Criteria on Incomplete Income Tax Return Form (ITRF), Business Codes and Media Release

i) Please note that information on Criteria for Incomplete ITRF has been updated and can be viewed via the dropdowns of the “Forms” box at the IRB’s website.

ii) According to the information available on the website and the media release dated 29 March 2012 by the Inland Revenue Board (IRB), effective from 1 January 2012,

· an incomplete Income Tax Return Form (ITRF) will be returned to the taxpayer.

· IRB will impose a penalty under Section 112(3) of ITA in the case of late resubmission of the ITRF to IRB.

· failure to submit Employer Return (Form E) on or before 31 March 2012 will be liable to offence under Section 120(1)(b) of ITA

iii) Members may now view the Business Codes at IRB’s website at the homepage via the dropdowns of the “Forms” box.

iv) The IRB has, via subsequent email, informed the Institute that filling a business code (box) incompletely will be tantamount to filing an incomplete return. Filling business code (box) incompletely means

· not indicating a business code in the box, or

· indicating a business code that is not provided by the IRB.

EXPEDITE TAX REFUNDS

The IRB has on 21 March 2012 released a press statement informing that they will expedite the processing of tax refunds this year. This could be done provided that the taxpayers had filed their ITRF via e-Filing and the information pertaining to name, identity card number in the corresponding bank are similar with the IRB’s record and the bank account particulars are accurately completed.

CRITERIA ON INCOMPLETE INCOME TAX RETURN FORMS (ITRF)

The IRB has issued the criteria on incomplete ITRF which is available on the IRB’s website at the link below: http://www.hasil.gov.my/pdf/pdfam/Kriteria_BNCP_Tidak_Lengkap.pdf.

The IRB has further informed that an incomplete ITRF will be returned to the taxpayer effective from 1 January 2012 and for any late resubmission of the ITRF, penalty under subsection 112(3) of the Income Tax Act 1967 will be imposed by the IRB.

Some of the key areas highlighted are as follows:

a. Failure to use the prescribed ITRF issued by the IRB and for the relevant year of assessment;
b. Errors in filling up basic information in the ITRF;
c. Using other taxpayer’s ITRF;
d. Error or filling up of incomplete date of the accounting period;
e. Mistake in filling up the accurate amount and error in the computation of tax in the ITRF; and
f. The particulars provided under the ‘Declaration’ column in the ITRF is either incorrectly filled up or incomplete.

BUSINESS CODE

Members are hereby informed that the business code is available on the Inland Revenue Board (IRB)'s website at http://www.hasil.gov.my under the heading "Borang" > "Kod Perniagaan" (Bahasa Melayu version) and "Forms"> "Business Codes" (English version).

Donations to Schools and Registered Places of Worship

We refer to the e-CTIM No.42/2012 issued on 22 March 2012.
As mentioned in the said e-CTIM, the information provided is preliminary and is subject to change.

Members are advised to wait for the guidelines to be issued by the authorities, before taking any action.

Donations to Schools and Registered Places of Worship

The 2012 Budget Speech (paragraph 45) states that financial contributions from companies and individuals to all registered places of worship and registered schools for the purpose of upgrading their facilities will be given tax deduction.

CTIM would like to advise members that the information set out below is preliminary and is subject to changes. We have been informed that Guidelines for the Application of Approved Special Fund will be uploaded on the websites of Inland Revenue Board (IRB) and the Ministry of Finance (MOF) once the amendment to the Income Tax Act 1967 (ITA) is gazetted.

Application for Approved Special Fund

• In order to enable donors to qualify for tax deduction, a religious body/educational institution has to apply individually to the IRB as soon as possible for approval to set up a “Special Fund” under the amended section 44(6), ITA for the purpose of receiving cash donations from the public.

• The Special Fund is established for purposes of management, operating, maintenance of religious body/school. Please note that this is separate from a Building Fund.

• The religious body/school will be given an approval number from the IRB. The approval number and the amount of donation should be indicated on the receipt signed by an official from the religious body/ school. The donor can then claim a deduction in his tax return form and produce the receipt upon tax audit.

• Only cash donations will qualify for tax deduction, and the total deduction to be claimed in a year of assessment is restricted to 7% of aggregate income for an individual and 10% in respect of a company.

• The religious body/school has to be registered with a parent body e.g. council of churches, etc. and it must be a non-profit making body.

Donations made between 8 October 2011 and 31 December 2011

• Pending the amendment to the ITA, application can be made by the donor to the MOF (Tax Analysis Division) for approval for income tax deduction for year of assessment (YA) 2011.

• Donor needs to forward a copy of receipt stating amount of donation and acknowledgement from school/religious body official.

Donations made on or after 1 January 2012

• Donors can claim tax deduction under the self-assessment system (SAS) in accordance with the amendment to the Income Tax Act 1967 gazetted.

Reminder to update CPE credit hours.

We would like to remind you that there is another 8 months to achieve and update your CPE training activities for 2012 (except for new members whose cycle begins next year, 2013 and exempted members).

As a reminder, the minimum number of hours to meet the CPE By-Laws requirements is 20 structured CPE credit hours per annum.

As we are still in the early part of the year, it is a good time to verify your CPE credit hours. Please view your CPE records by clicking HERE.

USER ID (membership number) and PASSWORD are required for online viewing & CPE record submission. Please email to password@mia.org.my if you require the password details.

Income Tax (Deduction for Expenditure on Franchise Fee) Rules 2012 [P.U.(A) 76/2012]

The Rules follow from paragraph 33 of the 2012 Budget speech, and the related Appendix 15.

They prescribe that the franchise fee paid to the franchisor by a qualified person for his franchise business prior to the commencement of business shall be deemed to be incurred in the basis period for a year of assessment in which the franchise business commences and shall be allowed a deduction in arriving at the adjusted income of that business, provided that the franchise fee incurred shall not be refundable.

These rules are effective from the year of assessment 2012.

In the Rules –

“franchise fee” means a fee paid by a qualified person to the franchisor for the right to use a mark (as in Section 4, Franchise Act 1998), trade secret, confidential information, intellectual property or system of franchise owned by that franchisor in accordance with the terms of a franchise agreement but shall not include royalty payment or other periodical payments.

“franchisor” means a franchisor within the meaning of Section 4 of the Franchise Act 1998 who wholly owns the local franchise brand and in relation to a company incorporated under Companies Act 1965, at least seventy per centum of the issued share capital is owned by Malaysian.

“qualified person” means a Malaysian resident person who is a franchisee within the meaning of Section 4 of the Franchise Act 1998.

“franchise business” means a business carried out by a qualified person using a local franchise brand.

“local franchise brand” means a trade mark or service mark that is registered under the Trade Marks Act 1976 by a franchisor whose franchise business is registered under Section 6 of the Franchise Act 1998.

CALL FOR INCOME TAX TECHNICAL AND OPERATIONS ISSUES

CTIM is going to have a dialogue with the Inland Revenue Board (IRB) in early April to discuss issues relating to technical and operational matters and to seek clarification from the authorities, where necessary. Towards this end, CTIM needs feedback from its members.



CTIM hopes that members will quickly forward, in writing, the challenges they face with regard to technical and operational matters as well as suggestions and comments for improvement, for consideration. The feedback will be reviewed by the Technical Committee of CTIM and, where appropriate, will be included in the Memorandum to be submitted to the IRB for discussion.



The feedback must have justification and supporting evidence, and where relevant, also quantify the impact to ensure sufficient depth to the feedback. Your feedback should reach us not later than 23 March 2012. You may submit all proposals via email to kslim@ctim.org.my or kim@ctim.org.my. Alternatively you may fax to the Institute at 03-2162 8990 or 2161 3207.

Prescribed Form CP58

Further to our e-CTIM No. 27/2012, CTIM is in the process of seeking clarifications from the Inland Revenue Board (IRB) on the various issues relating to the completion of the prescribed form CP58. We shall keep you informed of the progress.

Meanwhile, members are requested to submit their issues, comments or suggestions in relation to CP58 to the Institute on or before 24 March 2012 so that a more comprehensive response may be compiled and presented to the IRB.


You may fax your suggestions/comments to 03-2162 8990 or 03-21613207. Alternatively, you may email your suggestions/comments to Mr K. S. Lim, Ms Nadia, or Ms Yamuna at kslim@ctim.org.my, nadia@ctim.org.my or yamuna@ctim.org.my respectively

CTIM’S RULES AND REGULATIONS (ON PROFESSIONAL CONDUCT AND ETHICS) – (REVISED)

The Rules and Regulations on Professional Conduct and Ethics (Revised) are now available on the Institute’s website for members’ reference.

Members are advised to read the Rules and Regulations and abide by them.

Promotion of Investments (Promoted Activities And Promoted Products for Small Scale Companies) Order 2012 [P.U. (A) 63/2012]

This Order, effective from 2 March 2012, provides (in the First Schedule) the list of promoted activities and promoted products for small scale companies in 19 industries.


The following Orders are revoked by way of the Second Schedule in this Order:

· The Promotion of Investments (Promoted Activities and Promoted Products for Small Scale Companies)(Amendment) Orders 1998-2008 [P.U. (A) 81/1998, 305/2000, 386/2001, 96/2005 and 275/2007]

· The Promotion of Investments (Promoted Activities and Promoted Products for Small Scale Companies)(Amendment) (No.2 & 3) Orders 2005 [P.U. (A) 366 & 483/2005]

Promotion of Investments (Promoted Activities And Promoted Products) Order 2012 [P.U. (A) 62/2012]

This Order, effective from 2 March 2012, provides (in the First Schedule) the list of promoted activities and promoted products.


The following Orders are revoked by way of the Second Schedule in this Order:

· The Promotion of Investments (Promoted Activities and Promoted Products)(Amendment) Orders 2001 to 2008 [P.U. (A) 156/2001, 31/2002, 97/2005, 368/2005, 344/2007, 207/2008]

Promotion of Investments (Promoted Activities And Promoted Products for Reinvestment) Order 2012 [P.U. (A) 61/2012]

This Order, effective from 2 March 2012, provides (in the Schedule) the list of promoted activities and promoted products for reinvestment.


The Promotion of Investments (Promoted Activities and Promoted Products for Reinvestment) Order 2008 [P.U. (A) 210/2008] is revoked.

Promotion of Investments (Promoted Activities And Promoted Products for Selected Industries) Order 2012 [P.U. (A) 60/2012]

This Order, effective from 2 March 2012, provides (in the Schedule) the list of promoted activities and promoted products for the following industries:

· Machinery and equipment,

· Specialised machinery and equipment,

· Oil Palm biomass,

· Renewable energy, and

· Conservation of energy.



The Promotion of Investments (Promoted Activities and Promoted Products for Selected Industries) Order 2008 [P.U. (A) 458/2008] is revoked.

Promotion of Investments (Promoted Activities And Promoted Products for High Technology Companies) Order 2012 [P.U. (A) 59/2012]

This Order, effective from 2 March 2012, provides (in the First Schedule) the list of promoted activities and promoted products for high technology companies.


The following Orders are revoked by way of the Second Schedule in this Order:


· Promotion of Investments (Promoted Activities And Promoted Products for High Technology Companies) Order 1995 [P.U. (A) 32/1995] ,


· Promotion of Investments (Promoted Activities And Promoted Products for High Technology Companies) (Amendment) Orders 1997 - 2007 [P.U. (A) 508/1997, 259/1999, 385/2001, 109/2005 and 331/2007], and


· Promotion of Investments (Promoted Activities And Promoted Products for High Technology Companies) (Amendment) (No. 2 & 3) Orders [P.U. (A) 367 & 482/2005]

Revised Filing Programme For Income Tax Return Forms (ITRF) In The Year 2012

We refer to the e-CTIM No.34/2012 issued on 2 March 2012, which is reproduced below, and are pleased to elaborate (in red) on the key changes to the earlier 2012 Filing Programme.  Please note that you may click the links (in blue) indicated in the e-CTIM to refer to the relevant document and statutory provisions

.

 

Revised Filing Programme For Income Tax Return Forms (ITRF) In The Year 2012

Further to our e-CTIM No. 30 of 2012, please be informed that the Inland Revenue Board (IRB) has informed that the 2012 Filing Programme has been revised.

The key changes made on the earlier Filing Programme are as follows:-

·           The grace period of 15 days to settle tax payment for taxpayers who e-filed their 2012 Income Tax Return Form (ITRF) is no longer applicable for the settlement of tax payable under subsections 103(1A) (in relation to deemed assessment or additional assessment on amended return) and 103(2) (in relation to best judgment assessment, deemed assessment, advance assessment, composite assessment, increased assessment as a result of review by DGIR, etc.) of the Income Tax Act, (ITA) 1967.

However, there is no change for settlement of tax under subsection 103(1) of the ITA, i.e. 15 days grace period is still applicable.

·           With regard to paper filing via post, the grace period of 3 working days is now applicable in respect of payment of balance of tax payable under subsection 103(1) of the ITA.

For detailed information, members may view the latest 2012 Filing Programme at the IRB’s website.

IRB Media Release –Filing Season for Income Tax Return Forms (ITRF) for Year of Assessment 2011 Has Begun

The Inland Revenue Board (IRB) has issued a media release on 1 March 2012 to inform that the ITRF for the year of assessment 2011 can be submitted through e-filing beginning from 1 March 2012.

IRB has also provided the procedures for the activation of e-filing and the resetting of password. Resident taxpayers with no business income may now e-file Form BE through their smartphones or iPad (m-filing). This service can be accessed directly through the e-filing website at https://e.hasil.gov.my/ or at the IRB’s website at the following link http://www.hasil.gov.my/.

For more information, members may view the Media Release at the IRB’s website

Revised Filing Programme For Income Tax Return Forms (ITRF) In The Year 2012

Further to our e-CTIM No. 30 of 2012, please be informed that the Inland Revenue Board (IRB) has informed that the 2012 Filing Programme has been revised.

The key changes made on the earlier Filing Programme are as follows:-

·           The grace period of 15 days to settle tax payment for taxpayers who e-filed their 2012 Income Tax Return Form (ITRF) is no longer applicable for the settlement of tax payable under subsections 103(1A) and 103(2) of the Income Tax Act, (ITA) 1967

·           With regard to paper filing via post, the grace period of 3 working days is now applicable in respect of payment of balance of tax payable under subsection 103(1) of the ITA.

For detailed information, members may view the latest 2012 Filing Programme at the IRB’s website.

Submission of Income Tax Return Through Mobile Devices (m-filing)

The Inland Revenue Board (IRB) has informed that the Income Tax Return (Form BE) of a resident individual who does not carry on a business can now be submitted through m-filing.

Individual taxpayers can access the following link https://mfiling.hasil.gov.my/to proceed with the m-BE submission of their tax returns.

For more information on the details of the supported mobile devices, members may view the IRB’s website.