2016

Tax Planning - BFN 3114

Tutorial 1 Overview of Malaysian Taxation
Question 1
What are the different types of taxes that can be imposed by the government?
What is the significance of the two taxes for the Malaysian treasury?

Question 2
Explain briefly the scope of charge to tax of a Malaysian resident individual under the
provisions of the Income Tax Act 1967 (as amended).
Question 3
What are the types of income upon which income tax is chargeable?
Question 4
The following chargeable persons have Malaysian sources of income and foreign sources of
income for the basis year 2011 for the year of assessment 2011. State which of the income
indicated in the relevant columns would be liable to Malaysian income tax.

Persons

Malaysian
source
income
RM

NonMalaysian
source
income
RM

Lim (Non-resident)
Kassim (Resident)
Tim Sdn Bhd. (Resident company)
Mawar Sdn Bhd. (non-resident )

30,000
150,000
260,000
264,000

80,000
135,000
125,000
17,200

Halim (resident)

230,000

190,000

19,000,000
12,500,000

29,000,000
27,000,000

Maybe Insurance Bhd.(resident)

Blue Line Shipping Inc (non-resident)

Remarks
on nonMalaysian
sourced
income

Remitted
Remitted
Remitted
Remitted
Not
remitted
Not
remitted
Remitted

Answer:

Persons

Lim (Non-resident)
Kassim (Resident)
Tim Sdn Bhd. (Resident company)
Mawar Sdn Bhd. (non-resident company)

Malaysian
source
income
RM

NonMalaysian
source
income
RM

Remarks
on nonMalaysian
sourced
income

NonMalaysian
source
liable to
Malaysian
income
tax

30,000
150,000
260,000

80,000
135,000
125,000

Remitted
Remitted
Remitted

No
No
No

264,000

17,200

Remitted

No

2016

Tax Planning - BFN 3114

Halim (resident)
Maybe Insurance Bhd.
Blue Line Shipping Inc (non-resident)

230,000

190,000

19,000,000
12,500,000

29,000,000
27,000,000

Not
remitted
Not
remitted
Remitted

No
Yes
No

Note 1
Resident and non-resident persons receiving income from a source outside Malaysia and
remitted to Malaysia will be exempted from income under para 28 Sch 6 of the Income Tax
Act 1967 (as amended)
Note 2
the income of a resident company carrying on the business of banking insurance and sea
and air transport is taxed on a world scope.
Note 3
The income of a non-resident company carrying on the business of banking insurance and
sea and air transport is taxed only the income derived from Malaysia.

2016

Tax Planning - BFN 3114

Question 5

What are the stages of income between the gross income and the chargeable income? What
is the significance of the various stages?
ANSWER: The stages are as follows:

Gross income
Less

Allowable expenses
Double deductions
Special deductions
Adjusted income

Add
Less

Balancing charges
Capital allowances and balancing allowances
(Max: to adjusted income; balance c/f except listed
investment holding companies)
Statutory income

Add

Previous years business loss b/f

(not applicable to listed investment holding co)
Statutory income from other sources
Aggregate income

Less

Current year loss

Approved donations (Sec. 44(6), 44(6A), 44(8)...
Zakat paid by business Sec. 44(11A)
Total income

Less

Personal relief
Chargeable income

Tax Rate (%)

Tax Payable

Less

Rebates
Net Tax Payable

Significance
The income at each stage must be computed for each source since the treatment of the
income for business and non-business are different. The quantum of the income also
determines whether there will be any income to be taxed or losses to be C/F.

Tax Planning - BFN 3114

2016