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Include Left Education & Development - Qualifying Examination
 

TAXATION

OBJECTIVE
To equip candidates with the knowledge and understanding of the basic concepts, principles and current tax practices in Malaysia as well as the ability to solve practical problems and to be familiar with aspects of other relevant legislation.

INTRODUCTION
This paper is designed to develop an understanding among candidates of the concepts and principles of personal, business and corporate income taxation, taxation of specialised entities, withholding taxes, etc. Besides these, legislation relating to real property gains tax and investment incentives will also be covered.

Candidates are expected to display an in-depth understanding of the impact of all major taxes on the transactions of individuals, companies and special undertakings and be able to identify, discuss and advice on the tax issues in a particular situation as well as planning opportunities to minimise potential tax liabilities.

LEARNING OUTCOMES
Upon successfully completing the examination, candidates at the minimum should be able to:

●

 Explain how the Malaysian Tax System operates.
● Determine the taxability of receipts and deductibility of expenses in accordance with the tax legislation.
● Prepare the computation of tax liability for individuals, companies, trusts, partnerships, estates, clubs, co-operative societies and other specialised businesses.
● Explain the major tax incentives available to investors.
● Prepare computations of and advice individuals and companies on issues relating to real property gains tax as a result of the disposal of chargeable assets.
● Explain the application of exemptions and reliefs and provide advice on minimising or deferring tax liabilities.

SYLLABUS WEIGHTAGE

Syllabus Content Area

Weighting
General Introduction
Principles of Taxation

15%
Personal Taxation
Deceased persons, Estate and Trust Bodies
Partnerships

20%
Business / Corporate Taxation
Relief on capital expenditure

25%
Investment Incentives
Withholding Taxes
Indirect Taxes (Sales Tax and Service Tax)
Cross Border Activities

15%
Specialised Industries
Real Property Gains Tax
Tax Planning & Avoidance

25%
Total

100%

EXAMINATION FORMAT
A 3-hour written paper comprising 5 to 6 compulsory questions.

SYLLABUS CONTENT

NO CONTENT LEVEL OF KNOWLEDGE
A GENERAL INTRODUCTION  
1
An Introduction to the Malaysian Tax System

-

 Objectives of taxation
- Direct and Indirect taxes
- Basis of charge/ what is taxable/ who is taxable
- Basis period/ Basis year/ Year of assessment
- Tax rates
A
2
Tax Administration – Assessment and Collection

-

 Organisational structure
- Power and authority of the Director General of the Inland Revenue Board
- Filing of tax returns and collection of taxes
- Self- assessment system
- Appeals
- Responsibility of taxpayers and employers
- Tax audits and tax investigations
A
3
Basis of Assessment – Commencement, Cessation and Change of Accounting Dates

-

 Basis periods
- Commencement and cessation of operations
- Change of accounting dates
A
B
PRINCIPLES OF TAXATION

-

 Distinction between trade and non-trade activities
- Distinction between revenue and capital receipts and its assessability.
- Distinction between revenue and capital expenditure and its deductibility.
- Format of arriving at chargeable income
A
C PERSONAL TAXATION  
1
Scope of charge and residence status

-

 Scope of charge
- Importance and determination of residence status
A
2
Employment Income

-

 Definition of employment / Derivation
- Distinction between employment and profession
- Gross employment income
- Treatment of benefits
- Adjusted income
- Basis Period
- Exemptions
A
3
Non-Business Sources of Income
 Dividend, interest, discounts, rent, premiums, royalty and other income sources
- Derivation
- Basis periods
- Exemptions
- Adjusted income
- Statutory income
A
4
Computation of tax liability

-

 Determination of aggregate income
- Determination of total income
- Personal reliefs
- Determination of chargeable income
- Tax rates
- Rebates
- Determination of income tax payable/repayable
A
D
BUSINESS/ CORPORATE TAXATION

-

 Business source
- Adjusted income
- Statutory income
- Calculation of chargeable income
- Tax rates
- Imputation system for corporations
A
E RELIEF ON CAPITAL EXPENDITURE  
1
Capital Allowance on Plant, Machinery and Industrial Buildings

-

 Definition of Plant, Machinery and Industrial buildings
- Qualifying expenditure
- Eligibility for capital allowances
- Date when the expenditure is incurred
- Types of allowances
- Residual expenditure
- Plant and machinery bought on hire purchase
- Disposals
- Controlled transfers
B
2
Agriculture/ Forest Allowances

-

 Qualifying agricultural expenditure
- Qualifying forest expenditure
- Computation of allowances
- Disposals
B
3
Mining/ Prospecting Expenditures

-

 Qualifying expenditure
- Determination of allowances
- Disposals/ recoveries
B
F
INVESTMENT INCENTIVES
Incentives under Promotion of Investments Act 1986

-

 Pioneer status
- Investment Tax Allowance
- Export incentives
- Infrastructure Allowance
- Double Deductions
- Other incentives
B
 
Incentives under Income Tax Act 1967

-

 Reinvestment Allowance
- Double Deductions
- Approved Service Projects
- Other special deductions including acquisition of proprietary rights and acquisition of a foreign company
- Other incentives / exemptions (including operational headquarters, regional distribution centres and regional procurement centres)
 
 
Labuan Offshore International Financial Centre

-

 Trading and non-trading activities
- Tax rates
- Exemptions
 
G
WITHHOLDING TAXES

-

 Types of income
- Derivation
- Exemptions
- Rate of tax
- Penalties for non-compliance
B
H
INDIRECT TAXES (SALES TAX AND SERVICE TAX)

-

 Scope of charge
- Licensing requirements
- Rate of tax
- Filing of returns
- Penalties
B
I
CROSS BORDER ACTIVITIES

-

 Double taxation agreements i.e. main articles in such agreements
- Meaning of Permanent Establishment
- Taxation of employees and exemptions
- Withholding taxes
- Trading in/ with Malaysia
- Double tax relief
B
J
PARTNERSHIPS

-

 Existence of a partnership
- Calculation of provisional adjusted income
- Divisible income and adjusted income of partners
- Changes in partnership accounting dates
B
K
DECEASED PERSONS, ESTATE AND TRUST BODIES

-

 Basis periods
- Computation of chargeable income of a deceased person ( or an estate under administration)
- Types of trusts
- Taxation of trust bodies
- Computation of chargeable income
- Tax rates
B
L
SPECIALISED INDUSTRIES

-

 Basis periods
- Calculation of chargeable income
- Calculation of income tax payable
- Exemptions

[This includes clubs, trade associations, co-operative societies, insurance, sea and air transport, banking, leasing, unit trusts and investment holding activities]

 B
M
REAL PROPERTY GAINS TAX

-

 Basic principles
- Definition of real property
- Determination of acquisition and disposal price and date of disposal
- Chargeable gain
- Allowable loss
- Circumstances where disposal price equals acquisition price
- Exemptions including inter-company transfers
- Shares in a real property company (RPC)
- Acquisition price of shares in a RPC
- Returns and Assessment
B
N
TAX PLANNING & AVOIDANCE

-

 Employment versus Self- employment
- Remuneration packages
- Corporate structure and dividend flows
- Disposal of business operations and restructuring of activities
- Transfer of real properties
- Transfer pricing issues
- Tax avoidance
- Anti-avoidance provisions
B

TEXTS AND REFERENCES

Recommended Text(s)

1. Veerinderjeet Singh, Malaysian Taxation: Administrative and Technical Aspects, Malaysia: Pearson
2. Malaysian Master Tax Guide, CCH
3. Choong Kwai Fatt, Malaysian Taxation, Principles and Practice, Malaysia: Infoworld
4. Choong Kwai Fatt, Advanced Malaysian Taxation: Principles and Practice, Malaysia: Infoworld

Legislation, Regulations and Rulings

1. Income Tax Act 1967
2. Real Property Gains Tax Act 1976
3. Promotion of Investments Act 1986
4. Labuan Offshore Business Activities Tax Act 1990
5. Sales Tax Act 1972
6. Service Tax Act 1975
7. Income Tax (Capital Allowance and Charges) Rules 1969
8. Income Tax Leasing Regulations 1986
9. Various orders/rules made under the Income Tax Act 1967
10. Double Taxation Agreements
11. Public Rulings and Guidelines issued by the Inland Revenue Board

Additional References

1. Faridah Ahmad, Malaysian Tax Workbook, CCH.
2. Veerinderjeet Singh & Chow CheeYen, Malaysian Taxation Revision & Practice Guide, Pearson Prentice Hall
3. Alan Yeo Miow Cheng, Malaysian Taxation, PAAC
4. AlanYeo Miow Cheng, Examination Kit, Malaysian Taxation, YSB Management Sdn Bhd
5. All relevant journals published by the Malaysian professional bodies.

* Candidates are to refer to the latest edition of texts and materials.

Note :

Legislation

Questions involving knowledge of legislation will be based on Malaysian legislation and candidates are expected to have knowledge of any current changes in legislation. However, no questions on new legislation will be set until at least six (6) months have elapsed since the last day of the month in which Royal Assent was given to the new legislation or from the time the particular order is gazetted.
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