CPA Program

Malaysia Taxation

Segment outline

cpaaustralia.com.au
Edition 14a

Published by Deakin University, Victoria 3217 on behalf of CPA Australia Ltd,

ABN 64 008 392 452.
First published July 2011, reprinted January 2012, updated July 2012,
January 2013, July 2013, January 2014
CPA Australia Ltd 2014. This is an electronic version of the printed study material.
Apart from any fair dealing (e.g. for the purposes of private study) as permitted under
the Copyright Act 1968 (Cwlth), no part of this material may be copied, scanned,
transmitted, distributed or reproduced in part or in whole without the permission
ofCPA Australia Ltd.
Edited and designed by DeakinPrime
Printed by Blue Star Print Group
ISBN 978 1 74156 159 3

Authors
Ms Renuka Bhupalan
Professor Dr Jeyapalan Kasipillai
Acknowledgments
CPA Australia acknowledges the contributions of Dr Veerinderjeet Singh
Review panel
Ms Renuka Bhupalan
Professor Dr Jeyapalan Kasipillai
Dr Veerinderjeet Singh
Dr Loo Ern Chen
Dr Lydia Thiagarajah
CPA Australia Professional Programs & Pathways staff
Janine Harper
Suzannah Andrews
Richard Brown
Irwin Bushnell
Kristy Grady
Sarah Chinnick
Desley Ward
Elise Literski

John Ngiam
Instructional designer
Alberto Gonzalez

Travis Pemberton
Kylie Ross
Alisa Stephens
Belinda Zohrab-McConnell

DeakinPrime

Acknowledgment
The material used in this segment has been designed and prepared for the purpose of individual
study and should not be used as a substitute for professional advice. The material is not, and is not
intended to be, professional advice. The material may be updated and amended from time to time.
Care has been taken in compiling the material but the material may not reflect the most recent
developments and has been compiled to give a general overview only. Users of the material should
not act on the basis of any of the material without first obtaining professional advice specific to
their own situation. CPA Australia Ltd and Deakin University and the author(s) of the material
expressly exclude themselves from any contractual, tortious or any other form of liability on
whatever basis to any person, whether a participant in this segment or not, for any loss or damage
sustained or for any consequence which may be thought to arise either directly or indirectly
fromreliance on statements made in this material.
Any opinions expressed in the study materials for this segment are those of the author(s) and
notnecessarily those of their affiliated organisations, CPA Australia Ltd or its members.

Contents

Segment outline

0.1

Module 1: Overview of the Malaysian tax regime

1.1

Module 2: General knowledge of income tax

2.1

Module 3: Income tax (Corporate)

3.1

Module 4: Income tax (Business)

4.1

Module 5: Income tax (Individuals)

5.1

Module 6: Income tax (Others)

6.1

Module 7: Cross-border activities

7.1

Module 8: Investment incentives

8.1

Module 9: Real property gains tax

9.1

Module 10: Indirect taxation

10.1

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Segment outline

Contents
Introduction 0.3
Before you begin
0.3
CPA Program Guideprofessional level (The Guide)
Important dates

Segment description

0.3

Segment overview

0.4

Learning materials

0.6

Malaysia Taxation: The CPA as an adviser

Segment aims
General objectives
Module descriptions
Module weightings and study time requirements
Module structure
Additional learning resources

Exam 0.10
General information
Exam structure

Authors 0.11

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MALAYSIA TAXATION

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Introduction
The purpose of this segment outline is to:
n
define the aims, content and structure of the segment;
n
provide important information to assist you in your studies;
n
outline the learning materials and resources provided to support learning; and
n
provide information about the exam and its structure.

Before you begin

CPA Program Guideprofessional level (The Guide)
This is the main reference for all your questions about the CPA Program professional
level such as important dates and contacts and regulations and policies. The Guide
canbe accessed at: cpaaustralia.com.au/professionallevel.

Important dates
For information about important semester and exam dates, please refer to:
cpaaustralia.com.au/professionaldates.

Segment description
Malaysia Taxation: The CPA as an adviser
Business leaders appreciate that there are taxation implications that flow on from
most business decisions. A sound knowledge of Malaysian taxation law is essential
to ensure quality input into the strategic decision-making process by an individual,
partnershiporcompany.
This is the local variant of the taxation segment in the CPA Program. Candidates will
now have the option to complete the Malaysia Taxation segment.

Segment aims
The aims of this segment are to provide candidates with an:
1 overview of the Malaysian taxation system, a sound foundation of the principles
of taxation of income and a good appreciation of how these principles and the
provisions of the Income Tax Act 1967 are applied in the taxation of individuals,
unincorporated businesses and corporations;
2 understanding of the investment incentives in Malaysia as well as the provisions
ofthe Real Property Gains Tax Act 1976; and
3 understanding of the indirect taxation system.

0.3

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Segment overview
General objectives
On completion of this segment, candidates should be able to:
n
apply the principles and concepts of taxation and the relevant provisions
ofthetaxlegislation to situations they will encounter; and
n
correctly compute the chargeable income tax payable in certain situations.

Module descriptions
The segment is divided into 10 modules. A brief outline of each module is provided below.
Note: The relevant year of assessment for this edition of the study guide is YA2012.

Module 1 Overview of the Malaysian tax regime

Module 1 provides an overview of the Malaysian taxation system. It introduces
candidates to the key features of the Malaysian taxation system and the legislative
provisions that govern the administration of taxation within this jurisdiction.

Module 2 General knowledge of income tax

The module consists of various sections related to the scope and basis of taxation,
theprinciples of deductions, an overview of capital allowances and deductions in
respect of business losses and donations, the treatment of unabsorbed capital allowances
and business losses and aspects of tax administration.

Module 3 Income tax (Corporate)

This module focuses on the parts of the Income Tax Act that apply to companies.
Itintroduces the scope of Malaysian taxation that a company is subject to. It focuses
onthe topics covered in Module 2 in their application to a company, tax computations
and the obligations of a company in relation to its tax affairs.

Module 4 Income tax (Business)

Module 2 outlines the basis of assessment, the charging sections, badges of trade,
outgoings and deductions. Module 4 elaborates on this with a discussion about the
tax treatment and rules that arespecific to both sole proprietorships or self-employed
persons and partnerships.

Module 5 Income tax (Individuals)

This module elaborates on the tax treatment of income derived by individuals
fromincome other than the carrying on of a trade, business, profession or vocation.
Inparticular, it focuses on employment income and tax exemptions or concessions
giventoindividuals for other types of income. It also discusses the conditions
for claiming personal reliefs or rebates. It rounds off with the preparation of tax
computationsfor an individual by applying the information presented in the module.

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0.5

Module 6 Income tax (Others)

This module examines the taxation of specialised activities or industries, such as
banks, insurance, shipping and airline operations, leasing, co-operative societies,
investmentholding companies, unit trusts, trade associations, clubs or similar
institutions, trustbodies, deceased persons estates and charitable organisations,
underthe IncomeTax Act.

Module 7 Cross-border activities

This module provides an overview of the general rules relating to the various withholding
taxes on payments made to non-residents and the international aspectsofincome
taxation, including double tax agreements.

Module 8 Investment incentives

This module elaborates on the special schemes and tax incentives granted to attract
investments under the Promotion of Investments Act 1986 and the Income Tax Act.
Thisincludes pioneer status, investment tax allowance, reinvestment allowance,
approved service sector incentives, double deductions, operational headquarters,
international procurement centres, regional distribution centres, and sectoral and
export incentives. The module also covers the incentives available for Islamic
transactions and the tax regime in Labuan.

Module 9 Real property gains tax

This module provides an overview of the Real Property Gains Tax Act 1976 in relation to
real property transactions and transactions involving shares in real property companies.

Module 10 Indirect taxation

Module 10 gives an overview of the major provisions of the Customs Act 1967,
ExciseAct 1976, Sales Tax Act 1972 and Service Tax Act 1975. The focus is more on
salestax and service tax, which are taxes on selected goods and services respectively.

Module weightings and study time requirements

The total hours of study for this segment will vary, depending on your prior knowledge
and experience of the content, your individual learning pace and style, andthe degree
to which your work commitments will allow you to work intensively or intermittently
on the materials. You will need to work systematically through the study guide,
attemptall the review questions, andrevise the learning materials for the exam.
Theworkload for this segment is equivalent to thatofaonesemester postgraduate
unit.An estimated 10 to 15 hours ofstudy per weekover a12-week period will be
required for the average candidate before revision.
Do not underestimate the amount of time it will take to complete the segment.
The following table provides an indication of the proportion of study time to allocate
to each module, which should also reflect the emphasis placed on each module in
theexam.

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MALAYSIA TAXATION

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Table 1

Module
1 Overview of the Malaysian tax regime

Recommended
proportion of
study time (%)

Study
schedule

Week 1

2 General knowledge of income tax

Weeks 1, 2

3 Income tax (Corporate)

19

Weeks 2, 3, 4

4 Income tax (Business)

Week 5

5 Income tax (Individuals)

12

Weeks 5, 6, 7

6 Income tax (Others)

Weeks 7, 8

7 Cross-border activities

11

Weeks 8, 9

8 Investment incentives

10

Weeks 9, 10

9 Real property gains tax

10

Weeks 10, 11

10 Indirect taxation

Weeks 11, 12

100

Learning materials
Module structure
These study materials form your central reference in the Malaysia Taxation segment.

Contents
Each module has a detailed contents list. This list indicates the sequence of the
educational content in the module.

Preview
Each module begins with a preview containing the following sections.
Introduction. The introduction outlines what will be covered in the module and
howitrelates to other modules in the segment.
Objectives. A set of objectives is included for each module in the study guide.
Theseobjectives provide a framework for the learning materials and identify the
mainfocus of the module. The objectives also describe what candidates should be
abletodoafter completing the module.
Teaching materials. This section alerts you to the required teaching material (if any)
towhich you should have ready access, such as the relevant taxation legislation.

Study material
The study material is divided into sections and subsections, which will help you to
conceptualise the content and study it in manageable portions. It is also important
to appreciate the cumulative nature of the segment and to follow the given sequence
asclosely as possible.

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Review questions and suggested answers

The study guide includes review questions to provide you with the opportunity, asyou
progress through the segment, to assess your understanding of significant points
and stimulate further thinking on particular issues. The review questions require
you to prepare answers and to compare those answers with the suggested answers
before continuing with the study material. To assess how well you have understood
and applied the material in the text, itis important to write your answer before you
compareit with the suggested answer.
These questions are an integral part of your study and they should be fully utilised
to support your learning of the module content throughout the semester. You are
encouraged to spend time reviewing and analysing the module content. Completing the
review questions should form one part of your revision for the exam. It is evident that
candidates who achieve good results in the program and in their careers are those who
are able to think, review and analyse situations, and solve problems.
Youranswers to these questions do not contribute to your final result, and you are not
required to submit your answers for marking.

References
The reference list details all sources cited in the study guide. You are not expected to
follow up this source material.

Internet references
At various points in the segment materials you may be directed to references located on
the internet, and many of these are on external websites. All the URL addresses cited
are tested prior to the start of the semester to ensure their currency; however, this does
not guarantee that changes have not been made to the websites since the tests were
performed. CPA Australia provides links to external websites as a service to candidates
in the CPA Program. CPA Australia does not own, operate, sponsor or endorse these
external websites and makes no warranties or representations regarding the source,
quality, accuracy, merchantability or fitness for purpose of the content of these external
websites; nor warrants that the content of these external websites is free from any
computer virus or other defect or error.

Additional learning resources

My Online Learning
CPA Australia offers additional study material through My Online Learning to assist
candidatesin their study. Some of the content on My Online Learning is examinable,
including any study guide updates which will be posted here. You can access
MyOnlineLearning from the CPA Australia websitedetails are provided below.
How to access My Online Learning:
1 Go to: cpaaustralia.com.au/myonlinelearning
2 Click Access My Online Learning
3 Enter your member number in the username field and password and click Login
There is also a demonstration video to assist you in navigating the system.

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To access the workshop notes:

1 On the My Courses page, click the + sign next to the folder titled Workshops.
2 Click View under the relevant workshop title and a link to the document
willappear.
To access the study groups function, click My Study Groups next to My Courses
in the top banner, then select the relevant segment using the dropdown box next
toCourse.
Help Deskfor help when accessing My Online Learning either:
n
Email myonlinelearning@cpaaustralia.com.au; or
n
Telephone 1300 73 73 73 (Australia) or +613 9606 9677 (International) between
8.30 a.m. and 5.00 p.m. AEST Monday to Friday during the semester.
The additional study materials provided on My Online Learning for Malaysia Taxation
candidates include:
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Discussion forumsthese enable you to post any questions you may have about
thetechnical content of the segment.
n
Calendarkeep track of important dates and events.
n
Web linksaccess useful online resources including legislation and standards.
n
Workshop notesnotes for the face-to-face workshops are available on MyOnline
Learning for all candidates. Further information about the workshops is
providedbelow.
n
Webinarsif you have registered to participate in a live webinar, you can access
the relevant notes from My Online Learning. See below for further information
aboutwebinars.
n
Announcementsyou should check My Online Learning at least once a week as
important information and critical study information will be posted there.
n
Limited PDF versions of modulesModules covering approximately the first two
weeks of the syllabus are available to assist candidates that may not receive their
study materials in time for semester commencement. The PDF modules are the
same as the printed modules; however, the third-party copyright is removed.
Note:The PDF modules are not available for Singapore Taxation.

Study groups
Candidates who wish to participate in group discussion can join a study group through
My Online Learning. This provides candidates with access to a secure online list of email
contact details for other candidates who are studying the same segment and who have
also registered for a study group. Candidates can use these contact details to form their
own study groups.
Study groups can facilitate the exchange of ideas and discussion of issues raised in the
segment materials.
You can withdraw from a study group at any time by clicking on My Study Groups on
the top menu bar and then by clicking Leave Study Group.
By accepting the My Online Learning terms and conditions and privacy statement and
by joining a study group, candidates agree to use any disclosed information for the sole
purpose of arranging study groups for the CPA Program professional level. CPA Australia
will not be liable for the misuse of private information by study group candidates.

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Workshops and webinars

Workshops and webinars have been prepared on specific topic areas to help your learning
and understanding of key concepts. They do not cover all of the concepts discussed
in the segment materials, rather, they typically focus on providing additional learning
around some of the more challenging topics and concepts. Webinars are a condensed
version of the content from some of the workshops.
To gain the greatest benefit from your investment, it is recommended that you complete
your study of any relevant modules and any pre-work prior to attending.
If you are attending a workshop, you will need to print the relevant notes prior
toattending.
A copy of the workshop notes can be downloaded from My Online Learning a week
after the semester commences. Webinar notes are also available via My Online Learning
to candidates who have registered for a webinar.
A brochure and registration form detailing dates and times for face-to-face CPA Program
professional level workshops and webinars can be found on CPA Australias website at:
cpaaustralia.com.au/workshopswebinars or by contacting your local divisional office.

Registered tuition providers

You are able to source tuition via traditional face-to-face or online methods for
CPAProgram professional level segments (all excluding Singapore Taxation) from
registered tuition providers. The tuition provided is based on current CPA Program
professional level learning objectives and study materials. A list of current registered
tuition providers can be found on CPA Australias website at: cpaaustralia.com.au/
tuition. If you are interested you should contact the chosen provider directly to
purchase and enrol in your tuition program.

Learning support products

A range of quality learning products are available for you to purchase to further aid
your core study program and preparation for exams. This will appeal to candidates
looking to invest in additional learning resources other than those provided via the
current standard distance education offer. These include products such as revision
kits with practice exams and handy reference pass cards, visit: cpaaustralia.com.au/
learningsupport for more information.

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Exam
General information
CPA Program professional level exams are of three hours and 15 minutes duration.
The exam for Malaysia Taxation is open book. This means that candidates may bring
any reference material into the exam which they believe to be relevant and which may
assist them in undertaking the exam. This may include, for example, the study guide,
additional materials from My Online Learning and prepared notes.
Candidates may wish to bring the Malaysian Income Tax Act 1967, the Real Property
Gains Tax Act 1976, the Promotion of Investments Act 1986, the Service Tax Act 1975
and the Sales Tax Act 1972 into the exam room for reference. It is not compulsory for
candidates to bring these Acts to the exam.
It is highly recommended that all candidates have access to a calculator in the
exam. Please ensure that the calculator is compliant with CPA Australias guidelines.
Thecalculator must be a silent electronic calculating device whose primary purpose is
asa calculator.
Calculators with text-storing abilities are not permitted in the exam.
Important information about the exam, including permitted items and proof of identity
requirements is provided in the CPA Program Guideprofessional level and on the
CPAAustralia website.
The exam is based on the whole segment, including the general objectives, module
objectives and all related content. Where advised, relevant legislation is alsoexaminable.
As this exam forms part of a professional qualification, the required level of
performance ishigh. Inmost cases, the pass mark is in the range of 6065 per cent.

Exam structure
The Malaysia Taxation exam is comprised of a combination of multiple choice and
written response questions. Multiple choice questions include knowledge, application
and problem-solving questions which are designed to assess the understanding of
Malaysia Taxation principles. Written response questions can include a combination
of short answer and case scenario based questions. All written response questions
focus on the application of concepts and theories from the segment study materials to
solve a given problem. Awritten response question may require candidates to apply
concepts and theories from more than one module to provide the required solution.
Table 1 provides an indicationof theapproximate proportion of your study time which
shouldbe allocated to each ofthemodules.
Strategy, leadership and international business themes may provide contexts for
assessment in the exam.

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Authors
Renuka Bhupalan
has 20 years experience in taxation which includes two and a half years at Price Waterhouse,
London followed by over 13 years experience with Arthur Andersen and Ernst & Young in
KualaLumpur. She is currently an Executive Director at Tax and Malaysia.
Her experience covers both tax compliance and consulting work across a wide spectrum of
industries for multinational and Malaysian companies. Renukas work experience includes tax
planning for inbound and out-bound investments, group reorganisations, mergers, privatisation
and corporatisation exercises, transfer pricing, realestate and financial services, including Islamic
banking. Shehas also worked closely on the tax incentives inrelation to a special economic
corridorin Malaysia.
Renuka was responsible for tax training and tax knowledge management in both ArthurAndersen
and Ernst & Young, andhas been involved in leading various initiatives during her work in the tax
consultancy firms. She has also been involved inadvisory workrelated to operations in Labuan.
Renuka has spoken at seminars, conducted taxworkshops, andhas authored articles for journals
including the TaxGuardian, TheMalaysian Accountant and the Asia Pacific TaxBulletin.
Renuka graduated from the University of Bristol, United Kingdom with a second upper LLB (Hons)
degree. She was later called to the Bar at Grays Inn, London. Shesubsequently obtained the ATII
professional tax qualification in the UnitedKingdom. Renuka is also a member of the Chartered Tax
Institute of Malaysia.

Jeyapalan Kasipillai
is a Professor and Chair of Malaysian Business at Monash University
Malaysia. He completed his doctoral thesis at the University of
NewEngland, Australia and masters degree at the University of
Stirling, Scotland. Jeyapalan is a fellow member of CPA Australia,
the UK Chartered Institute of Secretaries and theChartered Tax
Institute of Malaysia.
After graduating from University of Malaya in 1974, Jeyapalan
joined the New Straits Times Group as a journalist and later
served the Inland Revenue Board for 15 years. He held the
post of AssistantDirector (Tax Investigations) prior to joining
UniversityUtara Malaysia asa lecturer in 1991. Jeyapalan is a
council member of the Chartered Tax Institute of Malaysia. He is
a member of the editorial committeeof e-Journal of Tax Research,
Australia and was appointed by TaxNotesInternational, USAin
2004 as its official correspondent for Malaysia. Jeyapalan was
conferred Monash Pro-Vice Chancellor Awards for excellence
in research on several occasions. InApril 2010, Jeyapalan was
appointed as a Professorial Visiting Fellow by the University of
NewSouth Wales, Sydney.

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