made a declaration of a kind corresponding to a declaration required by subsection 138(1), the declaration so made shall be treated as a declaration that he will regard and deal with classified material as confidential and as a declaration made and subscribed by him for the purposes of section 138.

Section 142

37. Where by virtue of paragraph 25 civil proceedings are taken under section 106 for the recovery of previous tax or any other sum due under a repealed law, section 142 shall apply in relation to those proceedings and that tax or sum as it applies in relation to proceedings for the recovery of tax due under this Act.

Section 149

38. Section 149 shall not apply to an order deemed to have been made under paragraph 33.

Section 150

39. Where approval has been given for the purposes of any of the repealed laws to a retirement scheme or to a pension or provident fund or society, the approval, if it was still effective on 31 December 1967, shall be deemed to have been given (subject to any conditions effective on that date) under section 150.

Section 154

40. (1) In paragraph 154(1)(e) the references to tax include a reference to previous tax and the reference to sums due includes a reference to sums of a corresponding kind due under the repealed laws.

(2) Rules made under section 154 may include such transitional and saving provisions as may be expedient in the circumstances.

Schedule 2:6

41. For the purposes of Schedule 2, where the operator owned an asset at the beginning of the basis period for the year of assessment 1968 and has incurred capital expenditure as defined in the Income Tax (Mining Operations) Rules 1949, of West Malaysia [F.L.N. 534[#8260]49] on or for the asset in connection with the working of the mine--

(a) the asset shall be deemed to be included in the definition of "mining asset" in paragraph 6 of that Schedule; and

(b) that capital expenditure to the extent allowed or determined to rank as capital expenditure under the Income Tax (Mining Operations) Rules 1949, of West Malaysia shall be treated as qualifying mining expenditure. 

Schedule 2:15

42. Paragraph 15 of Schedule 2 shall not apply where the operator (within the meaning of that Schedule) permanently ceases to work a mine in the basis period for the year of assessment 1968; and, where he permanently ceases to work a mine in the basis period for any of the years of assessment 1969 to 1972 inclusive--

(a) the reference to preceding years of assessment in subparagraph (a) of that paragraph shall include a reference to years of assessment under the West Malaysian Ordinance; and

(b) the references to repayments of tax and assessments in subparagraph (b) of that paragraph shall include references to repayments of previous tax and assessments under the West Malaysian Ordinance. 

Schedule 2:22

43. Where any capital expenditure is included by virtue of paragraph 41 in the total qualifying mining expenditure mentioned in the definition of "residual expenditure" in paragraph 22 of Schedule 2, that total, apart from any other deductions made for the purposes of that definition, shall be reduced by the amount--

(a) by which capital expenditure incurred prior to the commencement of the basis period for the year of assessment 1948 exceeds the residue of capital expenditure for that year of assessment as computed in accordance with rule 2(vii)(a) of the Income Tax (Mining Operations) Rules 1949;

(b) of any deductions made under paragraph 14(1)(h) of the West Malaysian Ordinance in respect of that capital expenditure in computing the income of the operator in question from the business in question for any period in ascertaining the statutory income from the business for any year of assessment under that Ordinance ending before 1 January 1968; and

(c) of any recoupment of that capital expenditure in relation to the mine in question received by the operator before that date and taken into account in computing any allowance under that Ordinance. 

Schedule 3:5

44. For the purposes of paragraph 5 of Schedule 3 in its relation to a building, in any case where the expenditure on the construction of the building in question was incurred prior to 1 January 1968, references in that paragraph to "year of assessment" and "basis period" shall be deemed to include references to any pre-year of assessment and to any pre-basis period respectively.

Schedule 3:10, 11 and 22

45. (1) Where in a case to which paragraph 10 or 11 of Schedule 3 or subparagraph (2) of this paragraph applies the basis period for the year of assessment 1967 under a repealed law overlaps the basis period for the year of assessment 1968, then, for the purposes of paragraph 10, 11 or 22, as the case may be, of Schedule 3, expenditure incurred in the period common to those two basis periods shall not be treated as incurred in the basis period for the year of assessment 1968.

(2) Where a person has for the purposes of a business of his incurred prior to the basis period for the year of assessment 1968 qualifying plantation expenditure on the construction of a building, then, if but for the repeal of the repealed laws he would have been entitled to an allowance in respect of that expenditure for a particular year of assessment under any of the repealed laws commencing after 31 December 1967, there shall be made to him under paragraph 22 of Schedule 3 in relation to the source consisting of that business for the year of assessment under this Act which coincides with that particular year an allowance equal to the amount of any allowance or allowances to which he would have been so entitled for that particular year.

Schedule 3:23

46. (1) For the purposes of paragraph 23 of Schedule 3, where in the basis period for the year of assessment 1967 under any repealed law a person has for the purposes of a business of his incurred qualifying plantation expenditure other than expenditure on the construction of a building, there shall be made to him in relation to the source consisting of that business for the year of assessment 1968 an allowance equal to one-half of that expenditure:

Provided that this subparagraph shall not apply in relation to any expenditure incurred in Sarawak.

(2) Where a person has for the purposes of a business of his incurred (prior to 31 December 1964) capital expenditure within the meaning of section 14 of the Sabah Ordinance upon a plantation or (prior to 31 December 1961) capital expenditure within the meaning of section 18a of the West Malaysian Ordinance, then, if but for the repeal of those Ordinances he would have been entitled to an allowance in respect of that expenditure for a particular year of assessment (under the appropriate one of those Ordinances) commencing after 31 December 1967, there shall be made to him under paragraph 23 of Schedule 3 in relation to the source consisting of that business for the year of assessment which coincides with that particular year an allowance equal to the amount of the allowance to which he would have been so entitled for that particular year.

(3) Where in a case to which subparagraph (1) or (2) applies the basis period for the year of assessment 1967 under a repealed law overlaps the basis period for the year of assessment 1968, then, for the purposes of paragraph 23 of Schedule 3, expenditure incurred in the period common to those two basis periods shall not be treated as incurred in the basis period for the year of assessment 1968.

Schedule 3:26

47. For the purposes of paragraph 26 of Schedule 3, if any sum as therein mentioned falls into charge to tax imposed under the West Malaysian Ordinance or the Sabah Ordinance for the year of assessment 1967, that paragraph shall not apply to that sum.

Schedule 3:27

48. (1) Paragraph 27 of Schedule 3 shall not apply in relation to a person, an asset or a business of his where, under subsection 18A(3) of the West Malaysian Ordinance or subsection 14(3) of the Sabah Ordinance, any sum of money or consideration is deemed to be that person's income for the year of assessment 1967 under the Ordinance in question, and the whole or any part of the sum or consideration relates directly or indirectly to that asset.

(2) In relation to a person, an asset and a business of his, the reference in paragraph 27 of Schedule 3 to qualifying agriculture expenditure shall when appropriate include capital expenditure (as defined in section 18A of the West Malaysian Ordinance and in section 14 of the Sabah Ordinance) incurred on that asset; and, when there is such an inclusion, then, if the preliminary conditions of that paragraph are satisfied, the references in subsubparagraph (b) of that paragraph to "agriculture allowance", "year of assessment" and "allowances" shall include respectively--

(a) any allowance made to that person under the said section 18a or 14 which relates directly or indirectly to any such capital expenditure incurred on that asset;

(b) any year of assessment under either of those Ordinances; and

(c) any such allowances, and the reference in the proviso to that paragraph to "year of assessment" shall include any year of assessment under either of those Ordinances.

Schedule 3:35

49. Paragraph 35 of Schedule 3 shall not apply to an asset disposed of by a person if a balancing charge in relation to that asset has been made on him under any repealed law.

Schedule 3:36

50. In the application of paragraph 36 of Schedule 3 to a person and an asset, if the asset is disposed of by him in the basis period for the year of assessment 1968, the reference in that paragraph to an initial or annual allowance shall be taken to be a reference to an initial or annual allowance of a kind allowed under any repealed law.

Schedule 3:37

51. In the application of paragraph 37 of Schedule 3 to a person and an asset, there shall be included in the total therein mentioned all allowances of a kind similar to allowances under that Schedule made to him under any repealed law in relation to that asset.

Schedule 3:39 and 40

52. Paragraphs 39 and 40 of Schedule 3 shall not apply to an asset disposed of if a balancing allowance or charge in relation to that asset has been made on a person (being the disposer in relation to that asset for the purposes of paragraphs 38 and 39 of that Schedule) under any repealed law.

Schedule 3:40 and 41

53. Rules made under paragraph 40 or 41 of Schedule 3 may be made applicable for transitional purposes to any repealed law and to any matter to which that law has been applicable.

Schedule 3:42

54. Paragraph 42 of Schedule 3 shall not apply to a building constructed prior to the basis period for the year of assessment 1968.

Schedule 3:57

55. Where in relation to an asset and a business of a person the period of any disuse for the purposes of paragraph 57 of Schedule 3 is a period which commenced prior to the basis period for the year of assessment 1968, all such assessments shall be made under any repealed law as may be necessary to counteract the benefit of any allowance made to that person for any year of assessment under that law in relation to that asset.

Schedule 3:68

56. (1) Subject to this paragraph, in the application of paragraph 68 of Schedule 3 in relation to an asset and a person as therein mentioned, any capital expenditure incurred by him on the asset shall be treated as qualifying expenditure incurred by him for the purposes of that paragraph and, where the total qualifying expenditure has been ascertained under that paragraph as construed with this subparagraph, that total shall be reduced in the manner provided by that paragraph (if applicable) and by any allowance made to him in relation to that asset.

(2) Subject to subparagraph (3), in subparagraph (1)--

"allowance" means any allowance made under any provision of any repealed law corresponding to any provision of Schedule 3 or any amount written off under any repealed law for any year of assessment for which no initial or annual allowance falls to be made in relation to an industrial building or any amount which was deducted from the capital expenditure under the provisions of any repealed law in connection with the computation of the value of an asset acquired before the basis period for the first year of assessment under any repealed law;

"capital expenditure" means capital expenditure as defined in any repealed law for the purposes of any provisions thereof corresponding to any provisions of Schedule 3.

(3) In the application of subparagraphs (1) and (2) in relation to a person and an asset if, but for this subparagraph, regard would be had to the same amount in respect of any capital expenditure or allowance by reference to more than one repealed law, regard shall be had to that amount only by reference to the appropriate repealed law, that is to say--

(a) the repealed law by virtue of which he is resident in the territory to which the law applies; or

(b) if there are two or more such laws, one of those laws elected by him when he first makes a claim for an allowance under Schedule 3 in respect of the asset or, in default of such an election, specified by the Director General. 

Schedule 3:69

57. Where for the purpose of this Schedule and Schedule 3 it is necessary to have regard to an allowance made under any repealed law, paragraph 69 of Schedule 3 shall apply (with such modifications as may be necessary) by reference to the repealed law relating to any such allowance.

Schedule 3:75

58. (1) In relation to a person, an asset and a business of his, if effect cannot be given or cannot be given in full to any allowance or allowances of the kind defined in subparagraph 56(2) to which paragraph 57 applies, that allowance or those allowances (or, as the case may be, the amount thereof to which effect has not been so given) shall be deemed to be an allowance to be made to him for the purposes of paragraph 75 of Schedule 3, the reference therein to the first subsequent year of assessment being treated as a reference to the year of assessment 1968 if there is adjusted income from that business for the basis period for that year or, in the absence of any such adjusted income, as a reference to the first year of assessment subsequent to the year of assessment 1968 for the basis period for which there is any such adjusted income:

Provided that, where this paragraph has been applied to any allowance or allowances or to any part thereof in relation to a business, this paragraph shall not apply to that allowance, those allowances or that part in relation to any other business of his.

(2) Subparagraph 56(3) shall apply to allowances affected by this paragraph as it applies to allowances within the meaning of subparagraph 56(1).

Schedule 3: general

59. Unless the context otherwise requires and subject to this Schedule, any reference in Schedule 3 to expenditure includes a reference to expenditure incurred before the basis period for the year of assessment 1968 and any reference in that Schedule to anything done or to any event includes a reference to a thing or event of the kind in question done or occurring before that basis period.

Schedule 4

60. (1) Subject to this paragraph, where in any case a person makes a claim under Schedule 4 for a deduction for a year of assessment in respect of qualifying prospecting expenditure, then, for the purposes of applying that Schedule to that case regard may be had to any such expenditure incurred (and any event which took place) not more than ten years before the end of the basis year for that year of assessment notwithstanding that the whole or part of that period of ten years elapsed before the commencement of this Act; and, whenever necessary, the reference in the proviso to paragraph 11 of that Schedule to a transaction to which section 140 applies shall be construed to include a transaction to which that section would have applied if it had been in force at the date of that transaction.

(2) Subparagraph (1) shall not apply to any expenditure incurred in Sabah or Sarawak, prior to the basis year for the year of assessment 1968 or to any expenditure with respect to which any deduction has been made under section 14A of the West Malaysian Ordinance.

Schedule 5

61. Where a notice of appeal against an assessment is given under the Sabah Ordinance or the West Malaysian Ordinance or a notice of objection to an assessment is given under the Sarawak Ordinance, then--

(a) if the notice was given before 1 January 1968, and the hearing of the appeal has not commenced before that date, the person to whom the notice was given shall forward it to the Clerk to the Special Commissioners as soon as may be after that date;

(b) if the notice is given after that date, it shall, notwithstanding any other provision of this Schedule, be given to the Clerk to the Special Commissioners and not to the person who would otherwise have received it, and, where a notice relating to an assessment is forwarded or given to the Clerk to the Special Commissioners in pursuance of this paragraph, an appeal against the assessment shall be deemed to have been forwarded to the Special Commissioners and shall be disposed of as nearly as may be in accordance with Schedule 5.

Application of this Act to assessment made under repealed law

61a. (1) Where an assessment under a repealed law is made on a person on or after 1 January 1972, the provisions of section 97 and Chapter 2 of Part VI of this Act shall apply to such assessment as if the assessment was made under section 90 or 91, as the case may be, of this Act.

(2) Where subparagraph (1) applies, the provisions to the contrary relating to appeal or objection against an assessment contained in a repealed law shall not apply.

Income related back

62. Where--

(a) by the operation of this Act any income of a person from a source of his is to be regarded as income receivable in respect of a period before the basis period for the year of assessment 1968; and

(b) that income would have been gross income for the pre-basis period for a pre-year of assessment if this Act had been in operation at the material time, that income, if not otherwise subject to previous tax, shall be treated as income for the year of assessment under the appropriate repealed law which corresponds to that pre-year of assessment or, if there is no such corresponding year of assessment, as income for the year of assessment under that law which includes the 1 July of that pre-year of assessment.

PART II

SPECIAL PROVISIONS FOR SABAH

Application and power of remission

63. (1) This Part shall apply only to Sabah.

(2) Any tax paid or payable by virtue of this Part may be remitted by the Director General on grounds of undue hardship; and section 129 shall apply in relation to any tax so remitted as it applies in relation to tax remitted under that section.

Interpretation

64. In this Part--

"appropriate date", in relation to a person, means the date on which the appropriate event mentioned in paragraphs 71 to 74 which gives him entitlement to payment of the Sabah credit of a company apportioned to him occurs;

"old tax" means income tax (excluding any tax deemed to be income tax under the Sabah Ordinance) imposed under the Sabah Ordinance;

"relevant date", in relation to a company, means the date on which the appropriate event mentioned in paragraph 69 which gives it entitlement to payment of the Sabah credit occurs;

"Sabah credit" means the amount ascertained under paragraph 68;

"statutory income", in relation to a person, a source and a year of assessment under the Sabah Ordinance, means the amount of his income from that source for the basis period under that Ordinance for that year of assessment increased by any balancing charge falling to be made in relation to that source for that year of assessment and reduced by any allowance falling to be made for that year under sections 14 to 21 of that Ordinance in relation to that source;

"year of assessment 1966[#8260]67" means the year of assessment commencing on 1 July 1966, under the Sabah Ordinance;

"year of assessment 1967" means the year of assessment 1967 under the Sabah Ordinance;

"year of assessment 1967[#8260]68" means the year of assessment commencing on 1 July 1967, under the Sabah Ordinance.

No chargeable income in certain cases

65. In the application of subparagraph 3(1) of this Schedule, a person shall be deemed not to have any chargeable income under the Sabah Ordinance for the year of assessment 1967[#8260]68.

Provisions as to statutory income for certain years of assessment

66. (1) In the case of a person other than a company, the aggregate of--

(a) so much of his statutory income for the year of assessment 1967[#8260]68 from each source of his other than a source consisting of a business (or, where paragraph (b) applies, from each source of his) as bears the same proportion to that statutory income as the number of days of the interval period bears to the number of days in the basis period in relation to that source under the Sabah Ordinance for that year of assessment; and

(b) where the accounts of a business of that person were made up for a period of twelve months ending on a day in the second half of the calendar year 1965 and the Commissioner has made a direction under subsection 28(2) of the Sabah Ordinance to treat that period as the basis period under that Ordinance for the year of assessment 1966[#8260]67, so much of what would have been the statutory income from each source of his other than a source consisting of a business for the year of assessment commencing on 1 July 1968, under the Sabah Ordinance, but for its repeal, as bears the same proportion to that statutory income as the number of days of the interval period bears to the number of days in the basis period in relation to that source under that Ordinance for the year of assessment commencing on 1 July 1968, under that Ordinance, 

shall be deemed to be statutory income of his for the year of assessment 1966[#8260]67 from a source of his.

(2) The amount of the statutory income of a person for the year of assessment 1966[#8260]67 from a source of his as ascertained under subparagraph (1) shall be charged to old tax for that year at the effective rate of tax; and Parts XI to XIII of the Sabah Ordinance shall apply to that amount as if that amount had been additional chargeable income of that person for that year.

(3) Where subparagraph (1) applies to a person and in his case there is no effective rate of tax, then, if none of the sources of income of that person was possessed by him for the whole of the basis period, in relation to each source, under the Sabah Ordinance for the year of assessment 1966[#8260]67, and the amount of his statutory income ascertained under subparagraph (1) exceeds the aggregate of the statutory income from each source of that person for that year--

(a) the effective rate of tax shall be ascertained by substituting that amount for that aggregate; and

(b) the total of that amount and the assessable income for the year of assessment 1966[#8260]67 (or, where there is no assessable income for that year, the total of that amount and the aggregate of the statutory income, if any, from each source of that person for that year reduced by the amount of any loss falling to be deducted under section 32 of the Sabah Ordinance in ascertaining the assessable income of that person for that year) shall be charged to old tax for that year at the effective rate of tax so ascertained; and Parts XI to XIII of the Sabah Ordinance shall apply as if that total (or, as the case may be, that total as so reduced) had been the chargeable income of that person for that year and that effective rate of tax had been the rate set forth in Part I of the Third Schedule to that Ordinance in relation to that person for that year. 

(4) Where subparagraph (1) applies to a person and in his case the amount of any loss or the aggregate of the amount of any losses falling to be deducted under section 32 of the Sabah Ordinance in ascertaining the assessable income of that person for the year of assessment 1966[#8260]67 exceeds the aggregate of the statutory income from each source of that person for that year, the excess shall be deducted from the amount of his statutory income ascertained under subparagraph (1); and in the application of paragraph 18 in relation to that person, regard shall be had only to the balance (if any) of any such loss or losses after the application of this subparagraph.

(5) Where by the operation of paragraph 62 any income of a person from a source falls to be treated as income for the year of assessment 1967[#8260]68, that income--

(a) shall be added to his statutory income from that source for the year of assessment 1967[#8260]68; or

(b) where he has no statutory income from that source for that year-- 

(i) if there is an amount of loss in relation to that source (being a loss which would fall to be deducted under section 32 of the Sabah Ordinance, but for its repeal, in ascertaining the assessable income for that year) the amount of that loss shall be reduced by the amount of that income or where that income exceeds that loss the excess shall be deemed to be statutory income from that source for that year;

(ii) if there is no such loss, the amount of that income shall be taken to be his statutory income from that source for that year,

and this paragraph shall apply to that loss as so reduced or, as the case may be, that statutory income.

(6) For the purposes of this paragraph, except where the context in subparagraphs (3) and (4) otherwise requires--

"basis period", in a case where a person other than a company possesses a source for a part or parts, but not for the whole, of a basis period, is to be construed as meaning that part or those parts of the basis period in question;

"effective rate of tax" in relation to a person, means the rate determined by dividing the amount of old tax chargeable on the chargeable income (excluding any additional chargeable income created under subparagraph (2)) of that person for the year of assessment 1966[#8260]67 by the amount of the assessable income of that person for that year;

"interval period", in relation to the year of assessment 1967[#8260]68 or the year of assessment commencing on 1 July 1968, under the Sabah Ordinance means that part of the basis period for that year which elapsed before 1 January 1967.

Ascertainment of old tax payable by company

67. For the purposes of this Part, in the case of a company the accounts of a business of whom were made up for a period of twelve months ending on a day in the calendar year 1966 other than 31 December (being a company with respect to which the Commissioner has not made a direction under subsection 28(2) of the Sabah Ordinance to treat that period as the basis period under that Ordinance for the year of assessment 1967) there shall be ascertained--

(a) the total amount of all old tax payable by that company, whether assessed under one or more assessments for that year of assessment, that total being computed after giving any relief due to that company for that year on or before the relevant date by virtue of section 41 or 43 of the Sabah Ordinance; and

(b) the amount of that total paid by the company on or before the relevant date and not refunded or repaid to it on or before the relevant date. 

Ascertainment of Sabah credit

68. (1) There shall be ascertained with respect to the old tax paid by a company as ascertained under paragraph 67 the Sabah credit in accordance with the following subparagraphs.

(2) In the case of a company to which paragraph 67 applies, the Sabah credit shall be so much of the old tax paid for the year of assessment 1967 as bears the same proportion to that old tax as the total of the statutory income from each source for the overlapping period bears to the assessable income of the company for that year.

(3) In this paragraph--

"overlapping period" means that part of the basis period under the Sabah Ordinance in relation to a source for a year of assessment under that Ordinance which overlaps the basis period in relation to that source for a year of assessment under this Act;

"total of the statutory income from each source for the overlapping period", in relation to a company, means so much of the aggregate of the statutory income from each source of that company for a year of assessment under the Sabah Ordinance, reduced by any amount falling to be deducted under section 32 of that Ordinance in ascertaining the assessable income of the company under that Ordinance for that year, as bears the same proportion to that aggregate as so reduced as the aggregate of the number of days of the overlapping period in relation to each source bears to the aggregate of the number of days in the basis period in relation to each source under that Ordinance for that year.

Events in which Sabah credit is payable to company

69. (1) Subject to paragraph 76, the Sabah credit of a company shall be payable upon the date of the occurrence of such one of the following events as first occurs in relation to the company, that is to say, on the dissolution of the company after 31 December 1967, or on its satisfying the Director General that it has not gone into dissolution before 1 January 1988, or, in the case of a company which ceases to have income (other than dividends) derived from Malaysia in the basis year for a year of assessment, on its satisfying the Director General that it was not resident for that basis year or for a year subsequent thereto and that it is not likely to have any income (other than dividends) derived from Malaysia in any of the two years following that basis year or, as the case may be, that subsequent year:

Provided that this paragraph shall not apply on the dissolution of a particular company after 31 December 1967, if at or about the time of the dissolution any of the assets of that particular company available for distribution to its members are transferred--

(a) to a company which together with that particular company is a member of the same group;

(b) to a company more than fifty per cent of the shares of which are held by members of that particular company; or

(c) to the members of that particular company or to a person or persons having control of that particular company within the meaning of section 139. 

(2) Where the proviso to subparagraph (1) applies on the transfer of a company's assets, the Sabah credit to which, but for that proviso, the company would have been entitled shall be paid in accordance with the following subparagraphs.

(3) Subject to subparagraph (4)--

(a) where all the assets of a company are transferred to the members of the company or to persons having control of the company within the meaning of section 139, the Sabah credit of the company shall be apportioned among them in the proportion in which they held as beneficial owners the ordinary share capital of the company at the date of its dissolution ("ordinary share capital" here having the same meaning as in the definition of "director" in subsection 2(1)), or, in the case of persons having such control, in the proportion in which they held their controlling interest, and shall be paid to each of them on the appropriate date;

(b) where all the assets of a company are transferred to a single person having such control, the Sabah credit of the company shall be regarded as his and shall be paid to him on the appropriate date. 

(4) Where a member or person to whom a Sabah credit (or any portion thereof) is to be paid under subparagraph (3) is a company, the amount to be paid shall be treated as a Sabah credit of the company and subparagraph (1) shall apply with respect to the payment of that credit.

(5) Where subparagraph (3) does not apply, the Sabah credit of a company shall be treated as a Sabah credit of the transferee and subparagraph (1) shall apply with respect to the payment of that credit.

(6) In a case where there are two or more transfers (other than transfers to members of the company or to a person or persons having control of the company within the meaning of section 139) to which the proviso to subparagraph (1) applies, subparagraph (5) shall be applied by making such apportionment of the Sabah credit among the transferees as the Director General considers to be reasonably necessary in order to give proper effect to subparagraph (5) in the circumstances.

Credit payable to company before dissolution in certain cases

70. Where the Director General is satisfied that the dissolution of a company is imminent and that the company will be entitled on its dissolution to the Sabah credit, he may make the amount of the Sabah credit available to the liquidator of the company; and, if the company is not dissolved within three months (or such longer period as the Director General may consider reasonable in the circumstances) after the making available of that amount to the liquidator, it shall be the duty of the liquidator to return that amount to the Director General upon being called upon to do so.

Events in which company's credit apportioned to individual is payable

71. Subject to paragraph 76, so much of the Sabah credit of a company as is apportioned under subparagraph 69(3) to an individual who was a member of that company at the time of its dissolution shall be payable on the date of the occurrence of such one of the following events as first occurs in relation to him:

(a) on his satisfying the Director General that he attained the age of fifty-five years before 1 January 1968;

(b) on his death at any time after 31 December 1967;

(c) on his attaining at any time after 31 December 1967, the age of fifty-five years;

(d) on his departure from Malaysia, if he is not a citizen and if he satisfies the Director General as to the matters set out in paragraph 72;

(e) if he was not resident for the basis year (being the year in which the company was dissolved or a year subsequent thereto) for a year of assessment and is not a citizen, on his satisfying the Director General that in that basis year or prior thereto he ceased to have any income (other than dividends) derived from Malaysia and that he is not likely to have any income (other than dividends) derived from Malaysia in any of the two years following that basis year;

(f) on his satisfying the Director General that he was not entitled before 1 January 1988, to payment of the amount of the Sabah credit apportioned to him;

(g) on his satisfying the Director General that he was prevented by serious disability from being gainfully employed for a period of not less than twelve months and during that period he did not have any source of income; or

(h) on his satisfying the Director General that he is in receipt of a pension derived from Malaysia and that he does not have and is not likely to have any other source of income: 

Provided that subsubparagraph (d) shall not apply to the individual if at the time of his departure from Malaysia he has any source (being a source the income from which is wholly or partly derived from Malaysia) other than--

(i) a source from which dividends arise;

(ii) a source from which interest arises;

(iii) a source consisting of a pension derived from Malaysia; or

(iv) a source consisting of an employment which will cease upon the expiration of a period of leave which commences on his departure or at the end of a period of travel which commences on his departure.

Matters as to which Director General is to be satisfied for the purposes of paragraph 71

72. For the purposes of subsubparagraph 71(d), an individual is required to satisfy the Director General that the individual--

(a) has not at the date of his departure from Malaysia obtained a Malaysian entry or re-entry permit or other like document;

(b) has not at the date under any written law any right of entry or re-entry into Malaysia; and

(c) is not likely to be resident in any of the basis years for the five years of assessment commencing with the year of assessment which follows the year of assessment in the basis year for which the departure took place. 

Trustees and executors

73. Subject to paragraph 76, so much of the Sabah credit of a company as is apportioned under subparagraph 69(3) to the trustees of a trust or the executors of a deceased person (the trustees or the executors, as the case may be, being members of the company at the time of its dissolution) shall be payable--

(a) on the termination of the trust or on the ascertainment of the residue of the estate of the deceased person, as the case may be;

(b) on their satisfying the Director General that the trust has not been terminated (or, as the case may be, the residue ascertained) before 1 January 1988; or

(c) where the trust body ceases, or the executors cease, to have income (other than dividends) derived from Malaysia in the basis year (being the year in which the company was dissolved or a year subsequent thereto) for a year of assessment, on their satisfying the Director General that the trust body was not, or the executors were not, resident for that basis year, and that the trust body is not, or the executors are not, likely to have any income (other than dividends) derived from Malaysia in any of the two years following that basis year. 

Provisions applicable when paragraphs 71 to 73 do not apply

74. Subject to paragraph 76, so much of the Sabah credit of a company as is apportioned under subparagraph 69(3) to a person (being a member of the company at the time of its dissolution) to whom none of paragraphs 71 to 73 applies shall be payable--

(a) on application to the Director General in the year of assessment 1988; or

(b) on application to the Director General before that year if the Director General is satisfied that there are circumstances similar to those in which a company would be entitled to payment of a Sabah credit before that year. 

Married women

75. Where the Sabah credit of a company is apportioned under subparagraph 69(3) to a woman who was a member of the company at the time of its dissolution, so much of that credit as is so apportioned to her shall be paid if she is married, whether at that time or subsequently thereto, and before the date on which she would otherwise have been entitled to payment thereof to her husband on the appropriate date in relation to him as if that credit had been apportioned to him:

Provided that--

(a) where the husband becomes entitled to payment of the credit so apportioned by virtue of subsubparagraph 71(d), that paragraph shall be so modified as to require the husband to satisfy the Director General as to the matters set out in paragraph 72 not only in respect of himself but also in respect of his wife, or, if paragraph 72 is not applicable to her, as to the matters set out in subsubparagraph 71(e) in respect of his wife;

(b) where the husband becomes so entitled by virtue of subsubparagraph 71(e), that paragraph shall be so modified as to require the husband to satisfy the Director General as to the matters set out therein not only in respect of himself but also in respect of his wife, or, where subsubparagraph 71(e) is not applicable to her as to the matters set out in paragraph 72 in respect of his wife. 

Power to set off credit against tax payable

76. Notwithstanding the foregoing paragraphs of this Part, where in any calendar year any company becomes entitled to payment of a Sabah credit or a person becomes entitled to payment of the Sabah credit of a company apportioned to him, the Director General may withhold payment thereof for the purposes of setting off the amount thereof against any tax or previous tax payable by that company or, as the case may be, by that person.

Construction of references to certain years of assessment

77. Where in any case regard is to be had by virtue of this Schedule to the year of assessment 1966 or 1967 under the Sabah Ordinance or to a year of assessment under the Sabah Ordinance coinciding with the calendar year 1966 or 1967, and in that case the appropriate year of assessment under that Ordinance is the year of assessment commencing on 1 July 1965, or the year of assessment 1966[#8260]67, regard shall be had to the year of assessment commencing on 1 July 1965, or the year of assessment 1966[#8260]67, as the case may be, and the basis period therefor in relation to a source, and not to the year of assessment 1966 or 1967 or the year of assessment coinciding with the calendar year 1966 or 1967, or the basis period therefor.

PART III

SPECIAL PROVISIONS FOR SARAWAK

Application and power of remission

78. (1) This Part shall apply only to Sarawak.

(2) Any tax paid or payable by virtue of this Part may be remitted by the Director General on grounds of undue hardship; and section 129 shall apply in relation to any tax so remitted as it applies in relation to tax remitted under that section.

Interpretation

79. In this part--

"old tax" means the profits tax (excluding any tax deemed to be profits tax under the Sarawak Ordinance) imposed under the Sarawak Ordinance;

"relevant date", in relation to any person means the date on which the appropriate event mentioned in paragraphs 83 to 88 which gives him entitlement to payment of the Sarawak credit occurs;

"Sarawak credit" means the amount ascertained under paragraph 82;

"year of assessment 1967" means the year of assessment 1967 under the Sarawak Ordinance.

No chargeable income in certain cases

80. Subject to paragraph 93, in the application of subparagraph 3(1) of this Schedule a person chargeable to salaries tax under the Sarawak Ordinance shall be deemed not to have any chargeable income under that Ordinance for the year of assessment 1967.

Ascertainment of old tax payable by a person

81. In the case of a person the accounts of a business of whom were made up to a date in the calendar year 1966 other than 31 December that business being a business with respect to which the Commissioner has not made a direction under subsection 25(1) of the Sarawak Ordinance to treat that period as the period by reference to which the assessable profits or loss from the business was to be computed there shall be ascertained for the purposes of this Part-

(a) the total amount of all profits tax payable by that person whether assessed under one or more assessments for the year of assessment 1967, that total being computed after giving any relief due to him for that year on or before the relevant date by virtue or section 59 or 61 of the Sarawak Ordinance; and

(b) the amount of that total paid by him on or before the relevant date and not refunded or repaid to him on or before the relevant date. 

Ascertainment of Sarawak credit

82. (1) There shall be ascertained with respect to the total amount of the old tax paid by a person as ascertained under paragraph 81 the Sarawak credit in accordance with the following subparagraphs.

(2) In any case to which paragraph 81 applies, the Sarawak credit of a person shall be so much of the profits tax paid by him for the year of assessment 1967 as bears the same proportion to that profits tax as the assessable profits for the overlapping period bears to the aggregate of the assessable profits from each source of his for that year reduced by the amount of any loss incurred by him which would be set off against those assessable profits under section 28 of the Sarawak Ordinance for the year of assessment 1967.

(3) In the application of subparagraph (2) to the trustees of a trust, the reference therein to profits tax paid for the year of assessment 1967 shall be taken to be a reference to so much of that profits tax paid by the trustees for that year as bears the same proportion to that profits tax as the aggregate of the assessable profits from each source of the trustees for that year, reduced first by the amount of any loss incurred by the trustees which would be set-off against those assessable profits under section 28 of the Sarawak Ordinance for the year of assessment 1967 and thereafter by so much thereof as falls to be treated as assessable profits for that year of a beneficiary or beneficiaries of the trust, bears to that aggregate reduced by the amount of any such loss for that year.

(4) In this paragraph--

"assessable profits for the overlapping period", in relation to a person, means so much of the aggregate of the assessable profits from each source of that person under the Sarawak Ordinance for a year of assessment under that Ordinance, reduced by the amount of any loss incurred by him which would be set-off against those assessable profits under section 28 of the Sarawak Ordinance, as bears the same proportion to that aggregate as so reduced as the aggregate number of days of the overlapping period in relation to each source bears to the aggregate of the number of days of the basis period in relation to each source under that Ordinance for that year of assessment;

"overlapping period" means that part of the basis period under the Sarawak Ordinance in relation to a source for the year of assessment 1967 which overlaps the basis period in relation to that source for a year of assessment under this Act.

Events in which Sarawak credit is payable to an individual

83. Subject to paragraph 92, the Sarawak credit of an individual shall be payable upon the date of the occurrence of such one of the following events as first occurs in relation to him:

(a) on his satisfying the Director General that he had attained the age of fifty-five years prior to 1 January 1968;

(b) on his death at any time after 31 December 1967;

(c) on his attaining the age of fifty-five years after 31 December 1967;

(d) on his departure from Malaysia, if he is not a citizen and if he satisfies the Director General as to the matters set out in paragraph 84;

(e) if he was not resident in the basis year (being the year in which he ceases to have income,other than dividends, derived from Malaysia or a year subsequent thereto) for a year of assessment and is not a citizen, on his satisfying the Director General that he is not likely to have any income (other than dividends) derived from Malaysia in any of the two years following that basis year;

(f) on his satisfying the Director General that he was not entitled to payment of the Sarawak credit prior to 1 January 1988;

(g) on his satisfying the Director General that he was prevented by serious disability from being gainfully employed for a period of not less than twelve months and during that period he did not have any source of income; or

(h) on his satisfying the Director General that he is in receipt of a pension derived from Malaysia and that he does not have and is not likely to have any other source of income: 

Provided that subsubparagraph (d) shall not apply to the individual if at the time of his departure from Malaysia he has any source (being a source the income from which is wholly or partly derived from Malaysia) other than--

(i) a source from which dividends arise;

(ii) a source from which interest arises;

(iii) a source consisting of a pension derived from Malaysia; or

(iv) a source consisting of an employment which will cease upon the expiration of a period of leave which commences on his departure or at the end of a period of travel which commences on his departure. 

Matters as to which the Director General is to be satisfied for the purposes of paragraph 83

84. For the purposes of subsubparagraph 83(d), an individual is required to satisfy the Director General that the individual--

(a) has not at the date of his departure from Malaysia obtained a Malaysian entry or re-entry permit or other like document;

(b) has not at that date under any written law any right of entry or re-entry into Malaysia; and

(c) is not likely to be resident in any of the basis years for the five years of assessment commencing with the year of assessment which follows the year of assessment in the basis year for which the departure took place. 

Events in which Sarawak credit is payable to a company

85. (1) Subject to paragraph 92, the Sarawak credit of a company shall be payable upon the date of the occurrence of such one of the following events as first occurs in relation to the company, that is to say, on the dissolution of the company after 31 December 1967, or on its satisfying the Director General that it has not gone into dissolution before 1 January 1988, or, in the case of a company which ceases to have income (other than dividends) derived from Malaysia in the basis year for a year of assessment, on its satisfying the Director General that it was not resident for that basis year or for a year subsequent thereto and that it is not likely to have any income (other than dividends) derived from Malaysia in any of the two years following that basis year or, as the case may be, that subsequent year:

Provided that this paragraph shall not apply on the dissolution of a particular company after 31 December 1967, if at or about the time of the dissolution any of the assets of that particular company available for distribution to its members are transferred--

(a) to a company which together with that particular company is in the same group;

(b) to a company more than fifty per cent of the shares of which are held by members of that particular company; or

(c) to the members of that particular company or to a person or persons having control of that particular company within the meaning of section 139. 

(2) Where the proviso to subparagraph (1) applies on the transfer of a company's assets, the Sarawak credit to which, but for that proviso, the company would have been entitled shall be paid in accordance with the following subparagraphs.

(3) Subject to subparagraph (4)--

(a) where all the assets of a company are transferred to the members of the company or to persons having control of the company within the meaning of section 139, the Sarawak credit of the company shall be apportioned among them in the proportion in which they held as beneficial owners the ordinary share capital of the company at the date of its dissolution ("ordinary share capital" here having the same meaning as in the definition of "director" in subsection 2(1)), or, in the case of persons having such control, in the proportion in which they held their controlling interest, and shall be paid to each of them on the relevant date as if the amount apportioned to each were a Sarawak credit of his: and

(b) where all the assets of a company are transferred to a single person having such control, the Sarawak credit of the company shall be regarded as his and shall be paid to him on the relevant date. 

(4) Where a member or person to whom a Sarawak credit (or any portion thereof) is to be paid under subparagraph (3) is a company, the amount to be paid shall be treated as a Sarawak credit of the company and subparagraph (1) shall apply with respect to the payment of that credit.

(5) Where subparagraph (3) does not apply, the Sarawak credit of a company shall be treated as a Sarawak credit of the transferee and subparagraph (1) shall apply with respect to the payment of that credit.

(6) In a case where there are two or more transfers (other than transfers to members of the company or to a person or persons having control of the company within the meaning of section 139) to which the proviso to subparagraph (1) applies, subparagraph (5) shall be applied by making such apportionment of the Sarawak credit among the transferees as the Director General considers to be reasonably necessary in order to give proper effect to subparagraph (5) in the circumstances.

Sarawak credit payable to company before dissolution in certain cases

86. Where the Director General is satisfied that the dissolution of a company is imminent and that the company will be entitled on its dissolution to the Sarawak credit, he may make the amount of the Sarawak credit available to the liquidator of the company; and, if the company is not dissolved within three months (or such longer period as the Director General may consider reasonable in the circumstances) after the making available of that amount to the liquidator, it shall be the duty of the liquidator to return that amount to the Director General upon being called upon to do so.

Trustees and executors

87. Subject to paragraph 92, the Sarawak credit of the trustees of a trust or the executors of the estate of a deceased person shall be payable--

(a) on the termination of the trust or on the ascertainment of the residue of the estate of the deceased person, as the case may be;

(b) on their satisfying the Director General that the trust has not been terminated (or, as the case may be, the residue ascertained) before 1 January 1988; or

(c) where the trust body ceases, or the executors cease, to have income (other than dividends) derived from Malaysia in the basis year for a year of assessment, on their satisfying the Director General that the trust body was not, or the executors were not, resident for that basis year or a year subsequent thereto, and that the trust body is not, or the executors are not, likely to have any income (other than dividends) derived from Malaysia in any of the two years following that basis year or, as the case may be, that subsequent year. 

Provisions applicable where paragraphs 83 to 87 do not apply

88. Subject to paragraph 92, the Sarawak credit of a person to whom none of paragraphs 83 to 87 applies shall be payable--

(a) on application to the Director General in the year of assessment 1988; or

(b) on application to the Director General before that year, if the Director General is satisfied that there are circumstances similar to those in which a company would be entitled to payment of the Sarawak credit before that year. 

Married persons: general

89. Where section 47A of the Sarawak Ordinance applies to a married woman and her husband for the year of assessment 1967, then, in the application of the foregoing paragraphs of this Part to the husband--

(a) a source of hers shall be taken to be a source of his;

(b) any reference to assessable profits or loss in relation to him shall be taken to include a reference to any assessable profits or loss of hers from a source so taken to be his source;

(c) any old tax paid by her for the year of assessment 1967 shall be treated as paid by him. 

Married persons: disposal of wife's credit

90. Where--

(a) a marriage took place before 31 December 1967, but section 47A of the Sarawak Ordinance did not apply to the wife of that marriage and her husband for any year of assessment under the Sarawak Ordinance; or

(b) a marriage takes place after 31 December 1967, the wife of that marriage shall not be entitled to any Sarawak credit to which she would otherwise have been entitled, and any such credit shall be payable to the husband of that marriage as if it were a credit ascertained as regards him under paragraphs 81 and 82 or under paragraph 85.

Married persons: modification of paragraphs 89 and 90

91. In any case where paragraph 89 or 90 applies to the husband and wife of a marriage--

(a) subsubparagraph 83(d) shall be so modified as to require the husband to satisfy the Director General as to the matters set out in paragraph 84 not only in respect of himself but also in respect of that wife, or, if paragraph 84 is not applicable to her, as to the matters set out in subsubparagraph 83(e) in respect of that wife;

(b) subsubparagraph 83(e) shall be so modified as to require the husband to satisfy the Director General as to the matters set out therein not only in respect of himself but also in respect of that wife, or, where subsubparagraph 83(e) is not applicable to her, as to the matters set out in paragraph 84 in respect of that wife. 

Power to set off Sarawak credit against tax payable

92. Notwithstanding the foregoing paragraphs of this Part, where any person becomes entitled to a Sarawak credit in any calendar year, the Director General may withhold payment thereof for the purposes of setting off the amount thereof against any tax or previous tax payable by that person.

Certain income to be disregarded

93.(1) Where in the calendar year 1967 a person ceased to possess a source the income from which is chargeable to profits tax under the Sarawak Ordinance, then, if by reference to income from that source up to the date of cessation an assessment has been made under the Sarawak Ordinance for the year of assessment 1968 under that Ordinance, the income from that source included in that assessment shall be disregarded for the purposes of this Act unless that assessment falls to be amended for any reason on or after 1 January 1968.

(2) Where in the calendar year 1967 a person ceased to possess a source the income from which is chargeable to salaries tax under the Sarawak Ordinance for that year of assessment, then, if--

(a) that person does not have income from any other source for the basis period in relation to any such other source for the year of assessment 1968; and

(b) subparagraph (1) does not apply to him, paragraph 80 shall not apply to that person and to the income from that source; and where this subparagraph applies to a person his income from that source which is chargeable to salaries tax under that Ordinance for the year of assessment 1967 shall be disregarded for the purposes of this Act.

(3) Where paragraph 80 applies to a person and by the operation of paragraph 62 any income of a person from a source chargeable to salaries tax under the Sarawak Ordinance falls to be treated as gross income for the pre-basis period for a pre-year of assessment, paragraph 62 shall be so modified in its application to that person and that income to treat that income as being income for the year of assessment under the Sarawak Ordinance which coincides with that pre-basis period.

Allowance for industrial building under Sarawak Ordinance to continue

94. In the case of a building which is an industrial building under the Sarawak Ordinance, the rate at which annual allowances were given in respect of that industrial building under the Sarawak Ordinance shall continue to apply to that building, and the allowances to which a person is entitled by virtue of paragraph 6 of the Fifth Schedule to the Sarawak Ordinance shall be given for the remainder of the years for which that allowance would have been given but for the repeal of that Ordinance instead of any allowance to which that person might otherwise be entitled under this Act.

PART IV

SPECIAL PROVISIONS FOR PENINSULAR MALAYSIA

Application and power of remission

95. (1) This Part shall apply only to Peninsular Malaysia.

(2) Any tax paid or payable by virtue of this Part may be remitted by the Director General on grounds of undue hardship; and section 129 shall apply in relation to any tax so remitted as it applies in relation to tax remitted under that section.

Interpretation

96. In this Part--

"old tax" means income tax (excluding any tax deemed to be income tax under the West Malaysian Ordinance) imposed under the West Malaysian Ordinance;

"relevant date", in relation to any person, means the date on which the appropriate event mentioned in paragraphs 107 to 113 which gives him entitlement to payment of the West Malaysian credit occurs;

"statutory income", in relation to a source and a year of assessment under the West Malaysian Ordinance, means the amount of the income from that source for the basis period under the West Malaysian Ordinance in relation to that source for a year of assessment under that Ordinance increased by any balancing charge falling to be made in relation to that source for that year and reduced by any allowance falling to be made for that year under sections 16 to 22A of that Ordinance in relation to that source;

"West Malaysian credit" means the amount ascertained under paragraph 102;

"year of assessment 1967" means the year of assessment 1967 under the West Malaysian Ordinance.

No statutory income in certain cases

97. Where a person in the calendar year 1967 commenced to carry on a business or commenced to exercise an employment or commenced to derive income from a source other than a business or an employment (being a source of a kind to which subsection 31(6) of the West Malaysian Ordinance would, but for this paragraph, have applied for the year of assessment 1967), he shall be deemed not to have any statutory income from that source for the year of assessment 1967.

Provisions for certain cases where subsection 31(5) or (7) of West Malaysian Ordinance would have been applicable

98. (1) Subject to paragraph 99, where a person in the calendar year 1965 or 1966 commenced to carry on a business or commenced to exercise an employment or commenced to derive income from a source of the kind referred to in paragraph 97, the following subparagraphs shall apply if subsection 31(5) or (7) of the West Malaysian Ordinance would, but for its repeal, have applied in relation to any such source for the year of assessment 1968 under that Ordinance and the year of assessment 1967.

(2) With respect to the year of assessment 1967, the calendar year 1967 shall be taken to be the basis period in relation to any such source for that year of assessment, if the income for that basis period is greater than what would, but for this paragraph, have been the basis period under the West Malaysian Ordinance for that year of assessment, in relation to that source.

(3) With respect to the year of assessment 1968, the calendar year 1968 shall be taken to be the basis period for that year of assessment, in relation to any such source.

(4) With respect to the year of assessment 1969, the person in question shall be deemed not to have statutory income from any source of the kind in question.

Paragraph 98 not to apply in certain cases

99. Paragraph 98 shall not apply in relation to a person and a source if--

(a) there in an acquisition (as defined in paragraph 105) of that source; or

(b) that source being a source the income from which falls within a particular paragraph of section 4, there is an acquisition by him of a new source (the income from which falls under that paragraph of section 4) prior to 1 January 1970, and the Director General does not, having regard to all the circumstances of the case, direct that this paragraph shall not apply, 

and all such assessments or additional assessments or repayments of tax shall be made as may be necessary in consequence of this paragraph.

Tax chargeable for year of assessment 1969

100.(1) Notwithstanding subparagraph 98(4), for the purposes of this paragraph the statutory income of a person from a source for the year of assessment 1968 (being a source in relation to which the calendar year 1968 is to be taken to be the basis period for that year of assessment) shall be taken into account in ascertaining the chargeable income of thatperson for the year of assessment 1969 as if that statutory income were statutory income of his from that source for the year of assessment 1969 and there shall be ascertained the tax chargeable on the chargeable income so ascertained for the year of assessment 1969.

(2) In the case of a person to whom subparagraph (1) applies, the tax chargeable for the year of assessment 1969 on the chargeable income (ascertained without having regard to subparagraph (1)) for that year shall be taken to be so much of the tax chargeable as ascertained under subparagraph (1) as bears to the tax so ascertained the same proportion as the total income of that person for that year ascertained without having regard to subparagraph (1) bears to the total income of that person for that year ascertained by having regard to that subparagraph.

Ascertainment of old tax payable by a person

101.(1) For the purposes of this Part, there shall be ascertained--

(a) the total amount of all old tax payable by a person, whether assessed under one or more assessments, for the year of assessment 1967, that total being computed after giving any relief due to him for that year, on or before the relevant date, by virtue of section 44 or 46 of the West Malaysian Ordinance; and

(b) the amount of that total paid by him on or before the relevant date and not refunded or repaid to him on or before the relevant date. 

(2) In ascertaining under subparagraph (1) the total amount of all old tax payable by a person for the year of assessment 1967 and the amount of that total paid by him, any old tax payable by reason of subparagraph 98(2) for that year and the amount of old tax paid in respect thereof shall be disregarded.

Ascertainment of West Malaysian credit

102. (1) Subject to paragraphs 103 and 104 with respect to the amount of the old tax paid by a person as ascertained under paragraph 101, there shall be ascertained an amount (in this Part referred to as the West Malaysian credit) which bears the same proportion to the amount so paid as the total amount of his statutory income bears to the assessable income of that person for the year of assessment 1967.

(2) In the application of subparagraph (1) to the trustees of a trust, the reference therein to old tax paid for the year of assessment 1967 shall be taken to be a reference to so much of that old tax as the aggregate of the statutory income of the trust body from all sources for that year reduced first by any amount falling to be deducted under subsection 33(2) of the West Malaysian Ordinance in ascertaining the assessable income of the trust body for that year and thereafter by so much of that aggregate (as so reduced) as falls to be treated as statutory income for that year of a beneficiary or beneficiaries of the trust, bears to the assessable income of the trust body for that year.

(3) In this paragraph "total amount of his statutory income" means the aggregate of his statutory income for the year of assessment 1967 from each source of income of a kind to which subsection 31(5) or (7) of the West Malaysian Ordinance would have applied (but for its repeal) at some time subsequent to that year, less any amount falling to be deducted under subsection 33(2) of that Ordinance in ascertaining the assessable income for that year.

Exclusion and inclusion of certain income for purposes of paragraph 102

103. For the purposes of paragraph 102, in ascertaining in relation to a person the total amount of his statutory income as therein mentioned--

(a) there shall be excluded-- 

(i) statutory income of that person from a source to which paragraph 97 or 98 applies;

(ii) income of his received in West Malaysia from outside West Malaysia in respect of which there is any statutory income of his for the year of assessment 1967, if he is not ordinarily resident for the basis year for the year of assessment 1968; and

(b) there shall be included, if paragraph 104 is applicable to him, the amount of his statutory income from any source therein referred to for the year of assessment 1967. 

Provisions consequent upon acquisition of source

104. Where the circumstances are such that a person has an amount of statutory income from a source (in this paragraph referred to as the old source) of a kind to which subsection 31(5) or (7) of the West Malaysian Ordinance has applied (or, but for this paragraph, would have applied) for both the year of assessment 1967 and the preceding year of assessment under the West Malaysian Ordinance, then, if--

(a) there is an acquisition of the old source on or after 15 June 1967; or

(b) the old source being a source the income from which falls within any paragraph of subsection 10(1) of the West Malaysian Ordinance, there is an acquisition by him of a new source (the income from which falls or would have fallen under that paragraph of the West Malaysian Ordinance but for its repeal) prior to 1 January 1969, and the Director General does not, having regard to all the circumstances of the case, direct that this paragraph shall not apply, subsection 31(1) or (2), as the case may be, of the West Malaysian Ordinance shall apply to him in relation to the old source for both those years, and all such assessments or additional assessments or repayments of old tax under that Ordinance (or, if subsection 31(5) or (7) has been applied to him in relation to the old source, all such assessments or additional assessments or repayments of old tax under that Ordinance) shall be made as may be necessary in consequence of this subparagraph.

Meaning of "acquisition"

105. In subsubparagraph 99(a) and in subsubparagraph 104(a) "acquisition" means acquisition of a source--

(a) in the case of a particular company-- 

(i) by a company in the same group;

(ii) by a company the shareholders of which hold or have held more than fifty per cent of the shares of that particular company; or

(iii) by a person having control of that particular company;

(b) in the case of an individual-- 

(i) by a relative of his ("relative" here and in subsubparagraph (c)(iii) having the same meaning as in section 65);

(ii) by a partnership of which he has, or he and associates of his have, control ("associates" and "control" here having the same meaning as in section 139 and paragraph 38 of Schedule 3 respectively);

(iii) by a company of which he has control; or

(iv) by a partner of his in any other business, otherwise than for valuable and adequate consideration;

(c) in the case of a source of a partnership-- 

(i) by a partner of the partnership;

(ii) by another partnership of which some or all of the partners of the first partnership are partners; or

(iii) by a partnership the partners of which are relatives of the partners of the first-mentioned partnership, otherwise than for valuable and adequate consideration; and

(d) in any other case, where the circumstances are similar to those in which, if the person effecting the acquisition was a company, there would be an acquisition. 

Additional provisions where subsubparagraph 104(a) applies

106. Where subsubparagraph 104(a) applies to a person and an old source, then, if that source is the only source of his in 1967 or if all sources of his ceased in 1967, the West Malaysian credit to the payment of which he would otherwise be entitled under this Part shall be payable to the person who acquired that old source at the relevant date in relation to that last-mentioned person and, where an old source was acquired by more than one person or two or more old sources were acquired by different persons, that credit shall be apportioned between the acquirers in such proportion as the Director General having regard to the circumstances considers just and reasonable and shall be payable to each of them on the relevant date as if the amount apportioned to each were a West Malaysian credit ascertained as regards him.

Events in which West Malaysian credit is payable to individual

107. Subject to paragraph 117, the West Malaysian credit of an individual shall be payable upon the date of the occurrence of such one of the following events as first occurs in relation to him:

(a) on his satisfying the Director General that he had attained the age of fifty-five years prior to 1 January 1968;

(b) on his death at any time after 31 December 1967;

(c) on his attaining the age of fifty-five years after 31 December 1967;

(d) on his departure from Malaysia, if he is not a citizen and if he satisfies the Director General as to the matters set out in paragraph 108;

(e) if he was not resident in the basis year (being a year in which he ceases to have income, other than dividends, derived from Malaysia or a year subsequent thereto) for a year of assessment and is not a citizen, on his satisfying the Director General that he is not likely to have any income (other than dividends) derived from Malaysia in any of the two years following that basis year;

(f) on his satisfying the Director General that he was not entitled to payment of the West Malaysian credit prior to 1 January 1988;

(g) on his satisfying the Director General that he was prevented by serious disability from being gainfully employed for a period of not less than twelve months and during that period he did not have any source of income; or

(h) on his satisfying the Director General that he is in receipt of a pension derived from Malaysia and that he does not have and is not likely to have any other source of income: 

Provided that subparagraph (d) shall not apply to the individual if at the time of his departure from Malaysia he has any source (being a source the income from which is wholly or partly derived from Malaysia) other than--

(i) a source from which dividends arise;

(ii) a source from which interest arises;

(iii) a source consisting of a pension derived from Malaysia; or

(iv) a source consisting of an employment which will cease upon the expiration of a period of leave which commences on his departure or at the end of a period of travel which commences on his departure.

Matters as to which the Director General is to be satisfied for the purposes of subsubparagraph 107(d)

108. For the purposes of subsubparagraph 107(d), an individual is required to satisfy the Director General that the individual--

(a) has not at the date of his departure from Malaysia obtained a Malaysian entry or re-entry permit or other like document;

(b) has not at that date under any written law any right of entry or re-entry into Malaysia; and.

(c) is not likely to be resident for any of the basis years for the five years of assessment commencing with the year of assessment which follows the year of assessment in the basis year for which the departure took place. 

Events in which West Malaysian credit is payable to company

109. (1) Subject to paragraph 117, the West Malaysian credit of a company shall be payable upon the date of the occurrence of such one of the following events as first occurs in relation to the company, that is to say, on the dissolution of the company after 31 December 1967 or on its satisfying the Director General that it has not gone into dissolution before 1 January 1988 or in the case of a company which ceases to have income (other than dividends) derived from Malaysia in the basis year for a year of assessment, on its satisfying the Director General that it was not resident for that basis year or for a year subsequent thereto and that it is not likely to have any income (other than dividends) derived from Malaysia in any of the two years following that basis year or, as the case may be, that subsequent year:

Provided that this paragraph shall not apply on the dissolution of a particular company after 31 December 1967, if at or about the time of the dissolution any of the assets of that particular company available for distribution to its members are transferred--

(a) to a company which together with that particular company is a member of the same group;

(b) to a company more than fifty per cent of the shares of which are held by members of that particular company; or

(c) to the members of that particular company or to a person or persons having control of that particular company within the meaning of section 139. 

(2) Where the proviso to subparagraph (1) applies on the transfer of a company's assets, the West Malaysian credit to which, but for that proviso, the company would have been entitled shall be paid in accordance with the following subparagraphs.

(3) Subject to subparagraph (4)--

(a) where all the assets of a company are transferred to the members of the company or to persons having control of the company within the meaning of section 139, the West Malaysian credit of the company shall be apportioned among them in the proportion in which they held as beneficial owners the ordinary share capital of the company at the date of its dissolution ("ordinary share capital" here having the same meaning as in the definition of "director" in subsection 2(1)) or, in the case of persons having such control, in the proportion in which they held their controlling interest, and shall be paid to each of them on the relevant date as if the amount apportioned to each were a West Malaysian credit of his;

(b) where all the assets of a company are transferred to a single person having such control, the West Malaysian credit of the company shall be regarded as his and shall be paid to him on the relevant date. 

(4) Where a member or person to whom a West Malaysian credit (or any portion thereof) is to be paid under subparagraph (3) is a company, the amount to be paid shall be treated as a West Malaysian credit of the company and subparagraph (1) shall apply with respect to the payment of that credit.

(5) Where subparagraph (3) does not apply, the West Malaysian credit of the company shall be treated as a West Malaysian credit of the transferee and subparagraph (1) shall apply with respect to the payment of that credit.

(6) In a case where there are two or more transfers (other than transfers to members of the company or to a person or persons having control of the company within the meaning of section 139) to which the proviso to subparagraph (1) applies, subparagraph (5) shall be applied by making such apportionment of the West Malaysian credit among the transferees as the Director General considers to be reasonably necessary in order to give proper effect to subparagraph (5) in the circumstances.

West Malaysian credit payable to company before dissolution in certain cases

110. Subject to paragraph 117, where the Director General is satisfied that the dissolution of a company is imminent and that the company will be entitled on its dissolution to the West Malaysian credit, he may make the amount of the West Malaysian credit available to the liquidator of the company; and, if the company is not dissolved within three months (or such longer period as the Director General may consider reasonable in the circumstances) after the making available of that amount to the liquidator, it shall be the duty of the liquidator to return that amount to the Director General upon being called upon to do so.

Trustees and executors

111. Subject to paragraph 117, the West Malaysian credit of the trustee of a trust or the executors of the estate of a deceased person shall be payable--

(a) on the termination of the trust or on the ascertainment of the residue of the estate of the deceased person, as the case may be;

(b) on their satisfying the Director General that the trust has not been terminated (or, as the case may be, the residue ascertained) before 1 January 1988; or

(c) where the trust body ceases, or the executors cease, to have income (other than dividends) derived from Malaysia in the basis year for a year of assessment, on their satisfying the Director General that the trust body was not, or the executors were not, resident for that basis year or a year subsequent thereto and that the trust body is not, or the executors are not, likely to have any income (other than dividends) derived from Malaysia in any of the two years following that basis year or, as the case may be, that subsequent year. 

Hindu joint families

112. Subsubparagraphs 107(a), (b), (c) , (e) and (f) shall apply in relation to a Hindu joint family as if those subparagraphs referred to the family's manager or karta.

Provisions applicable where paragraphs 107 to 112 do not apply

113. Subject to paragraph 117, the West Malaysian credit of a person to whom none of paragraphs 107 to 112 applies shall be payable--

(a) on application to the Director General in the year of assessment 1988; or

(b) on application to the Director General before that year if the Director General is satisfied that there are circumstances similar to those in which a company would be entitled to the payment of the West Malaysian credit before that year. 

Married persons: general

114. Where section 47 of the West Malaysian Ordinance applies to a married woman and her husband for the year of assessment 1967, then, in the application of the foregoing paragraphs of this Part to the husband--

(a) any reference to a source shall be taken to include a reference to a source of hers as if it were a source of his;

(b) any reference to statutory income in relation to him shall be taken to include a reference to any statutory income of hers from a source so included as his source;

(c) any reference to an acquisition by him shall be taken to include an acquisition by her; and

(d) any old tax paid by her for the year of assessment 1967 shall be treated as paid by him. 

Married persons: disposals of wife's credit

115. Where a marriage takes place after 31 December 1967, the wife of that marriage shall not be entitled to any West Malaysian credit to which she would otherwise have been entitled, and any such credit shall be payable to the husband of that marriage as if it were a credit ascertained as regards him under paragraphs 101 to 105 or under paragraph 109.

Married persons: modification of paragraphs 107 and 108

116. In any case where paragraph 107 or 108 applies to the husband and wife of a marriage--

(a) subsubparagraph 107(d) shall be so modified as to require the husband to satisfy the Director General as to the matters set out in paragraph 108 not only in respect of himself but also in respect of that wife, or, if paragraph 108 is not applicable to her, as to the matters set out in subsubparagraph 107(e) in respect of that wife;

(b) subsubparagraph 107(e) shall be so modified as to require the husband to satisfy the Director General as to the matters set out therein not only in respect of himself but also in respect of that wife, or, where subsubparagraph 107(e) is not applicable to her, as to the matters set out in paragraph 108 in respect of that wife. 

Power to set off West Malaysian credit against tax payable

117. Notwithstanding the foregoing paragraphs of this Part, where any person becomes entitled to a West Malaysian credit in any calendar year, the Director General may withhold payment thereof for the purposes of setting off the amount thereof against any tax or previous tax payable by that person.

Certain income to be disregarded

118. Subject to paragraph 104, where any person ceases to possess a source in the calendar year 1967 (being a source to which subsection 31(5) or (7) of the West Malaysian Ordinance is applicable for both the year of assessment 1967 and the preceding year of assessment under that Ordinance), any income of that person from that source shall be disregarded for the purposes of this Act.

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53,,/APPENDIX

APPENDIX

ACT 683

Part II of the Finance Act 2007

SAVING AND TRANSITIONAL PROVISIONS

38. General provisions

(1) The principal Act** shall apply for the purposes of this Part unless otherwise provided.

(2) Where there is any inconsistency between any provision of this Part and any provision of the principal Act, that provision of the principal Act shall be void to the extent of the inconsistency.

39. Balance for credit

(1) For the purposes of this Part, the balance for the credit of a company as at 31 December 2007 (hereinafter referred to in this Part as "108 balance") shall consist of--

(a) the amount of the balance for the credit of that company at the end of the basis period for a year of assessment 2007 ascertained under subsection 108(8) of the principal Act prior to the coming into operation of this Act; 

["subsection 108(8) -- Where in relation to a company, the compared aggregate exceeds the compared total at the end of the basis period for a year of assessment, a sunm equal to the amount of the excess shall be carried forward as a balance for the credit of the company to the following year of assessment."]

(b) the amount of the balance for the credit of that company ascertained under section 23 of the Income Tax (Amendment) Act 2000 [Act A1093] as at 31 December 2007; and 

["section 23 (Excess carried foward) -- In relation to a year of assessment and a company, the amount of the excess carried forward as the balance for the credit of the company to the following year of assessment under subsection 108(6) of the principal Act before the coming into operation of the amendment to section 108 in this Act shall remain in credit as at 31 December 2000 and shall not be carried forward to the year of assessment 2001 and subsequent years of assessment."]

(c) where the basis period of the company for the year of assessment 2007 ends-- 

(i) on a day other than 31 December 2007, any tax paid during the period from the first day of the basis period of that company for the year of assessment 2008 to 31 December 2007; or

(ii) on 31 December 2007, the final instalment paid under section 107c of the principal Act in respect of that basis period.

(2) Except as provided in subparagraph (c)(ii), any tax paid or tax charged on any assessment or composite assessment made after 31 December 2007 shall not be added to the 108 balance or revised 108 balance.

(3) In this section, "tax paid" has the same meaning assigned to it in subsection 108(14) of the principal Act prior to the coming into operation of this Act.

["subsection 108(14) -- In this section--

"due date" has the same meaning as in subsection 103(12)(a);

"tax paid" means any payment of tax made by the company in the basis period for a year of assessment, whether or not paid through instalments under section 107c, less payments (if any) in respect of--

(a)

the tax payable for the year of assessment 2000 on current year basis and prior years of assessment;

(b)

any penalties imposed under subsection 112(3) or 113(2);

(c)

any increase in tax under section 103, 107b or 107c; or

(d)

any excess or any increase on the excess under section 108."]

40. Dividend paid by company

(1) Where--

(a) a dividend is paid by a company to any of its shareholders at any time during the period from 1 January 2008 to 31 December 2013; and

(b) the company has a 108 balance or received 108 balance on the day before the dividend is paid, and, if the dividend is deemed by virtue of section 14 of the principal Act to be derived from Malaysia, the company shall be entitled to deduct tax at the rate applicable to the company at the date the dividened is paid.

(2) The dividend paid under subsection (1) shall consist of dividend paid in cash in respect of ordinary shareholding.

(3) In this Part, "ordinary shareholding" means holding of share other than share which carries only a right to any dividend which is of a fixed amount or at a fixed rate per cent of the nominal value of the shares, or a fixed rate per cent of the profits of the company.

41. Dividend paid on or before 31 December 2007

Where the basis period of a company for the year of assessment 2007 ends on a day other than 31 December 2007 and the company paid dividend to its shareholders during the period from the first day of the subsequent basis period to 31 December 2007, then, if the dividend is deemed by virtue of section 14 of the principal Act to be derived from Malaysia, the company shall be entitled to deduct tax at the rate applicable to the company at the date the dividend is paid.

42. Tax deemed deducted

Where a company pays or distributes without deduction of tax a dividend from which it is entitled to deduct tax under this Part, the dividend shall be deemed to be dividend of such gross amount as determined in accordance with the formula--

1 x B

_____

(1-A)

where

A

is the rate applicable to the company at the time of payment or distribution of dividend;

B

is the amount in fact paid or where section 41 applies and the dividend consists of property other than money, the amount of the market value of that property at the time of distribution of the dividend,

and a sum equal to the difference between that gross amount and the amount in B in the above formula shall be deemed to have been deducted from the dividend as tax.

43. Revision in tax rate

Notwithstanding any other provision of this Part, where a dividend is paid or distributed with or without deduction of tax under this Part, and there is a revision in the rate of tax for companies for any year of assessment (in this section referred to as the "revised rate"), the amount of the dividend received by the shareholder shall be deemed to be a dividend of such gross amount as determined in accordance with the formula--

1 x B

_____

(1-A)

where

A

is the revised rate applicable to the company at the time of payment or distribution of dividend;

B

is the amount in fact paid or where section 41 applies and the dividend consists of property other than money, the amount of the market value of that property at the time of distribution of the dividend,

and a sum equal to the difference between that gross amount and the amount in B in the above formula shall be deemed to have been deducted from the dividend as tax.

44. Certificate to shareholder

Every company shall upon paying or distributing to a shareholder a dividend of a kind to which section 40 or 41 applies (whether tax is deducted therefrom or not) furnish the shareholder with a certificate setting forth in respect of the dividend--

(a) the gross dividend paid to the shareholder;

(b) the amount of tax-- 

(i) which the company is entitled to deduct under section 40 or 41; or

(ii) deemed to have been deducted by the company under section 42; and

(c) the amount in fact paid or where section 41 applies and the devidend consists of property other than money, the amount of the market value of that property at the time of distribution of the dividend. 

45. Statement to Director General

(1) Where--

(a) section 40 applies, the company shall-- 

(i) within 30 days from the date dividend is paid to its shareholders, furnish to the Director General a statement in the prescribed form containing such particulars as may be required for the purpose of ascertaining the 108 balance or revised 108 balance; and

(ii) notwithstanding subparagraph (i), within 7 months following the close of the accounting period which constitutes the basis period of the company for year of assessment 2008, 2009, 2010, 2011, 2012, 2013, or 2014 (if applicable) furnish to the Director General a statement in the prescribed form containing particulars as may be required for the purpose of determining the 108 balance or revised 108 balance, or any excess under section 48 at the end of that basis period;

(b) section 41 applies, the company shall within 30 days from 31 December 2007 furnish to the Director General a statement in the prescribed form containing such particulars as may be required for the purpose of ascertaining the 108 balance or any excess under section 48; or

(c) the company is not entitled to deduct tax on dividend paid during the period from 1 January 2008 to 31 December 2013, the company shall within seven months following the close of the accounting period which constitutes the basis period of the company for year of assessment 2008, 2009, 2010, 2011, 2012, 2013, or 2014 (if applicable) furnish to the Director General a statement in the prescribed form containing particulars of such dividend paid. 

(2) The failure of the company to comply with subsection (1) is an offence under subsection 120(1) of the principal Act.

(3) A statement under this section may be furnished to the Director General in accordance with section 152A of the principal Act.

46. Revised 108 balance

Where during the period from the first day of the basis period for year of assessment 2008 to 31 December 2013--

(a) the tax charged on the chargeable income of a company for the year of assessment 2000 on a current year basis and prior year of assessment is discharged or remitted; or

(b) any amount of tax paid by that company which has been taken into account for the purpose of computing the 108 balance is refunded, the 108 balance of the company, shall on the day the tax is discharged, remitted or refunded, be reduced by such amount of tax discharged, remitted or refunded (in this Part referred to as "revised 108 balance").

47. Reduction of 108 balance

Where a company has paid dividend to any of its shareholders--

(a) on any date during the period from the first day of the basis period for year of assessment 2008 to 31 December 2007, in the case where the basis period of a company for the year of assessment 2007 ends on a day other than 31 December 2007; or

(b) on any date during the period from 1 January 2008 to 31 December 2013, from which tax has been deducted or deemed to have been deducted in accordance with this Part, the 108 balance or revised 108 balance shall be reduced first by the amount of tax so deducted or deemed to have been deducted in respect of paragraph (a) until the 108 balance or revised 108 balance is reduced to nil.

48. Dividend paid in excess of revised 108 balance

(1) Where section 41 or 46 applies and a company has deducted tax on any dividend paid to its shareholders in accordance with this Part, and the amount deducted exceeds the revised 108 balance, the excess shall be a debt due from the company to the Government and that debt shall be due and payable on the due date.

(2) Where any excess due and payable by a company under subsection (1) has not been paid by the due date, that excess as is unpaid upon the expiration of that date shall, without any further notice being served, be increased by an amount equal to ten per cent of the excess so unpaid, and the amount unpaid and the increase on the amount unpaid shall be a debt due from the company to the Government and that debt shall be payable forthwith to the Director General.

(3) In this section, "due date" means the last day of the seventh month from the date following the close of the accounting period of the company to which period section 41 to 46 applies.

49. Non-deduction of tax

(1) A company shall not be entitled to deduct tax from any dividend paid to its shareholder if--

(a) as at 31 December 2007 the 108 balance of that company is nil;

(b) as at any date from 1 January 2008 to 31 December 2013 the 108 balance or reduced 108 balance is reduced to nil pursuant to section 47; or

(c) the company has exercised an irrevocable option under section 50. 

(2) Where a company--

(a) is not entitled to deduct tax under this section from a dividend paid to any of its shareholders; and

(b) issues to any of its shareholders certificates which purport to show that an amount of tax has been deducted under this Part from dividend paid to the shareholders, an amount equal to what would have been the total amount of tax deducted or deemed to have been deducted, if sections 40, 41 and 42 had been applicable, from the gross amount of the dividend (ascertained in accordance with section 42) paid to all its shareholders at the time that the dividend was paid to those shareholders shall be an amount due from the company to the Government and that amount shall be increased by an amount not exceeding the amount due; and the Director General shall serve on the company a written requisition in the prescribed form calling upon the company to pay the amount due and the increase on the amount due, and that amount shall be a debt due from the company to the Government and that debt shall be payable forthwith to the Director General upon the service of the requisition:

Provided that where the company satisfies the Director General that such certificate has been issued only to particular shareholders specified by the company, that debt shall be reduced to an amount ascertained by reference to the certificates issued to those particular shareholders.

(3) Where a company is not entitled to deduct tax on any dividend paid pursuant to subsection (1), the provisions of the principal Act shall apply to such dividend.

50. Option to disregard balance

Notwithstanding that a company has a 108 balance or revised 108 balance at any time during the period from 1 January 2008 to 31 December 2013, the company may in that period exercise an irrevocable option in the prescribed form not to deduct tax under section 40 and where such option is made, the company shall not be entitled to deduct tax under that section upon the exercise of the option.

51. Set-off under section 110

(1) Section 110 of the principal Act, prior to the amendment of that section under this Act, shall apply to a person other than an offshore company (excluding chargeable offshore company) in respect of any tax deducted under this Part:

Provided that that person shall not be entitled to any set-off under that section if--

(a) in the case where section40 applies, dividend is paid to that person during the period from the date that person acquires the shares from which such dividend is paid to the date of the disposal of such shares and that period is less than 90 days; or

(b) the dividend paid is not in respect of dividend derived from ordinary shareholding. 

(2) For the purpose of this section--

(a) any reference in subsection 110(1) of the principal Act prior to the amendment of that sectionunder this Act to "tax which is deducted from any dividend under section 108" shall be construed as references to "tax which is deducted from any dividend under section 40 or 41 of this Part";

(b) any reference in subsection 110(13) of the principal Act prior to the amendment of that section under this Act to "tax has been deducted under subsection 108(1) or deemed to have been deducted under subsection 108(2)" and "excess referred in subsection 108(6) or (9)" shall be construed as references to "tax which is deducted or would be deducted under section 40 or 41 of thsi Act" and "excess in section 48 of this Act" respectively; 

["subsection 110(13) -- Where tax had been set off or is due to be set off under subsection (1) in relation to a dividend and the Director General discovers that the company which had paid, credited or distributed that dividend in respect of which tax has been deducted under subsection 108(1) or deemed to have been deducted under subsection 108(2) had made no payment or had made insufficient payment of tax under section 103, or instalment payments under section 107C or of the excess referred to in subsection 108(6) or (9), the Director General having regard to all the circumstances may if it appears to him to be necessary--

(a)

assess that dividend on the basis of the net amount and no tax shall be set off under subsection (1) upon making an assessment on the shareholder; or

(b)

make such assessment in accordance with section 91 on the shareholder where tax had been set off under subsection (1) in order to counteract any benefit obtained from the tax that had been set off and where such assessment is made, the shareholder shall be chargeable to tax on that dividend on the basis of the net amount and no tax shall be set off under subsection (1)."]

["subsection 108(1) -- Where a dividend is paid or credited by a company to any of its shareholders in the basis period for a year of assessment, then, if the dividend is deemed by virtue of section 14 to be derived from Malaysia, the company shall be entitled to deduct tax therefrom at the rate applicable to the company on the chargeable income for that year of assessment or, where there is no chargeable income of the company for that year at the rate which would be so applicable if there were such chargeable income."]

["subsection 108(6) -- Where, in relation to a year of assessment and a company, the compared total exceeds the compared aggregate at the end of the basis period for a year of assessment, a sum equal to the amount of the excess shall be a debt due from the company to the Government and that debt shall be due and payable on the due date."]

["subsection 108(9) -- Where in relation to a year of assessment, a company fails--

(a)

to render the statement referred to in subsection (5); or

(b)

to provide the information required in the statement referred to in subsection (5),

and the Director General is of the opinion that the company has paid, credited or distributed dividends to its shareholders in the basis period for that year of assessment, he may compute the amount of the excess referred to in subsection (6), if any, and shall serve on the company a written requisition in the prescribed form calling upon the company to pay an amount equal to that excess and an amount of an increase not exceeding the amount equal to that excess, andthe amount equal to that excess and the increase on that amount shall be a debt due from the company to the Government and that debt shall be payable forthwith to the Director General upon the service of the requisition."]

(c) acquisition of shares referred to in paragraph (1)(a) shall not include acquisition of shares in the company listed on Bursa Malaysia. 

52. 108 balance or revised 108 balance after 31 December 2013

Notwithstanding any other provision of this Part, if the 108 balance or revised 108 balance of the company has not been utilized in part or in full as at 31 December 2013, such balance shall be disregarded.

53. Statutory income deemed total income

Where for the basis period for a year of assessment, gross income of a company is from a source consisting of dividend paid to that company under this Part, the statutory income of that company for that year in respect of that source is deemed to be the total income or part of the total income of that company for that year.

54. Debt discharge

A payment made in discharge or partial discharge of debt of the kind mentioned in sections 48 and 49 shall be regarded as a payment of tax for the purpose of section 111 of the principal Act.

55. Power to remit

Notwithstanding the foregoing sections of this Part, where--

(a) the excess is increased by an amount under section 48; or

(b) the amount due is increased by an amount under section 49, the Director General may in his discretion, for any good cause shown, remit the whole or any part of that amount and, where the amount remitted has been paid, the Director General shall repay the same.

56. Tax shall be deducted

Every company which has a 108 balance or revised 108 balance and has paid dividend at any time during the period from 1 January 2008 to 31 December 2013 shall deduct tax from the dividend in accordance with section 40 unless the company has exercised an irrevocable option under section 50.

57. Non-applicability

This Part shall not apply in respect of any dividend or part thereof which is debited to the exempt account or in respect of any dividend or part thereof which is exempt under subparagraph 5(6) of Schedule 7a of the principal Act.

Act 693

Part II of the Finance Act 2009

SAVINGS AND TRANSITIONAL PROVISIONS*

47. Application of this Part

(1) Sections 48, 49 and 50 shall be read together with and be in addition to the provision of sections 45, 46 and 51 of the Finance Act 2007 [Act 683] respectively.

(2) Where there is any inconsistency between any provision of this Part and any provision of the principal Act, that provision of the principal Act shall be void to the extent of the inconsistency.

48. Statement to Director General

(1) Notwithstanding that no dividend is paid by a company pursuant to subsection 40(1) of the Finance Act 2007 the company shall, within 7 months following the close of the accounting period which constitutes the basis period of the company for the year of assessment 2008, 2009, 2010, 2011, 2012, 2013 or 2014 (if applicable), furnish to the Director General a statement in the prescribed form containing particulars as may be required for the purpose of determining the 108 balance or revised 108 balance, or any excess under section 48 of the Finance Act 2007 or section 49 at the end of that basis period.

(2) The failure of a company to comply with subsection (1) shall be an offence under subsection 120(1) of the principal Act.

(3) A statement under this section may be furnished to the Director General in accordance with section 152A of the principal Act.

(4) Where in relation to a year of assessment 2008, 2009, 2010, 2011, 2012, 2013 or 2014 a company fails to render a statement in accordance with this section or sections 45 of the Finance Act 2007 the Director General may compute the amount of excess referred to in section 48 of the Finance Act 2007 or section 49 and shall serve on the company a written requisition in the prescribed form calling upon the company to pay an amount equal to that excess and an amount of an increase not exceeding the amount equal to that excess, and the amount equal to that excess and the increase on that amount shall be a debt due from the company to the Government and that debt shall be payable forthwith to the Director General upon the service of the requisition.

49. Amount in excess of 108 balance

(1) Where the amount of tax discharged, remitted or refunded under section 46 of the Finance Act 2007 exceeds the 108 balance or revised 108 balance, as the case may be, the excess shall be a debt due from the company to the Government and that debt shall be due and payable on the last day of the seventh month (in this section referred to as "due date") from the date following the close of the accounting period of the company to which the tax is discharged, remitted or refunded.

(2) Where any amount of debt due and payable under subsection (1) has not been paid by the due date, the amount of debt unpaid shall, without any further notice being served, be increased by an amount equal to ten per cent of the debt so unpaid, and the amount unpaid and the increase on amount unpaid shall be a debt due from the company to the Government and that debt shall be payable immediately to the Director General.

(3) This section shall apply where no dividend is paid pursuant to section 40 of the Finance Act 2007.

(4) This section shall apply notwithstanding the company has exercised an irrevocable option under section 50 of the Finance Act 2007.

50. Set-off for tax deducted

A person is not entitled to a set-off in accordance with section 51 of the Finance Act 2007 if the dividend paid to that person is not paid in cash.

Act 755

Finance Act 2013

SAVINGS AND TRANSITIONAL

39. Application of this Part

Where there is any inconsistency between any provisions of this Part and any provision of the principal Act, the provision of the principal Act shall be void to the extent of the inconsistency.

40. Balance of allowances and adjusted loss of a person in respect of interest income

(1) The amount of adjusted loss of a person in respect of interest from a source consisting of a business for a year of assessment 2012 as ascertained under subsection 44(4) or (5) prior to the coming into operation of sections 5 and 10 of this Act--

(a) shall for the year of assessment 2013 be deducted in accordance with subsection 43(2) of the principal Act against the aggregate statutory income of that person from a source consisting of a business; or

(b) where there is no aggregate statutory income from that source consisting of a business for the year of assessment 2013, the amount shall be deducted against the adjusted income of that person from a source other than a source consisting of a business for the year of assessment 2013 and subsequent years of assessment until the amount is fully deducted. 

(2) The amount of allowance in respect of interest from a source consisting of a business which has not been so made to a person for year of assesssment 2012 as ascertained under paragraph 75 of Schedule 3 to the principal Act prior to the coming into operation of sections 5 and 10 of this Act--

(a) shall for the year of assessment 2013 be made to that person for the purposes of the Schedule and section 42 of the principal Act from any source consisting of a business of that person; or

(b) where the person has no source consisting of a business for a year of assessment 2013, the amount of allowance shall be deducted against the adjusted income of that person from a source other than a source from a business for the year of assessment 2013 and subsequent years of assessment until the amount is fully deducted. 

* *NOTE --The Income Tax Act 1967 [Act 53 ], which is referred to as the "principal Act" in this Part.

* *NOTE --Sections 47, 48, 49 and 50 of Act 693 come into operation on the coming into operation of this Act (i.e. 9 January 2009).

Unannotated Statutes of Malaysia - Principal Acts/INCOME TAX ACT 1967 Act 53/INCOME TAX ACT 1967 ACT 53/LIST OF AMENDMENTS