Background
The following statutory orders have been issued to
give effect to the 2013 Budget proposal: to provide tax incentives in support
of efforts to revive abandoned housing projects.
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Date Gazetted
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Citation
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Effective date/Application
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12 March 2013
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From Year of assessment (YA) 2013
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12 March 2013
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From YA 2013
Applies to a loan approved on or after 1 January
2013 but not later than 31 December 2015.
Applies to interest expense incurred for a period of
3 consecutive years from the YA in which the loan is approved.
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14 March 2013
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Apply to instruments executed by an original
purchaser/rescuing contractor or developer on or after 1 January 2013 but not
later than 31 December 2015.
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14 March 2013
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Term commonly defined
The term “bank or/and financial
institution” under P.U.(A) 89, 91 and 92 is defined to mean:
(a) a
bank or finance company licensed or deemed to be licensed under the Banking and
Financial Institutions Act 1989;
(b) a
bank licensed under the Islamic Banking Act 1983;
(c) a
development financial institution prescribed under the Development Financial
Institutions Act 2002;
(d) an
insurance business licensed under the Insurance Act 1996;
(e) a
takaful operator licensed under the Takaful Act 1984;
· In this order, “qualifying person” (QP)
means a person resident in Malaysia who is also one of the institutions listed
under (a) to (e) in the paragraph above.
· The Minister exempts a QP from payment
of income tax on statutory income (SI) derived from interest which is related
to the business of giving loan to the rescuing contractor or developer for a
period of three consecutive YA, commencing from the first YA in which the
interest income is accrued to that QP.
· “Rescuing contractor or developer”
means a contractor or developer who is appointed or approved by the Minister of
Housing and Local Government (MHLG) to carry on rehabilitation works for the
abandoned project.
· “Abandoned project” means a project
which is certified by the MHLG as abandoned project pursuant to paragraph
11(1)(ca) of the Housing Development (Control and Licensing) Act 1966.
· The SI is determined after deducting
allowances under Schedule 3 of the Income Tax Act 1967 (ITA) notwithstanding
that no claim was made for such allowances. The amount exempted is SI further
reduced by first the current year losses from other businesses and next any
unabsorbed adjusted loss and the current year adjusted loss from the business
of giving loan to the rescuing contractor or developer.
·
In this Order, QP means a
rescuing contractor or developer who is appointed or approved by the Minister
of Housing and Local Government or liquidator to carry on rehabilitation works
for an abandoned project. “Liquidator” and “abandoned project” are defined in
the Order.
·
Under this Order, a
deduction is allowed in ascertaining adjusted income from a business of a QP
for the basis period for a YA in respect of expenses specified under Rule
4(2)(a) and (b), which are incurred by the QP during that basis period,
primarily or principally for the purpose of the abandoned project. The
specified expenses are:
(a) expenses incurred in the course of acquiring
loan for the purpose of the abandoned project;
(b) expenses
in respect of interest incurred on the loan.
“Loan” means a loan granted by a bank or a financial institution to
finance an abandoned project. The definition of “bank or financial institution”
is given above in the paragraph headed “Term commonly
defined”.
·
The amount of deduction
allowed is twice the amount of expenses allowed under Rule 4(2)(a) while
interest allowed under Rule 4(2)(b) is in addition to deduction allowed under
section 33 of the ITA. Such deductions are to be claimed in the basis period
for a YA in which the abandoned project is completed.
·
The Rules also provide that
the following are to be claimed in the basis period for the YA in which the
abandoned project is completed:
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Development expenditure for
the abandoned project (Rule 4(6));
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The portion of general and
administrative expenses attributable to the abandoned project (Rule 4(7));
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Capital allowance under
schedule 3 of the ITA on assets used for the purpose of the abandoned project
(Rule 4(9));
Stamp duty exemptions granted under the
above Orders are summarized in the following table:
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(No. 5) Order
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(No. 6) Order
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Exemption
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Instruments executed by an original
purchaser, that is a purchaser whose name is stated in the Sale and Purchase
Agreement in relation to an abandoned project, or his beneficiary are granted
exemption from stamp duty.
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Instruments executed by a rescuing
contractor or a developer, that is a contractor or a developer who is
appointed or approved by the Minister of Housing and Local Government to
carry on rehabilitation works for an abandoned projected are exempted from
stamp duty.
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Instruments
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(a) any loan
instrument or loan agreement approved by the bank and financial institution
for the purpose of financing the revived residential property in relation to
the abandoned project; and
(b) any instrument of transfer for the purpose
of transferring the revived residential property in relation to the abandoned
project
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(a) any loan
instrument or loan agreement approved by the bank and financial institution
to finance the abandoned project; and
(b) any instrument of transfer for the purpose
of transferring the revived residential property in relation to the abandoned
project
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Common
definitions
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“bank and
financial institution” – see paragraph headed “Term commonly defined”
(above).
“abandoned
project” – means any project certified by the Minister of Housing and Local
Government as an abandoned project pursuant to paragraph 11(ca) of the
Housing Development (Control and Licensing) Act 1966
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The meaning of “revived residential
property” is also specified in each Order.
You may write to the Institute at technical@ctim.org.my
or secretariat@ctim.org.my
in respect of any concern or comments you may have on the Guidelines.
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