Introduction to Tax Residence
Chapter 1 introduction & tax residence
•Direct taxes – taxes paid directly to government (income tax , RPGT)
•Indirect taxes – taxes paid to government via 3rd party( sale,service)
•Income
tax –scope of charge( S3 of ITA) has been modified by ‘’tax exempted’’ Income tax shall be charged for each y/a upon income of any person accruing in or derived from MY or received in MY from outside MY
Income known as revalue gain( capital gain never go for inc tax
Person=individual , Co(chargeable person) partnership is not C.P
•2
type of chargeable person which are resident and non resident
Resident=individual , specialised industry Co and other Co
1.
Individual and other Co— MY derived subject to income tax
Foreign derived: if not remitted into MY not taxable but if remitted into MY is taxable but tax exempt (temporary) non chargeable
1
Specialised industry company(banking, shipping) – worldwide scope MY derived and foreign derived subject to income tax
Non resident (NR ind ; NR Co) – MY derived subject to income tax
Foreign derived not taxable (law defined)
2)
1.
Every ‘’year of assessment ‘’ – year that income is assessed to tax
Since 2000 the y/a is current year basis
But old law – valid up to 1999 is preceding year basis
Tax law follow y/a but more important to know ‘period’ of such year known as basis period
Individual’s tax residence status is governed by section 7 of income tax act
Section 7(1) an individual is a resident in MY for the basis year for a particular year of assessment if :
S7(1)(a)— he is in MY in that basis year for a period or periods amounting in all to 182days or more
2
S7(1)(b) – if basis period of less than 182 days and that period is linked by or linked to another period of 182 consecutive day
Provided that any temporary absence from MY
i.
Connected with his service in MY and owing to service matters or attending conferences or seminars or study abroad
ii.
•Direct taxes – taxes paid directly to government (income tax , RPGT)
•Indirect taxes – taxes paid to government via 3rd party( sale,service)
•Income
tax –scope of charge( S3 of ITA) has been modified by ‘’tax exempted’’ Income tax shall be charged for each y/a upon income of any person accruing in or derived from MY or received in MY from outside MY
Income known as revalue gain( capital gain never go for inc tax
Person=individual , Co(chargeable person) partnership is not C.P
•2
type of chargeable person which are resident and non resident
Resident=individual , specialised industry Co and other Co
1.
Individual and other Co— MY derived subject to income tax
Foreign derived: if not remitted into MY not taxable but if remitted into MY is taxable but tax exempt (temporary) non chargeable
1
Specialised industry company(banking, shipping) – worldwide scope MY derived and foreign derived subject to income tax
Non resident (NR ind ; NR Co) – MY derived subject to income tax
Foreign derived not taxable (law defined)
2)
1.
Every ‘’year of assessment ‘’ – year that income is assessed to tax
Since 2000 the y/a is current year basis
But old law – valid up to 1999 is preceding year basis
Tax law follow y/a but more important to know ‘period’ of such year known as basis period
Individual’s tax residence status is governed by section 7 of income tax act
Section 7(1) an individual is a resident in MY for the basis year for a particular year of assessment if :
S7(1)(a)— he is in MY in that basis year for a period or periods amounting in all to 182days or more
2
S7(1)(b) – if basis period of less than 182 days and that period is linked by or linked to another period of 182 consecutive day
Provided that any temporary absence from MY
i.
Connected with his service in MY and owing to service matters or attending conferences or seminars or study abroad
ii.