Tax Audit

Lately two of my clients being tax audit by IRB.

Client A

Nothing to add back, so IRB added back certain portion of upkeep of office equipment expenses

Reason: Capital nature


Client B

Scenario 1 : Loss of cash - embezzlement by an employee

IRB's action: Do not allow such loss of cash as a deduction

IRB's reply: Why no legal action? Why not sue the Staff?

Reason behind the reason: Police report was lodged, policemen managed to catch the staff, the staff was released two days later. After that, "no more" action. (Can I ask IRB to call the policeman to find out WHY?)

Public Ruling 5/2005: Loss of cash caused by theft, defalcation or embezzlement by an employee is allowable as it arises directly from the necessity of delegating certain duties of the business to subordinates.

Scenario 2: Upkeep of Motor Vehicles

This Company is having a lot of salesmen. They all using their own motor vehicles to carry out their duties (travel around whole country to get sales).

Salesman is not allowed to claim car maintenance from the Company but they are allowed to go to the panel workshop to service their cars.

The workshop will send in a statement to this Company every month end for services rendered and of course demand for payment.

IRB's action: Added back fully the expenses, meaning that it is 100% not deductible

IRB's reply: Not logic, where got Company so nice one??

The general deduction test is provided in the opening paragraph of S 33 (1).

Business expense has to fulfill all the following conditions in order to secure a deduction from the gross income of a business source:

(a) the scope of expenses refers to "outgoings and expenses";

(b) the expenses have to be "wholly and exclusively"'

(c) incurred;

(d) in the production of gross income fromt that business source

(What can I say about: 1st our policeman, 2nd our IRB officer????????)

Q & A - 2008 budget

Q: My company has substantial accumulated retained profit but with no S 108 credit. Thus my company could not declare dividends to me unless if pays income tax. With the Budget 2008 announcement on the single-tier tax system for dividends, how will the change affect my company's position?

A: Budget 2008 proposed a single-tier company income tax system whereby tax on the company's profit is a final tax and dividends distributed to shareholders will be exempted from tax. Under this single-tier income tax system, companies having no S 108 credit on Jan 1, 2008, will automatically be allowed to move to this system. However companies with credit balance in the S 108 credit will be given an option to elect for this system or continue with the full imputation system until Dec 31, 2013.

In your case, if the company has no S 108 credit as of Jan 1, 2008, it will automatically move to the single-tier income tax system. In this situation, the company can distribute dividends based on the accumulated retained profit without incurring any tax liability.

Q: My husband and I are thinking of purchasing sports equipment worth around RM 1,000 this year. Can we claim RM 300 each for the same sports equipment in our own tax returns?

A: As the maximun deduction allowed for the purchase of sport and exercise equipment for an individual is RM 300. It is either you or your husband who can claim for the relief. The claim must be supported by receipt(s).

GENERAL QUESTIONS

Q1: I received only employment income in the beginning of the year. Subsequently, I started my own business in the middle of the year. Which form do I need to fill up?

A1: You are required to fill Form B 2008 because you have business income. The due date for submission is 30th June 2009.

Q2: How can I get a Return Form B, if I do not receive it?

A2: You can get a Return Form from the LHDNM branch nearest to your work place or residence.

Q3: Can we fill up a photocopy return form for submission?

A3: No. You are advised to get a Form B from any of the LHDNM branches. You can also use e-filing for submission of Form B.

Q4: Can I submit Form B by fax?

A4: Tax payers are not allowed to submit Form B via fax.

Q5: I have received Form B 2008 for my late husband who died on 20.05.2008. But I have not received my Form B 2008. Can I use my late husband’s Form B 2008 to declare my income?

A5: You are not allowed to declare your income in your late husband’s Form B 2008. You are advised to get a new Form B 2008 from any of LHDNM’s branch offices. Furthermore, you are responsible for declaring your late husband’sincome (if any) from 01/01/2008 – 20/05/2008 in his Form B 2008. Upon completion, please return the said Form B 2008 to LHDNM together with a copy of the death certificate of your late husband.

Q6: I received two forms under 2 different reference numbers for the same year of assessment. Which one should I fill?

A6: You should check with the branch that handles your file to make sure which reference number is active. Please return the non-active Return Form with a covering letter to inform that it is a duplicate file.

Q7: Where should I submit the Return Form?

A7: i) For submission by post, please return to:Lembaga Hasil Dalam Negeri Malaysia Pusat Pemprosesan Aras 10-18, Menara C ,Persiaran MPAJ,Jalan Pandan Utama, Pandan Indah Karung Berkunci 11096 50990 Kuala Lumpur.

ii) For submission by hand you may submit the form at Level 12 of the address given in (i).

Q8: How do I know whether my Form B has been received by LHDNM? I am worried that I will be penalised if LHDNM did not receive my form.

A8: You are advised to contact the Call Centre at Pandan Indah at 03-42893700 to check the status of your Form B.

Q9: If my Form B was processed at Processing Centre Pandan Indah, does it mean that my file has been transferred there too?

A9: Under the Self Assessment System, all Return Forms will be processed at the Processing Centre at Pandan Indah. However your tax file is still maintained at the branch office that handled your file previously.

Q10: When is the due date for submission of Form B 2008?

A10: The due date for submission of Form B 2008 is 30th June 2009.

Q11: Will penalty be imposed if I submit the Form B after 30th June?

A11: Yes, LHDNM will impose a penalty under subsection 112(3) of the Income TaxAct 1967. Please refer to LHDNM's website at http://www.hasil.org.my/ for rate of penalty under subsection 112(3).

Q12: When can I get my Form J? I want to know the amount of tax to be paid.

A12: Under the Self Assessment System, no Notice of Assessment (Form J) is issued to the tax payer. Tax payers are required to calculate their tax payable.The Form B submitted is deemed to be a Notice of Assessment.

Q13: With the implementation of the Self Assessment System, there will be no more Form J issued by LHDNM. How do I know whether my tax liability is correct or not?

A13: Under the Self Assessment System, a Return Form which has been completed,signed and accepted by LHDNM will be deemed to be a Notice of Assessment and considered correct until an audit report proves otherwise. If you have further enquiries regarding the tax calculation, please contact LHDNM at 03-42893700.

Q14: Why do I have to keep all the source documents for 7 years?

A14: Records, documents and working sheets need to be kept for 7 years as evidence and reference when required.

Q15: Will a penalty be imposed if I do not keep all the records?

A15: If you do not keep your business records, you may be charged in court under Section 119A of the Income Tax Act 1967. If convicted, the penalty imposed will be not less than RM300 and not more than RM10,000 or imprisonment for not less than 1 year or both.

Q16: Can I just fill in the personal details only and leave the other parts of the Form B blank, sign and return it with my statement of accounts?

A16: No. Your Form B will be considered as incomplete and will be returned to you for correction. Under the Self Assessment System you are not required to submit any supporting documents and bills for deduction. You are required to keep all these documents for 7 years as evidence and reference when required.

Q17: If I realised that I had disclosed my income incorrectly after I had submitted my Form B, do I have to submit a new Form B to the Processing Centre?

A17: You are not allowed to submit a new Form B. You are advised to write in to notify the LHDNM branch that handles your file of any amendment.

Q18: What would be the action taken by LHDNM when the income declared inthe Form B is lower compared to the income after tax audit?

A18: LHDNM will raise an Additional Assessment (JA) together with a penalty under subsection 113(2) Income Tax Act 1967. You can view the rate of penalty from LHDNM’s website at http://www.hasil.org.my/ <>

Q19: I have ceased my business two years ago and I have no more income but I am still receiving the Form B. Do I need to fill up the Form or just return it back without filling it up?

A19: You are required to complete the Form and return it to LHDNM before the due date. Kindly notify the LHDNM branch that handles your file that you have no more income and not to issue any Form B in the future.

Q20: I am a real estate agent/insurance agent/direct selling agent. But I have not registered with the Companies Commission of Malaysia. What form should I use to declare my income?

A20: You should use a Form B to declare your income.

Q21: I run a small business and I do not keep any business records. The Profit and Loss Account is based on estimates. How am I going to submit my tax return? Will my estimated income statement be accepted by LHDNM? Will I be penalised for not keeping complete records?

A21: You can refer to Helaian Kerja HK-1(Working Paper) in the Guide Book which can be downloaded from http://www.hasil.org.my/. This working sheet guides you on how the Adjusted Income is to be calculated. Whether the Profit and Loss statement submitted by you can be accepted depends on the Tax Audit that may be carried out by our officers. In view of this, you are advised to keep full and proper records to avoid being penalised as provided for under Section 82 and 82A of the Income Tax Act 1967. Failure to comply is an offence punishable by a fine of not less than RM300 and not exceeding RM10,000 or imprisonment for a term not exceeding 12 months or both. Please refer to thePublic Ruling 5/2000 (Amended) dated 30/06/2001. You can view it at http://www.hasil.org.my/.

Q22: Where can I get the Guide Book for Form B?

A22: You can download it from our website at http://www.hasil.org.my/ .

Q23: What type of business records should I maintain?

A23: You can refer to the Public Ruling 5/2000 (Amended) dated 30/06/2001 or you can get assistance from our officers at any LHDNM branch.

Q24: I have made some errors in Form B. Can I use the correction liquid to amend it?

A24: You are not allowed to use the correction liquid. However you can amend it by drawing a line across the mistake and writing the correct details above it. Make a brief initial against each correction made.

Q25: I am a director of a company and at the same time I have commenced a sole proprietorship. Should I fill two return forms?

A25: No, you need not fill up two return forms. You can use the Form B to declare your business income in Column C1 and your employment income as a director in Column C10.

Q26: How do I declare my partnership income if the CP30 is still not receivedby the due date for submission of the Form B?

A26: You are advised to make an estimate as accurately as possible if the CP30 is not received by the due date. Upon receiving the CP30, please forward it with a covering letter to the LHDNM branch which handles your file.

Q27(a): If a person receives commission or consultancy fees as part time income, should it be classified as business or employment income?

A27(a): The commission or consultancy fees received is business income and Form B should be used to declare your income.

Q27(b): If the payment mentioned above is received yearly or monthly,how should the payment of tax be made?

A27(b): You can either:

a) Pay the tax on or before the last date for submission of Form B i.e. before 30th June of each year, or

b) Make a request for CP500 (CP500 is a bi-monthly installment scheme) to the Collection Branch where your file is located.

Q27(c): If the commission income received in a year does not reach the taxable threshold, should I still register an income tax file?

A27(c): You are not required to do so if your total gross income from the above source does not exceed RM23,000 per annum and you do not have other sources of income.

FAQ ON FORM B PART

A: PARTICULARS OF INDIVIDUAL

Q1: If my name is wrongly printed in the Form B, how do I amend it?

A1: You may cancel and initial on the Form and write your correct name in the space within A6 and A8.

Q2: What do you mean by “Type of Assessment” in column A5?

A2: 1- Joint in the name of husband = Wife elects for joint assessment and the tax will be assessed under the husband.

2- Joint in the name of wife = Husband elects for joint assessment and the tax will be assessed under the wife.

3- Separate = Tax payer elects for separate assessment.

4- Own self = If the status of an individual is single/divorced/deceased; or husband/wife has no source of income or received exemption income.** For Form B 2006, please leave this column blank if the status of an individual is ‘4’ as above.

Q3 : If I am a pensioner and I receive only pension income; what type of assessment should be filled up in column A5?

A3 : You should fill in ‘4’ in column A5.

Q4 : My wife is not working. What type of assessment should I fill in the item“Type of Assessment” in column A5?

A4: You should fill in ‘4’ in column A5.

Q5: What are Public Rulings?

A5: Public Rulings are issued by LHDNM for the purpose of providing guidance to the public and officers of the Inland Revenue Board. It sets out the interpretation of the Director General of Inland Revenue Malaysia in respect ofthe tax laws, policies and procedures that are to be applied.

Q6: Should I fill up column A8 if my correspondence address remains unchanged?

A6: Yes. You need to complete this column.

Q7: I have several business premises, which address should I fill in column A9?

A7: You are required to fill in the address of your main business premise.

Q8: I have rented a premise for my business from Jan 2008 until April 2008 and then shifted to the new premise on Sept 2008. Which address should I use?

A8: You should use the current / latest address in column 

PART B: PARTICULARS OFHUSBAND / WIFE

Q9: My wife and I have declared our income in separate forms. Are we still required to complete the particulars of husband/wife in Part B?

A9: Yes. You and your wife are required to complete the particulars in part B.8

PART C: STATUTORY INCOME AND TOTAL INCOME

Q10: Where can I check the business code for the columns C1 to C3?

A10: Please refer to Appendix G, Form B Guidebook. You may download it from http://www.hasil.org.my/. 

Q11: If I have more than three businesses, how do I declare these incomes in Part C of the Form B?

A11: If you have more than three businesses, enter the sum of statutory income from Business 3 and subsequent businesses in the column C3. List out Business 3 and subsequent businesses as per format C1 and C2 for each business by using attachment(s) and submit together with the Form B.

Q12: I have suffered business loss in the current year. How do I claim this business loss in the Form B?

A12: You may claim the current year business loss in column C19 but it is restricted to the amount of Aggregate Income in column C18. Unabsorbed current year loss can be carried forward. You need to fill this amount in column J1a.

PART D : DEDUCTIONS

Q13 : In the year 2008, I bought an electronic dictionary for my child. Can I claim any tax deduction for this purchase?

A13 : With effect from Year of Assessment 2007, tax payer may claim a deduction restricted to RM1,000 of any purchase of books, magazines, journal or other similar publications (in the form of hard copy or electronic) – excluding newspapers and banned reading materials such as morally offensive magazines.

Q14 : I bought a personal computer in the year 2006 and claimed a computer rebate of RM500 in my Form B 2006. In Jun 2008, I bought another personal computer at a price of RM3,600. Can I claim for a deduction in my Form B 2008?

A14 : With effect from Year of Assessment 2007, tax payer is entitled to claim a deduction for purchase of a personal computer restricted to RM3,000 once every three years.

Q15 : I had bought a computer for my business usage. Can I claim for a computer deduction/relief in my Form B 2008?

A15: You are not eligible to claim for computer deduction/relief in your Form B 2008 since it is for business usage. Nevertheless, you are allowed to claim capital allowance on the said computer. Please refer to Working Sheet HK-1.2.4 in Guide Book Form B for calculation of capital allowance.

Q16: Am I eligible to claim for computer deduction/relief in my Form B 2008 if receipt issued for the purchase of computer is in my child’s name who is still in school?

A16 : You are eligible to claim a deduction/relief in your Form B 2008 for purchase of computer restricted to RM 3000.

Q17 : In the year 2008, my wife and I each bought a laptop computer for RM3,250 and RM 2,950 respectively. If I opt for joint assessment in 2008,what is the amount that I can claim for computer deduction/relief? And what is the amount if I opt for separate assessment?

A17 : For a joint assessment, you are only eligible to claim computer deduction/relief up to RM 3000 only. However, if it is a separate assessment, you can only claim RM 2,950 and your wife can claim RM 3,000 in your Form B 2008.

Q18 : In the year 2008, I had deposited RM 2,500 in “Skim Simpanan Pendidikan Nasional (SSPN)” and my withdrawal was RM 400. Account balance at the end of year 2008 was RM 4,800. Can I claim for relief up to RM 3,000?

A18 : Total relief claimable for SSPN is total net saving in a year which is total savings less total withdrawals for the year. Hence, you are only allowed toclaim RM 2,100 as SSPN relief (RM 2,500 - RM 400).

PART E: TAX PAYABLE

Q19: Do I qualify to claim the Individual Rebate (E4) if my chargeable income is RM50,000?

A19: You are not eligible to claim this rebate. The individual rebate is only allowed for those having Chargeable Income (E1) not exceeding RM35,000.

Q20: Can I get the wife’s rebate in Item E5 if she is not working?

A20: You are eligible for the wife’s rebate if your chargeable income (E1) does not exceed RM35,000.

Q21: Will I be able to get the tax rebate for my husband if I elect for Joint Assessment?

A21: You would be allowed the tax rebate for your husband if your ChargeableIncome (E1) does not exceed RM35,000 and relief for husband has been claimed.

Q22: My Chargeable Income (E1) exceeds RM35,000 and my wife is a housewife and has no income. Can I claim the tax rebate for her?

A22: No, as your Chargeable Income (E1) has exceeded RM35,000.

Q23: I have elected for Joint Assessment in the name of my husband. The total tax in E3 is RM500 and I am entitled to RM700 as a rebate. What is the amount that I need to put in E9?

A23: You have to fill in RM500 in E9 instead of RM700. Total rebate is restricted to the amount of total income tax in column E3.

PART F: SUMMARY OF TAX AND PAYMENTS

Q24: I have forgotten to enter CP500 amount in the column F2 of my Form B. What should I do?

A24: You are advised to write to the collection branch which handles your file,informing them of your total payment made under the CP500 scheme.

PART G: PRECEDING YEARS’INCOME NOT DECLARED

Q25: In the year 2008, I received arrears of bonus for the year 2006. Do I haveto declare this income in the Form B 2008?

A25: Yes. Please declare the arrears in Part G of the Form B 2008.

Q26: In my form EA I noticed there is PCB deduction on my arrears; where should I enter this amount?

A26: You are not required to enter this amount in the Form
B. This amount would have been credited into your account.PART J, K, L

Q27: Must I fill up section J, K, and L in the Form B 2008?

A27: You have to fill in the relevant columns only. Leave it blank, if it is not relevant.Please refer to Guidebook B 2008 for further information.

PART M: FINANCIAL PARTICULARS OF INDIVIDUAL

Q28(a): How should I fill in Part M if I have more than one business?

A28(a): If you have more than one business, you are required to declare the financial information of the business with the highest turnover. For other businesses, you should fill in the gross business income in column M8.

Q28(b): In the above situation, would it mean that the figure in column M25 (netprofit/loss) Form B 2008 would not be the same as the net profit/loss in business income?

A28(b): You have to fill in the net profit of your main business only in column M25.

Q29: If I have more than one business, which business code should I fill in Part M in the column M1?

A29: You are advised to fill in the code of the business with the highest turnover.

Q30: If I have a partnership business, should I fill in Part M in the Form B?

A30: If you have a partnership business, you are not required to fill in the financial particulars of the partnership in Part M. You only have to fill in your share of the gross profit from the partnership in column M8 of the Form B.

Q31: Should I declare the gross income or net income in columns M9 to M12?

A31: You have to declare the gross income in these columns.

Q32: What should I fill in the column “Pendapatan Lain” in M12?

A32: “Pendapatan Lain” means other non-business sources of income which are not declared in columns M9 to M11 such as other gains or profits which are liable to tax.

Q33: Where should I declare bad debts that are recovered in Part M of Form B?

A33: Bad debts recovered are gross income from business and should be declared as gains or sales in column M2 of Form B.

Q34: What type of interest expenses is referred to in column M14 of Form B?

A34: Column M14 of the Form B refers to loan interest such as bank loan interest but excludes interest on hire purchase and lease.

Q35: What is the expenditure that can be allowed in computing adjusted income from any sources of income under the income tax law?

A35: Section 33 of the Income Tax Act 1967 provides that expenditure that is wholly and exclusively incurred in the production of income is allowable. However, expenditure that is not allowable under section 39, ITA 1967 among others, areas follows:

a. Private and domestic expenditure in any form.

b. Capital expenditure such as purchase of asset.

c. Expenditure not wholly and exclusively incurred in the production of income such as donation, legal fees for acquiring of asset, or for personal matter, fine for offences against the law including fine and expenses incurred for appeal on Income Tax.

d. Entertainment expenses not incurred in the production of income.

Q36: If I did not prepare the business balance sheet statement, should I fill in columns M27 to M49?

A36: Under the Self Assessment System, a tax payer who has income from a business source is required to fill Part M of Form B which contains particulars from Trading, Profit and Loss account and Balance Sheet. Tax payers are required to keep complete business records under section 82 and 82A of the ITA 1967. You may seek advice from LHDNM officers on what type of business records should be maintained.

Q37: I am a partner in a partnership with my wife. I have not registered a partnership file before. How are we going to fill in Part M of the Form B?

A37: You are advised to register a partnership file with LHDNM. If you have not done so, please follow the steps as below:-

1) Register your partnership with the LHDNM branch nearest to your business address to get a partnership tax file number.

2) Please fill in the Form P 2008, to declare financial information and distribution of partnership income to each partner.

3) In the Form B 2008, you and your wife should declare the statutory income of the partnership in column C4 of Part C and gross partnership income in column M8 of Part M.

DECLARATION SECTION

Q38: If the Form B 2008 is prepared by a tax agent appointed by me, should Ifill and sign in the declaration section?

A38: Yes. You are still required to fill and sign in the declaration section as a confirmation that the information you declared in the form is correct. Whereas the tax agent will fill and sign in the section of the “Particulars Of Tax Agent Who Completes The Return Form”.

Q39: If I am overseas, can I authorise a representative to fill up the form and sign the form on my behalf?

A39: If a tax payer is unable to sign the form himself because he is overseas or for other valid reasons, the Form B can be signed and sent in by his representative or by a third party. However the third party or representative will be responsible for the information given in the form. If the Form is to be signed and sent by your representative or third party, please fill up the Declaration Section as follows:

1) Fill in the name and identity card number/passport number of the tax payer’s representative.

2) Please enter “2” in column “This return form is made on behalf of the above”

3) Tax payer’s representative is to sign in the signature box provided.

Service Tax For IT Industry

The word "consultancy" is not defined in the Service Tax Act 1975. The ordinary and general meaning of consultancy may therefore be relied upon.

This means "the act of providing expert advice and notification of facts and information". It can generally be accepted that such services would not include work of a routine and mundane nature and where no expert opinion is expressed.

The persatuan Industri Komputer Malaysia (PIKOM) has clarified that for the computer industry, consultancy services include the following:

1. Consultancy in purchase computer
2. Consultancy in program/software development
3. Consultancy in implementing software development
4. Consultancy in selecting a system integration
5. Consultancy in computer management information system (MIS)
6. Consultancy in formulate an information system and information technology strategy
7. Consultancy in other consultation on services relating to computer project include advise on business strategy, on organisational set up and future directions
8. Computer project management/management information system

Those not subject to service tax:

• Installation, training, implementation work on computer
• Cost of hardware/software products
• Warranties on hardware/software
• Maintenance of hardware or software (on call basis, no fixed contract or agreement being signed. Otherwise, refer to No 5. above)

Stamping by Way of Franking and Official Receipt (Kew 38)

With reference to e-MIT 02/2009, item No. 6, the Institute wishes to inform that the IRB has indicated that due to some complications, the old way of stamping by way of franking on the instrument itself and by official receipt (Kew 38) is still available until further notice.

Disallowance of Filing of Tax Return in PDF Format

The Inland Revenue Board (IRB) has informed that with effect from Year of Assessment 2008, tax agents are not allowed to use tax return in pdf format for filing purposes. Tax agents are advised to use e-filing or manual filing through original printed tax return forms. This is because many of the pdf return forms have created technical difficulties for the IRB as these could not be scanned due to various reasons and the IRB staff has had to manually key in all the data from the tax return into the computer system which has created an administrative burden.

However, the PDF return form will still be available on the IRB website for the use of individual taxpayers who have not received the tax return forms and who face difficulties in coming personally to the IRB offices to obtain the original printed form.

A copy of the IRB letter may be viewed at the MIT website or click HERE.

High Court reported case pertaining to trademark laws

THE "AYAMAS" TRADEMARK CASE

Ayamas Convenience Stores Sdn. Bhd. (the Plaintiff) v. Ayamas Sdn. Bhd. (the Defendant) [1995] 1 CLJ 137

Facts: In this case, the Plaintiff was the registered proprietor in Brunei of the trade mark "AYAMAS" in respect of meat, fish, poultry and games.

The Defendant registered a company name known as Ayamas Sdn. Bhd. in the operation of the "Grandy's" fast food outlets.

The Plaintiff sued the Defendant for infringement of its registered trade mark and passing off.

The Plaintiff alleged that the Defendant infringed the Plaintiff’s registered trade mark by using the word "Ayamas" in the operation of the "Grandy's" fast food outlets in such a way as to pass off the Plaintiff’s trade mark and which was calculated to deceive customers into thinking that the goods sold by the Defendants are made by the Plaintiff.

The Defendant argued that the Plaintiffs reputation was in West Malaysia, not in Brunei. Hence, no customers were deceived and that Plaintiff had not proven existence of goodwill in Brunei.

Furthermore, the defendant argued that besides fried chicken, they had not sold other goods which were similar to the plaintiff’s goods.

Outcome of the Case:

The court held that the claim for trade mark infringement failed.

The mere use of the business name of the Defendant similar to the Plaintiff’s trade mark is not sufficient to constitute infringement.

Based on the evidence adduced, there was no attempt to persuade or mislead the Defendant's customers to believe that the products sold were the Plaintiff’s products. The Plaintiff's excellent reputation and goodwill in Malaysia must be shown to have suffered or to be likely to suffer from the Defendant's activities in confusing or misleading the public.

On the facts, no reasonable customer would be misled into thinking that the Defendant was serving the Plaintiff's products.

A trade mark protects only those goods for which the trade mark is registered. It gives no protection to anything which is not included in the specifications of goods. The proprietor thus has the exclusive rights to use the trade mark in relation to the registered goods only.

In this case, it is clear that registration of a business/company name is not itself a sufficient proof of a trademark infringement.

On the other hand, if the Defendant were to use the said name in the course of his business as their "trademark", the infringement will likely to occur.

SCHEDULAR TAX DEDUCTION -PCB 2009

New release

IRB has issued the new STD schedules taking into account the 2009 Budget proposals. The new schedule is applicable to 2009 remuneration. Bonus and directors’ fees paid in 2009 must also be based on the new 2009 schedule.

For prior year remuneration paid in 2009, the old STD tables (issued in 2004) should be used.
As a concession, employers with a large number of employees and/or using computerised payroll systems, may apply in writing to the relevant IRB branches handling their files, to continue using the old STD tables until March 2009.

In developing the new STD schedule, efforts have been taken to ensure a more accurate deduction to closely reflect the actual tax liability. Various reliefs enjoyed by the individual are now included as a factor in arriving at the deduction. Consequently, the new computation formulae may appear to be more complicated. Members are advised to read the explanatory notes carefully and familiarise themselves with the new STD rules. You may download the explanatory notes on www.hasil.gov.my/melayu/pdf/NOTA PENERANGAN KPD JADUAL PCB 2009.PDF or click HERE.

To assist employers and tax practitioners in computing the deduction, the IRB has made available the “Kalkulator PCB” on its website (http://eapps.hasil.gov.my/pcbcalc/). Employers who agree with an employee’s request to claim allowable deductions and rebates under the Income Tax Act 1967 should use the Kalkulator PCB to ascertain the amount of STD. Employers using their own computerised payroll systems must obtain specification of the STD computerised calculation method and approval from the IRB

http://www.hasil.org.my/melayu/pdf/JADUAL%20PCB%202009%20UTK%20LAMAN%20WEB.pdf

Compound for Non-Filing of Form E for Dormant Companies

In response to the submission of the professional bodies on the above matter, the Inland Revenue Board (IRB) has clarified that the compound notices were issued to active employers who failed to submit the Form E based on the records available with the IRB.

In view of the submission by the profession and the need for a practical resolution of the matter, the IRB has agreed to granting a concession whereby for cases which have not yet been settled, the IRB has agreed to withdraw the compound for employers with no employees or who are dormant or in the process of being wound up. The employer should, however, confirm its status via a letter signed by the director or the proprietor. Alternatively, the employer may submit any document that would support its claim that the business has been terminated or liquidated, etc.

The IRB has also reminded that an employer who has received a Form E must complete and file the Form on or before the due date, even if it is dormant, under liquidation or has no employees. Employers must inform the IRB if they are no longer active or are under liquidation so that the IRB can update its records.

Entertainment Expense - New PR 3/2008

ENTERTAINMENT EXPENSE
Public Ruling No. 3/2008
Date of Issue: 22 October 2008

This Ruling is effective from the year of assessment 2008 and subsequent years of assessment. This Ruling supersedes Public Ruling No. 3/2004 issued on 8 November 2004 and Addendum to Public Ruling No. 3/2004 issued on 23 August 2007.

1. This ruling explains:

(a) the tax treatment of entertainment expense as a deduction against grossincome of a business; and

(b) steps to determine the amount of entertainment expense allowable as adeduction.


2. General provision for deduction

Generally, under subsection 33(1) of the ITA, an expense wholly and exclusively incurred in the production of gross income from a source is allowable as a deduction against gross income from that source.

However, the allowable expense under subsection 33(1) of the ITA is subject to the specific prohibition under subsection39(1) of the ITA.


3. Deduction for entertainment expense

An entertainment expense that is wholly and exclusively incurred in the production of gross income under subsection 33(1) of the ITA is not allowed a deduction of fifty percent (50%) unless the entertainment expense falls within any of the specified categories in proviso (i) to (viii) of paragraph 39(1)(l) ITA, then it qualifies for adeduction of one hundred percent (100%).


4. Principles in determining the allowable entertainment expense

In determining whether an entertainment expense can be allowed as a deduction and the amount to be allowed, the following steps have to be adhered to:

(a) Determine whether the expense falls within the definition of entertainment as provided under section 18 of the ITA.

No deduction is allowed as entertainment expense if the expenditure does not fall within the definition ofentertainment.

(b) If the expense amount falls within the definition of entertainment provided under section 18 of the ITA, determine whether the expense is wholly and exclusively incurred in the production of gross income under subsection 33(1)of the ITA.

If the expense is not wholly and exclusively incurred in the production of gross income, then the expense is not allowed a deduction. The test under subsection 33(1) of the ITA is also applicable to entertainment expense as it is applicable to other expenses.

(c) If the expense is allowable under subsection 33(1) of the ITA, determine whether that expense is included under any of the categories of entertainment expense specified under proviso (i) to (viii) to paragraph 39(1)(l) of the ITA. If the expense is included under any of those provisos, a deduction of one hundred percent (100%) against gross income is allowed. The remaining entertainment expense which does not fall within the mentioned provisos is allowed a fifty percent (50%) deduction against gross income.


5. Steps to determine allowable entertainment expense

The principles mentioned in paragraph 4 should be applied in determining the amount of allowable entertainment expense. Below illustrates the tax treatment for several examples of entertainment expense:

5.1 Entertainment given to a potential customer in a closed transaction - 0% deduction (Not wholly and exclusively incurred under subsection 33(1)of the ITA)

5.2 Entertainment given to potential or existing customers during the launching of company’s new product - 100% (Proviso (vii) to paragraph 39(1)(l) of the ITA)

5.3 Wedding gift to customer - 0% (Not wholly and exclusively incurred under subsection 33(1)of the ITA)

5.4 Entertainment to employees of related companies - 0% (Not wholly and exclusively incurred under subsection 33(1)of the ITA)

5.5 Entertainment for annual general meeting of company - 0% (Not wholly and exclusively incurred under subsection 33(1)of the ITA)

5.6 Cash contribution for customer’s annual dinner- 0% (Not wholly and exclusively incurred under subsection 33(1)of the ITA)

5.7 Annual dinner to employees - 100% (Proviso (i) to paragraph 39(1)(l) of the ITA)

5.8 Gift with business logo for customer’s annual dinner - 100% (Proviso (vi) to paragraph 39(1)(l) of the ITA)

5.9 Gift without business logo for customer’s annual dinner - 50% (Not included under provisos (i) to (viii) toparagraph 39(1)(l) of theITA)

5.10 Free trip as an incentive to sales agent for achieving the sales target - 100% (Proviso (vii) to paragraph 39(1)(l) of the ITA)

5.11 Gift of flower for customer’s opening of new outlet - 50% (Not included under provisos (i) to (viii) to paragraph 39(1)(l) ofthe ITA)

5.12 Entertainment to suppliers - 50% (Not included under provisos (i) to (viii) to paragraph 39(1)(l) of the ITA)

5.13 Hampers for customers during festive seasons - 50% (Not included under provisos (i) to (viii) to paragraph 39(1)(l) ofthe ITA)

Setting Your Goals

By: Brian Tracy

In my conversations with hundreds of top salespeople over the years, I have found that they all have one thing in common. They have taken the time to sit down and create a clear blueprint for themselves and their future lives. Even if they started the process of goal setting and personal strategic planning with a little skepticism, every one of them has become a true believer.

Becoming a True Believer

Every one of them has been amazed at the incredible power of goal setting and strategic planning. Every one of them has accomplished far more than they ever believed possible in selling and they ascribe their success to the deliberate process of thinking through every aspect of their work and their lives, and then developing a detailed, written road map to get them to where they wanted to go.

The Definition of Happiness

Happiness has been defined as, "The progressive achievement of a worthy ideal, or goal." When you are working progressively, step-by-step toward something that is important to you, you generate within yourself a continuous feeling of success and achievement.

You feel more positive and motivated. You feel more in control of your own life. You feel happier and more fulfilled. You feel like a winner, and you soon develop the psychological momentum that enables you to overcome obstacles and plough through adversity as you move toward achieving the goals that are most important to you.

Determine Your Values

Personal strategic planning begins with your determining what it is you believe in and stand for-your values. Your values lie at the very core of everything you are as a human being. Your values are the unifying principles and core beliefs of your personality and your character. The virtues and qualities that you stand for are what constitute the person you have become from the beginning of your life to this moment.

Your values, virtues and inner beliefs are the axle around which the wheel of your life turns. All improvement in your life begins with you clarifying your true values and then committing yourself to live consistent with them.

Fuzzy or Clear?

Successful people are successful because they are very clear about their values. Unsuccessful people are fuzzy or unsure. Complete failures have no real values at all.

Build Self-Confidence and Self-Esteem

Values clarification is the beginning exercise in building self-confidence, self-esteem and personal character. When you take the time to think through your fundamental values, and then commit yourself to living your life consistent with them, you feel a surge of mental strength and well-being. You feel stronger and more capable. You feel more centered in the universe and more competent of accomplishing the goals you set for yourself.

Action Exercises

Here are two things you can do immediately to put these ideas into action.

First, decide for yourself what makes you truly happy and then organize your life around it. Write down your goals and make plans to achieve them.

Second, begin with your values by deciding what it is you stand for and believe in. Commit yourself to live consistent with your inner most convictions - and you'll never make another mistake.