Tutorial 13

Q3 (a)

The domicile of a person is defined as the country in which the person has his permanent
home, ie the country in which the person has been habitually and physically in
which the person has been habitually and physically present and that person has the
intention to reside in that country permanently.
For Malaysia income tax purposes, once a person is domiciled in Msia,
there is a presumption of continuity.

Tax Implication

The income of the executor is taxed at scale rates ranging from 0% to 28% .

A special relief of RM9,000 under Section 64(4) will be given against the
total income of the executor for that year of assessment.
Tutorial T13
3(b)
Similarities Estate

Scope of charge It is chargeable to income tax on

income of the estate accrued in or
derived from Malaysia.

Foreign income received in Malaysia

from outside Malaysia shall be
exempt from tax under Para 28 of Sch 6
of the ITA, 1967.

Remuneration There is no deduction for the

remuneration of executor's as
expense(s) in the various steps of
computation of income up to the
chargeable income.

Deduction of annuity Annuity is deductible in arriving at

the total income.

Approved cash It can be given a deduction in

donation arriving at its total income and is
restricted to 7% of aggregate income.

Tax rate -flat Income is chargeable to a flat rate of 28%

(if the deceased individual did not
died domiciled in Malaysia).

Distribution of income Generally, the distribution made is capital

in nature (e.g. gift) and it will not be subject
to income tax.

Differences Estate
Distribution made to The distributed amount made to beneficiary
beneficiary is capital in nature and not subject to
income tax.

Deduction against the A special relief of RM9,000 [S64(4)]

total income can be given if the deceased
individual died domiciled in Malaysia.

No relief of RM9,000 will be given

(if the deceased individual died not
domiciled in Malaysia).

Tax rate Income is chargeable to tax at scale

rates of 0% to 28% (if the individual
died domiciled in Malaysia).

Basis period Calendar year basis (i.e. 1 Jan to 31 Dec)

 Trust

It is chargeable to income tax on

income of the trust accrued in or
derived from Malaysia.

Foreign income received in Malaysia

from outside Malaysia shall be
exempt from tax under Para 28 of Sch 6
of the ITA, 1967.

The remuneration of a trustee /

trustees is not given deduction in
the various steps of computation
of income up to the chargeable
income.

Annuity is deductible in arriving at

the total income.

The approved donation can be given a

deduction in arriving at its total income and
is restricted to 7% of aggregate income.

Income is chargeable to tax at 24%.

The distribution made under the

Accumulation trust will not be taxed in hand
of recipient.

Trust
It is taxable as income under S4(e)
on a beneficiary on the amount based
on a share of total income (ordinary
source).
S110 set-off can be given based on
the formula: T x SI / TI where -
T : tax chargeable on trust;
SI : statutory income
(ordinary source); &
TI : total income of the trust

No such a tax treatment or deduction

for trust.

However, a resident beneficiary's

statutory income from the ordinary
source can be deducted for a resident
trust. Section 61(2)

Income is chargeable to tax at a flat

rate of 24%.

It can be either 31 Dec or non-31 Dec