Confused over tax treatment on WSP?

01Tax Treatment for WSP received:

• The WSP received are not taxable in the gross income, which are exempted from tax under Income Tax (Exemption) (No.22) Order 2006 [P.U.(A) 207/2006]

02Tax Treatment for Salary:

• The salary expenditure which financed by the subsidies are not allowed for deduction under Section 33(1) of the ITA 1967

03Reference

Income Tax (Exemption) (No.22) Order 2006 [P.U.(A) 207/2006

• With effective from year of assessment 2006, the subsidies and grants received are exempt from tax

Revenue expenditure and capital expenditure

• The revenue expenditure which financed by the subsidies and grants are not eligible for a deduction under Section 33(1) of the ITA 1967 such as staff salaries
• The capital expenditure which financed by the subsidies and grants are not eligible to claim capital allowance under Schedule 3(1) of ITA 1967

Public Ruling No1/2006 Agriculture Allowances

• the subsidies or grants received from the government for the purpose of reducing the burden of capital expenditure in carrying on agricultural or plantation activities
• So that, the grant received is not taxable; and
• The expenses financed from the grant are not eligible for any tax deduction or any allowances under Schedule 3 to the ITA.

04Sources:

Income Tax (Exemption) (No.22) Order 2006 [P.U.(A) 207/2006

Public Ruling No1/2006 Agriculture Allowances