Tuesday, October 16, 2012

MALAYSIA BUDGET 2013 SUMMARY


INDIVIDUAL INCOME TAX
Reduction in individual tax rate
 Chargeable income (RM)
Current rate (%)
Proposed rate (%)
Reduction (%)
0-2,500
0
0
0
2,501-5,000
1
0
1
5,001-20,000
3
2
1
20,001-35,000
7
6
1
35,001-50,000
12
11
1
50,001-70,000
19
19
0
70,001-100,000
24
24
0
Above 100,000
26
26
0

Tax savings : RM50,000 – RM2,500 = RM47,500 X 1% = RM475

Personal relief

YA 2013 
YA 2012
Amount deposited into Skim Simpanan Pendidikan Nasional
RM6,000 
RM6,000 
Child : > 18 years, Full time education in colleges, university
RM6,000
RM4,000
Disabled child : > 18 years, pursuing  Full time education in colleges, university
RM6,000
RM4,000

Withdrawal from Private Retirement Scheme

Effective from YA 2013, tax to be charged on withdrawal from Private Retirement Scheme (PRS) before the age of 55 (except due to death or permanent departure from Malaysia). The withdrawal will be subject to tax at a rate of 8%.

Here are feature of PRS:

All contribution made to PRS will split into sub-account A & B:-

Sub-Account
%
Type of withdrawal
A
70
When member reach retirement age
B
30
Pre-retirement withdrawal (can withdraw once a year), tax charge @ 8%


COMPANY INCOME TAX

Interest income

Effective from YA 2013, interest income will treated as business income, if :-

-      Interest income part of stock in trade
-      Receivable from business of lending money
-      Business is licensed under any written law

Time Bar To Raise Assessment

Effective from YA 2013, time bar for raising an assessment or additional assessment be reduce from 6 years to 5 years.

The 5 years time bar is not applicable in the case of fraud, wilful default or negligence.
Double deduction for 1Malaysia Training Scheme Programme

Double deduction allowed on training expenses incurred by companies that are entitled to participate in the 1Malaysia Training Scheme Programme (also known as SL1M) to provide soft skills and other on-the-job-training to unemployed graduates.

(Effective from 1.6.2012 – 31.12.2016)

Tax Treatment of Limited Liability Partnership (LLP)

Here are the income tax treatment of LLP :-

-          Tax rate @ 25%, for total capital contribution < RM2.5 million will enjoy preferential tax rate of 20% on 1st RM500,000 chargeable income.
-          All responsibility under Income Tax Act 1967 : The compliance officer or any partner
-          Partner remuneration is not allow as deduction if not provided in the LLP agreement
-          Company or partnership which converts to LLP allow to carry forward unabsorbed business losses to be utilised against LLP future income, except substantial change in capital.
-          Any profit paid, credited or distributed to partners by LLP is exempt from tax.
-          LLP enjoy the same tax treatment as a company under ITA 1967 except special incentive given exclusively to a company. For example, under the PIA 1986, only company is eligible to enjoy incentive under the Act.

 (Effective effective upon the coming into operation of the Limited Liability Partnerships Act 2012 i.e. 9 Feb 2012.)

Accelerated Capital Allowance : Security Control And Surveillance Equipment

The Accelerated capital allowance extended for another 3 years and enhanced as follows:-
-          Extended to companies that install security control and surceillance equipment in resident areas,
-          Include safety glass and panic button equipment in the list of security equipment.

Tax Incentive on Abandoned Housing Project

 Company
Incentive
Financial Institution
- Exemption on interest income from Rescuing contractor
- 3 consecutive year of assessment
 (Loan approved 1.1.2013 – 31.12.2015)
Rescuing contractor
-      Double deduction on interest expense and all related cost to refinance the project
-      No stamp duty on loan agreement (1.1.2013-31.12.2015)
House purchaser
-      Exemption of stamp duty on instrument of transfer and loan agreement (1.1.2013-31.12.2015)


Tax Treatment on Asset Held on Sale

-          Qualifying asset deemed disposed for the purpose of para. 48 & 61 of Sch. 3 if asset is held for sale
-          Disposal value is determined based on market value at the time the asset is held for sale or at the end of basis period
-          If asset not sold in the relevant period, the asset deemed disposed in the following basis period
-          If the asset brought back into use in a business, qualifying expenditure = market value & no initial allowance.

TAX INCENTIVE

Tax Incentive For Child Care Centres

Tax incentives for employers be enhanced as follows:
-          Double deduction on operation and maintenance expenses
-          Double deduction on allowance and subsidy expenses to workers at the childcare centre
Tax incentive for new and existing childcare provider:
-          Tax exemption on statutory income for 5 years
-          Building as industrial building : 10% per annum

Tax Incentive For Pre-School Education

Tax incentive given to operator:-
-          Tax exemption on statutory income for 5 years
-          Building as industrial building : 10% per annum

Review Tax Incentive For Tour Operators
        100% tax exemption on statutory income derived from group inclusive tours participated by not less than 750 inbound foreign tourists per year, or
        100% tax exemption on statutory income derived from domestic tours participated by not less than 1,500 local tourists per year.
 (Effective from YA 2013 – YA 2015)

REAL PROPERTY GAIN TAX

The Real Property Gains Tax rates on the gains from the disposal of residential and commercial properties be revised as follows:



1.1.2012 – 31.12.2012
1.1.2013 onward

Individual
Company
Individual
Company
Disposal within 2 years
10%
10%
15%
15%
Disposal within 3-5 years
5%
5%
10%
10%
Disposal in the 6th year and thereafter
Nil
Nil
Nil
Nil

Notification of Non-Chargeability

-          A person who disposes of a chargeable asset and is required to furnish a return to the Director General may furnish with the return a notification in the prescribed form that such disposal is not taxable or tax exempt.
-          If disposer provided incorrect or wrong information, assessment issued with an increase equal to 10% of tax payable will be imposed.

Period For Director General To Raise Assessment

Period to make assessment reduce within 6 years to 5 years, which affect the followings:-
-          Sec 15(3) : Additional assessments
-          Sec 19(1) : Error or mistake
-          Sec 24(3) : Refund of overpayments

Effective from 1.1.2014

Amendment of Schedule 4

Disposer may claim portion of exemption proportionate to the part of chargeable asset disposed.