Question

Question 3       TRUE or FALSE                                                                                  

1       An individual is considered to be physically present in Malaysia for a whole day only if he is present in Malaysia for at least half of a day.

2       Section 7(1) of the Income Tax Act 1967 stipulates four sets of circumstances under which an individual would be deemed resident in Malaysia.

3       Non-resident individuals in Malaysia are taxed at a higher tax rate and are not entitled to personal reliefs.

4       Citizens of Malaysia are automatically tax residents.

Answer 1

1. This Statement is True. An individual is considered to be physically present in Malaysia for a whole day even if he is present in Malaysia for a part(s) of the day.

2. This Statement is True. Section 7(1) of the Income Tax Act, 1967 stipulates four sets of circumstances under which an individual would be deemed to be resident in Malaysia. The Circumstances under which an individual is deemed to be resident of Malaysia is as follows:

a) A citizen of Malaysia who is employed in Public Services or Service of Statutory Authority.

AND

b) That person is not Malaysia at any day druing the Previous Year because of the following reasons:

i) having and exercising his employment outside Malayisa.

ii) attending any course of study in an institution which is outside Malaysia and such course is fully sponsored by Employer.

such individual would be deemed to be resident for that Assessment Year.

3. This statement is True. Non-resident individuals in Malaysia are taxed at a higher tax rate and are not entitled to personal reliefs. To be a resident of Malaysia an individual should fulfill any of the following conditions laid down in Section 7 of the Income Tax Act, 1967:

a) The Individual is in Malaysia for 182 days or more during the previous year.

b) The Individual is in Malaysia for less than 182 days provided the temporary absence from Malaysia:-

i) connected with his service in Malaysia and owing to service matters or attending seminars or for study purpose outside Malaysia.

ii) owing to ill-health of himself or his immediate family member.

iii) in respect to social visits not exceeding 14 days in aggregate.

In the following cases he shall be deemd to be in Malaysia if he is in Malaysia immediately prior to or after the temporary absence.

c) The individual is in Malaysia for a period of 90 days or more during the Previous year AND in repect preceding previous years immediately preceding the previous year :

i) he shall be a resident of 3 previous years out of 4 previous years.

ii) he shall be more than 90 days in aggregate during the 4 previous years immediately preceding the previous year.

d) The individual is less than 90 days in Malaysia but he is a resident of Malaysia for 3 previous years immediately preceding the year of Assessement.

4. This Statment is False. Citizen of Malaysia is not automatically a Tax Resident in Malaysia. If you are a citizen of Malaysia but has not ful-filled any of the conditions stated in Section 7 of The Income Tax Act, 1967 then he is a Non- Resident for the Purpose of computing tax liability under the Act.

Citizen and Residency are two different things. An individual could be a Citizen of Malaysia but he could be a Non-Resident for the purpose of Tax Liability. Non Resident are taxed at 30% Flat Rate and are not given tax exmeptions in Malaysia.

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