Question

Mr Lee, an Information Technology senior executive from mainland China, was under an employment contract in Malaysia with MSC Sdn Bhd since 1 November 2014. Since then,his pattern of stay until he left Malaysia permanently on 31 December 2019 was as follows:

Period of stay                                                             Place of stay

01 November 2014 to 31 December 2015                  In Malaysia

01 January 2016 to 31 August 2016                           In New Zealand, staying with his uncle

01 September 2016 to 19 September 2016                 In HK visiting mother who was seriously ill

20 September 2016 to 03 February 2017                   In Malaysia

04 February 2017 to 31 August 2017                         In France to undertake a company project

01 September 2017 to 17 November 2018                 In Malaysia

18 November 2018 to 30 November 2018                 In China (13 days) for a vacation

01 December 2018 to 31 December 2019                  In Malaysia

Required:

(a)     Determine the residence status of Mr Lee for Years of Assessments 2014 to 2019 under the Income Tax Act (ITA) 1967.

(Your answer should state the relevant legislation under the ITA 1967)

P/S: EXAMPLE ANSWER (a) WILL BE LIKE THIS .

Year	Total days present in Malaysia	Status resident / non-resident	Section Section 7(1)(a), Section 7(1)(b), Section 7(1)(c),Section 7(1)(d)	Explanation
2014	190 Days	Resident	Section 7(1)(a)	jane is resident for the 3 immediately preceding basis years.Under this category, an individual can be a resident in Malaysia even though he might never actually have been in Malaysia at all during that basis year.

(b)     Distinguish the requirements between Sections 7(1)(b) and 7(1B) of the ITA 1967.

       

Answer 1

Provisions took from (http://www.agc.gov.my/agcportal/uploads/files/Publications/LOM/EN/Act%2053.pdf)

(a) As per Section 7 of the Income Tax Act 1967,

(1) For the purposes of this Act, an individual is resident in Malaysia for the basis year for a particular year of assessment if—

(a) he is in Malaysia in that basis year for a period or periods amounting in all to one hundred and eighty-two days or more;

(b) he is in Malaysia in that basis year for a period of less than one hundred and eighty-two days and that period is linked by or to another period of one hundred and eighty-two or more consecutive days (hereinafter referred to in this paragraph as such period) throughout which he is in Malaysia in the basis year for the year of assessment immediately preceding that particular year of assessment or in that basis year for the year of assessment immediately following that particular year of assessment:

Provided that any temporary absence from Malaysia— (i) connected with his service in Malaysia and owing to service matters or attending conferences or seminars or study abroad;

(ii) owing to ill-health involving himself or a member of his immediate family; and

(iii) in respect of social visits not exceeding fourteen days in the aggregate, shall be taken to form part of such period or that period, as the case may be if he is in Malaysia immediately prior to and after that temporary absence;

(c) he is in Malaysia in that basis year for a period or periods amounting in all to ninety days or more, has been with respect to each of any three of the basis years for the four years of assessment immediately preceding that particular year of assessment either—

(i) resident in Malaysia within the meaning of this Act for the basis year in question; or

(ii) in Malaysia for a period or periods amounting in all to ninety days or more in the basis year in question; or

(d) he is resident in Malaysia within the meaning of this Act for the basis year for the year of assessment following that particular year of assessment, having been so resident for each of the basis years for the three years of assessment immediately preceding that particular year of assessment.

(1A) For the purposes of subsection (1), an individual shall be deemed to be in Malaysia for a day if he is present in Malaysia for part of that day and in ascertaining the period for which he is in Malaysia during any year, any day (within paragraphs 1(a) and (c)) for which he is in Malaysia shall be taken into account whether or not that day forms part of a continuous period of days during which he is in Malaysia.

(1B) Notwithstanding subsection (1), where a person who is a citizen and –

(a) is employed in the public services or service of statutory authority, and

(b) is not in Malaysia at any day in the basis year for that particular year of assessment by reason of –

(i) having and exercising his employment outside Malaysia; or

(ii) attending any course of study in any institution or professional body outside Malaysia which is fully-sponsored by the employer, he is deemed to be a resident for the basis year for that particular year of assessment and for any subsequent basis years when he is not in Malaysia.

(a) Calculation of residential status

Year	Total Days Present in Malaysia	Status	Section	Explanation
2014	190	Resident	7(1)(a)	Present for more than 182 days in Malaysia.
2015	365	Resident	7(1)(a)	Present for more than 182 days in Malaysia.
2016	104	Resident	7(1)(b)	Visit to ill mother not to be considered as the visit was for more than 14 days i.e. 19 days. Resident as per 7(1)(b) because of the previous year present in Malaysia for more than 182 days.
2017	156	Resident	7(1)(c)	Resident as per 7(1)(c) because was present for more than 90 days in 2017 and resident for the past three years (2014, 2015 & 2016).
2018	365	Resident	7(1)(a)	Present for the complete year. Resident as per 7(1)(a) because present for more than 182 days.
2019	365	Resident	7(1)(a)	Present for the complete year. Resident as per 7(1)(a) because present for more than 182 days.

(b) Difference between the requirement of 7(1)(b) and 7(1B)

7(1)(b) states that if a person is not present in Malaysia for 182 days in the basis year but present for 182 days or more in the preceding or succeeding basis year then he will be considered as resident.

Whereas

7(1B) states that if a person is employed in public service or a service of a statutory authority and is not present for a single day in Malaysia but has gone outside either due to employment or for studying which is sponsored by his employer then he will be considered as a Resident.