eKTP 48

Budget 2018 Proposal Highlight
Part 3 of 3

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Reference is made to our last eKTP 47 regarding to the Malaysian Budget 2018 announced on 27 October 2017. Let us share more information as below:

 

OTHERS



1. Due Date for Notification of Change in Accounting Period


Current Position
There is no provision in the Income Tax Act 1967 but only the Public Ruling issued by the Inland Revenue Board.


Proposal
A company, limited liability partnership, trust body or co-operative society shall notify the Director General (DG) of any changes in its accounting period before a specified due date. Notification is to be provided by way of the Form CP204B.


Proposal 1
Where the new accounts are made up ending before the original year-end – 30 days before the end of the new accounts.


Proposal 2

Where the new accounts are made up ending after the original year end – 30 days before the end of the original year end.

Failure to notify the DG within the above stipulated timeline is an offence and on conviction, may render the taxpayer fine of RM 200 to RM 20,000, or imprisonment for a term not exceeding six months or both under Section 120.

Effective dates: Upon coming into operation of the Finance (No.2) Act 2017

 


2. References to Basis Period of computation of Limited Liability Partnership (LLP)


Current Position
Under Section 44(12) of the Income Tax Act 1967, a basis year in relation to a company, trust body or co-operative society wherever mentioned in Sections 44(6), (6A), (8) and (11) shall be construed as references to the basis period for the year of assessment of that company, trust body or co-operative society.


Proposal
To ensure that the references of a basis period in relation to a LLP to be in line with company, trust body or co-operative society, it is proposed that for the purpose of claiming a deduction for approved donations, gift of artefact, etc., references to basis year in relation to a LLP shall be construed as references to the basis period for the year of assessment of the LLP.

Effective dates: Upon coming into operation of the Finance (No.2) Act 201

 


3. Eligibility for Recovery of Withholding Tax


Current position
Currently, REIT distributions that have suffered withholding tax under Section 109D would be excluded from taxpayer’s tax returns. The withholding tax deducted is a final tax.


Proposal
It is proposed that REIT distributions subject to tax under Section 109D would be eligible for repayment of tax if the tax withheld under Section 109D is in excess of the taxpayer’s final tax liability in a relevant year of assessment where the taxpayer is exempted from tax.

Effective date:  Upon coming into operation of the Finance (No.2) Act 2017

 


4. Expansion of tax incentives for hiring the disabled


Current position
Employers who employ disabled persons, certified by the Department of Social Welfare (JKM), are eligible to claim a further deduction on salary paid to the disabled persons.

This incentive is made available from the year assessment 1982.

However, employers who employ workers affected by accidents/critical illness, and those employees are not being certified by the JKM are not entitled for further deduction on the salary paid.


Proposal
To support those who have been affected by accidents/critical illness and are able to secure suitable employment, it is proposed that a further deduction be given to their employers. The Medical Board of the Social Security Organisation (SOCSO) needs to certify that these employees are able to work within their capabilities.

Effective date: From year of assessment 2018.
 



REAL PROPERTY GAIN TAX (RPGT)

 

1. Conditional Contracts
 

Current position
Presently, where a disposal/acquisition of real property requires governmental approval (i.e. approval by the Government or a State Government or an authority or committee appointed by the Government or a State Government), the date of disposal/acquisition shall be the date of such approval.


Proposal
The scope of the above approval be limited to approval by the Government or a State Government only.

Effective date: From 1st January 2018.



2. Disposal of Real Property by non-citizen and non-permanent resident


Current position
Where the sales consideration is wholly or partly in monetary form, the acquirer is required to retain the whole sum or 3% of the total value of the sales consideration, whichever is lesser, and remit to Inland Revenue board within 60 days from the date of disposal.


Proposal
It is proposed that the retention sum by the acquirer be increased from 3% to 7% of the total value of the sales consideration.

 Effective date: 1st January 2018.

 


3. Real Property Gains Tax Rates applicable to Executor of the estate of a deceased person who is not a citizen or not a permanent resident


Current position
Presently, Part III of Schedule 5 provides the rate of tax in the case of an individual who is not a citizen or not a permanent resident as follows:

i)  30% for disposal of chargeable assets within 5 years;
ii) 5% for disposal of chargeable assets in the 6th year or thereafter


Proposal
It is proposed that Part III of Schedule 5 be expanded to an executor of the estate of a deceased person who is not a citizen or not a permanent resident

Effective date: 1st January 2018.

 


4. Transfer of Assets which disposal price is deemed equal to acquisition price


Current position
Presently, the below transactions would be regarded as “no gain no loss” transaction:

a) Transfer of assets between spouses;

b)  Transfer of assets owned by an individual, or his wife or jointly or with a connected person to a company controlled by the said persons for a consideration consisting of shares in the company, or for a consideration consisting substantially of share in the company and the balance is in monetary form.


Proposal
It is proposed that the above could only be regarded as “no gain no loss” transaction for an asset owned by a citizen or jointly owned by citizens

Effective date: 1st January 2018.