CIRCULAR MF12/2011: MIA ISSUES FRSIC CONSENSUS 15

CIRCULAR MF12/2011: MIA ISSUES FRSIC CONSENSUS 15 ''CLASSIFICATION OF A TERM LOAN THAT CONTAINS A REPAYMENT ON DEMAND CLAUSE BY THE BORROWER''

30 Mar 2011

Circular MF12/2011

ALL MEMBER FIRMS

MIA ISSUES FRSIC CONSENSUS 15 ''CLASSIFICATION OF A TERM LOAN THAT CONTAINS A REPAYMENT ON DEMAND CLAUSE BY THE BORROWER''

The Institute is pleased to inform members that the Council has approved the release of FRSIC Consensus 15 ''Classification of a Term Loan that Contains a Repayment on Demand Clause by the Borrower''.

FRSIC Consensus 15 is issued as part of the Institute’s initiatives to promote best practices in compliance with the highest standards in financial accounting. FRSIC completed the development of the Consensus after considering the responses to the exposure draft, published in January 2011.

About the Consensus

FRSIC Consensus 15 provides guidance to address the current and non-current classification issues faced by a borrower related to a term loan agreement which contains a repayment on demand clause. Considering the legal opinions obtained as well as the case laws established in Malaysia, FRSIC concluded that the repayment on demand clause in term loan agreements governed by and construed in accordance with the laws of Malaysia would not affect the borrower’s ability to defer settlement of a liability for at least twelve months after the reporting period. As such, the borrower should determine the classification of the liability associated with such term loan in its statement of financial position in accordance with other terms and conditions as stated in the term loan agreement.

Please be guided accordingly.

Issuance of individual and partnership income tax return forms for the year of assessment 2010

The Inland Revenue Board (IRB) has informed that the income tax return forms have been issued in batches since January 2011 to individuals and partnerships who have not done e-filing before. Partnerships and individuals who do not receive these return forms by 31 March 2011 can obtain a copy of the forms from the relevant Assessment Branch. Members may view the IRB’s letter dated 17 March 2011 on the Institute’s website at http://www.ctim.org.my/cms/news.asp?menuid=14.

ETP ROADMAP

Malaysia's Economic Transformation Programme (ETP) roadmap is a comprehensive effort by the Performance Management & Delivery Unit (PEMANDU) under the Prime Minister's Department that will transform Malaysia into a high-income nation by 2020.

Although it was announced back in October 2010, many people are keen to know what it is really about, why is it so crucial to Malaysia, and how it will benefit Malaysia as a whole, as well as every Malaysian.

For more info, log on to http://www.pemandu.gov.my/

Income Tax Credit

On 30 December 2010, the IRB issued a guideline GPHDN 2/2010 to defind the term for income tax credit and the procedure on utilisation of income tax credit as set-off.

http://www.hasil.gov.my/pdf/pdfam/GPHDN2_2010ENG.pdf

Income tax - e-filing of return forms BE, B, M, P and E for the year of assessment 2010

The Inland Revenue Board Malaysia (IRB) has issued a press statement on 25 February 2011 that the e-filing of return forms BE, B, M, P and E for the year of assessment 2010 is available from March 1, 2011. All taxpayers are advised to commence the e-filing of their return forms to avoid the challenges of filing the returns towards the last few days of the due date of filing of the returns.

Taxpayers who have not used e-filing before can apply for their identification numbers (PIN) by e-mailing the application to pin@hasil.gov.my or contact 1-300-88-3010 to e-file their returns.

For tax taxpayers who have used e-filing before but have forgotten their passwords, the IRB has detailed the steps to reset their passwords. Alternatively, the taxpayers may call the helpline at 03-4289 3535 or 1-300-88-3010 for assistance.

Members may view the press statement at the website of the IRB at http://www.hasil.gov.my/pdf/pdfam/PengemukaanBNCP2010eFiling.pdf

Finance Act 2011 (Act 719)

The Finance Act 2011 (Act 719) has been gazetted on 27 January 2011. The Act is the same as the Finance (No. 2) Bill 2010 except that the amendment to Section 46 of the Income Tax Act 1967 now includes clarifications that “parents” shall be individuals resident in Malaysia, the medical treatment and care services are provided in Malaysia and the medical practitioner is registered with the Malaysian Medical Council.

Proposed Categorisation (3-Tier) of Approved Tax Agents

The IRB had proposed to categorise tax agents into 3 categories at a dialogue with the professional bodies on 10 December 2010. The brief proposals are as follows:

Category 1 Tax Agent: deals with non-corporate cases, except investigation and incentive cases.

Category 2 Tax Agent: deals with all tax cases (including corporate and non-corporate cases) except cases on specialised industries (such as sea and air transport, banking, insurance, leasing and petroleum) and incentive cases

Category 3 Tax Agent: deals with all types of tax cases including cases on specialised industries and incentive cases.

The professional bodies have submitted a Joint Memorandum to the IRB to state their views on the proposed categorisation of tax agents. Members will be informed of further developments in due course.