Question

Chris and Renuka provided to their tax accountant the following details of their stay within Malaysia and abroad in the years 2014 and 2015:

Chris

01.01.2014 - 20.01.2014 (20 days) In Malaysia

21.01.2014 - 02.07.2014 (163 days) In New Zealand

03.07.2014 - 14.09.2014 (74 days) In Malaysia

15.09.2014 - 30.09.2014 (16 days) Attended an accounting seminar in Singapore

01.10.2014 - 31.12.2014 (92 days) In Malaysia

01.01.2015 - 31.01.2015 (31 days) In Malaysia

01.02.2015 - 31.12.2015 (334 days) In Singapore

Renuka

01.01.2014 - 24.02.2014 (55 days) In Malaysia

25.03.2014 - 27.08.2014 (124 days) In Switzerland

27.08.2014 - 31.12.2014 (126 days) In Malaysia

01.01.2015 - 31.05.2015 (149 days) In Indonesia

01.06.2015 - 17.09.2015 (109 days) In Malaysia

18.09.2015 - 30.09.2015 (13 days) Social visit to Indonesia

01.10.2015 - 30.11.2015 (61 days) In Malaysia

01.12.2015 - 31.12.2015 (31 days) In South Africa

Required:

(i) Ascertain the residence status of Chris and Renuka for the years 2014 and 2015

under the Malaysian ITA. State the relevant section of the tax legislation and explain the reasons for arriving at each of your answers.

P/S : EXAMPLE ANSWER WILL BE LIKE THIS

Year	Total days present in Malaysia	Status	Section	Explanation
2011	120	Non resident	Section 7(1)(A)	Mr. Singh is not considered as the resident of Malaysia for tax purposes as he had lived in Malaysia for 120 days only in 2011

(ii) Explain the advantages of being a tax resident in Malaysia in respect of an individual.Candidates are required to provide any FOUR advantages of being a tax resident in Malaysia for tax purposes.

Answer 1

Ascertainment of Residential status of Chris for 2014 and 2015:

Year Total days present in Malaysia Status

2014 20+74+92 = 186 days . Resident

2015. 31 days Non resident

Ascertainment of Residential status of RENUKA for 2014 and 2015:

Year Total days present in Malaysia Status

2014. 55+126=181 days . Non resident

2015 . 109+61= 170 days. Non resident

Note : Section 7 of the Income tax act 1967 says that Residential status is determined by reference to the number of days an individual is present in Malaysia. Generally , an individual who is in Malaysia for a period or periods amounts to 182 days or more in a calendar year will be regarded as a tax resident.

Advantages of being a tax resident in Malaysia for tax purposes:

1) Resident individuals need to pay tax (from 0 to 28%) on taxable income, but non resident individuals are subject to flat rate of 28%.

2) Resident individuals are eligible for a rebate of RM350 if their taxable income does not exceed RM35000.

but non residents are not entitled for a rebate.

3) Being a Resident individual , they are entitled to a personal reliefs for example : Personal relief, wife relief and children relief., But non residents are not eligible for these reliefs .

4) Deductions from income are available for resident while , non residents cannot use those to reduce taxable income.