Friday, November 09, 2012

Public Ruling No. 7/2012 : Taxation of Unit Holders of Real Estate Investment Trusts / Property Trust Funds


The Inland Revenue Board has on 29 October 2012 issued Public Ruling No. 7/2012 : Taxation of Unit Holders of Real Estate Investment Trusts (REIT) / Property Trust Funds (PTF). The objective of this ruling is to explain the tax treatment of distribution of income from real estate investment trusts / property trust funds in Malaysia to it’s unit holders.

On filing of Income Tax Return Form (ITRF), only under the following circumstances income from REIT/PTF has to be reported:-

(a)    in the case of resident corporate unit holders where the withholding tax provision under Section 109D of the ITA 1967 is not applicable, and

(b)   where REITs/ PTF –

(i)      are not exempted from tax under Section 61(1A) of the ITA 1967 (on the basis that the distribution is less than 90% of its total income for that YA), and
(ii)    distribute income which carries a tax credit proportionate to each unit of the taxable income in respect of the tax paid by the REITs/PTF,

unit holders should declare the REITs/PTF distribution as income in their ITRF and claim a set-off under section 110(9A) of the ITA 1967.

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