Taxation - Scope Of Charge | tally training in chandigarh

Taxation - Scope Of Charge

Tax

compulsory exaction of money by public authority for public purposes enforceable by law.

part of our earning contributed to the Gov to meet expenditure for the benefit of the people.

( construction of roads, school, hospital, etc.

Types of Taxes

1. Direct Taxes

Paid directly to the Revenue authorities by the taxpayer.

Example: Income tax, Stamp duty

Real property gain tax

   2. Indirect Taxes

Paid indirectly to the Revenue authorities by the taxpayer.

A third party will collect the taxes on their behalf and forward the tax collected to the Revenue authorities.

Example: Sales tax, Service tax, Import duty, export duty, excise duty.

Sources of Revenue Law

Statute laws ( eg. Income Tax Act, 1967)

Case laws ( Created by the decision of courts)

Informal laws ( Inland Revenue Board )

Tax Administration

Ministry of Finance: Overall control of Malaysian Taxation

Inland Revenue Board (IRB): Responsible for assessment & collection of Direct Taxes

 ( personal & corporate)

Royal Malaysian Customs & Excise Department: Responsible for assessment & collection

 of indirect taxes.

S3, ITA, 1967

An salary impose should be charged for every time of evaluation of any individual gathering in or got from M'sia or got in M
S4,ITA.1967

*A tax is chargeable when:

gains of profits from a business/employment

dividends, interest or discount

rents, royalties/ premium

pension

ncome is a periodically monetary return coming in with regularity from a definite source 

excludes mere windfall.

Tree (capital) produces fruits (the income)

Capital gains/receipts are NOT a subject to income tax.

Sales of a company = Income of a company: Thus, it is taxable.

Person

S2 of Act  defines 'person' to include a company, a body of persons: e.g. Co-operative societies

Different tax rates apply to different category of chargeable person.

Accruing in or derived from

1) Accruing in - coming of income in a passive manner: e.g. interest, rental, dividend

2) Derived from (received)- active involvement in obtaining the income: e.g. employment income

Employment income derived from Malaysia and the salary related to the income is paid to him 

in Japan ( Income received in Malaysia from outside Malaysia), The subject is not taxable to 

Malaysian Tax since the year 2004 under Sch.6 Para 28 of ITA.

P.S:

i) Foreign income not received in Malaysia is NOT taxable.

ii) Foreign income received in Malaysia is NOT taxable due to Sch.6 Para 28 of ITA, 1967.

Scope of Charge ( Generally)

a) Derived and Remittance Basis - Income derived in that country and overseas income 

received in that country will be taxable. (tax before 2008)

b)World Scope Basis (resident company in specialised business) - Any income derived from 

that country or overseas will be taxable.

c) Territorial Basis - Only income derived in that country will be taxable.

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May 16, 2018

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