Tax Credit Repayment for Defunct Company by the Registrar and Amendments to the Claim Codes in the 2012 Form C Guidebook

30 May 2012

Circular 29/2012


TO ALL ACCOUNTANTS

TAX CREDIT REPAYMENT FOR DEFUNCT COMPANY BY THE REGISTRAR AND AMENDMENTS TO THE CLAIM CODES IN THE 2012 FORM C GUIDEBOOK


1.

TAX CREDIT REPAYMENT FOR DEFUNCT COMPANY BY THE REGISTRAR

Members are hereby informed that all unsettled assets of companies which have been dissolved under the proviso of Section 308 of the Companies Act 1965 (CA 1965) including tax credit, shall be vested on the powers of the Registrar pursuant to Section 310 of the CA 1965.

Directors and/or shareholders of the dissolved company are disqualified from representing the company as the company no longer exist and as such, are disqualified from applying for the tax credit refund to claim on the company’s assets.

Application for court order by the director and/or shareholders of the company to reinstate the company must first be done if the company still wishes to do so as the Companies Commission of Malaysia (SSM) does not have the power to reinstate the company which had been struck off from the SSM’s list.

For companies applying for dissolution, they are required to submit the Statement of Declaration by Applicant to the SSM stating that the company has no assets and liabilities vested in the SSM register i.e. the company must ensure that all the assets are settled before application is made.

All tax repayment application will be forwarded directly to and under the name of “Suruhanjaya Syarikat Malaysia”.

The letter issued by the Inland Revenue Board (IRB) dated 14 May 2012 is attached for members’ attention.

2.

AMENDMENTS TO THE CLAIM CODES IN THE 2012 FORM C GUIDEBOOK

The Inland Revenue Board (IRB) has on 24 May 2012 made amendments to the Claim Codes listed in Appendix D of Section 1: Special Deduction and Other Claims in the 2012 Form C Guidebook as appended below:

a.

Additional code “149” for “Deduction for expenditure to obtain the 1-InnoCERT certification”

b.

Additional code “150” for “Deduction for promotion of international or private school”

For further details, please refer to the 2012 Form C Guidebook which is available on the IRB’s website at http://www.hasil.gov.my under the heading “Borang” > “Syarikat” (Bahasa Melayu version) and “Forms” > “Company” (English version) > 2012.

Please be guided accordingly.


HO FOONG MOI (MS)


Acting Chief Executive Officer

IMPLICATIONS OF THE HOUSING DEVELOPMENT (CONTROL AND LICENSING) (AMENDMENT) ACT 2012 ON INSOLVENCY PRACTITIONERS

The Housing Development (Control and Licensing) (Amendment) Act 2012 was gazetted on 9 February 2012. The effective date of the Act has yet to be announced.

The Ministry of Housing and Local Government has proposed that the Housing Development (Control and Licensing) Act 1966 be amended for more protection to house buyers and to minimise the occurrence of abandoned projects. The amendments which involved eight existing provisions, one new provision and one abolished provision were passed in the Parliament in December 2011.

A new section (Section 18A) was introduced in the Housing Development (Control and Licensing) (Amendment) Act 2012 which enables house buyers to initiate criminal proceedings against any licensed housing developers who abandon or cause to be abandoned housing projects. The licensed developer who abandons or causes a housing development to be abandoned can be fined between RM250,000 and RM500,000 or jailed up to 3 years, or both.

The Act has also been amended to extend the interpretation of a ‘housing developer’ to include a person or body appointed by a court of competent jurisdiction to be the provisional liquidator or liquidator for the housing developer in a case where the housing developer is under liquidation. Hence, the liquidator is subjected to the duties imposed by the Act and may be liable for the offences of breaching such duties of a housing developer.

In view of the seriousness of the amendment to the interpretation of a “housing developer”, members who are liquidators are advised to seek legal advice before taking on any abandoned housing project. Meanwhile, the Institute is engaging with the relevant authorities to discuss the implications of the Housing Development (Control and Licensing) (Amendment) Act 2012 on insolvency practitioners. Members will be informed of the outcome in due course.

A copy of the Housing Development (Control and Licensing) (Amendment) Act 2012 is attached herewith for your attention.

Please be guided accordingly.

REVISION IN MINIMUM COVERAGE OF PROFESSIONAL INDEMNITY INSURANCE (PII)

The Council at its meeting held on 29 March 2012 had approved a revision in the minimum coverage of Professional Indemnity Insurance from RM100,000.00 to RM250,000.00 per partner per firm with effect from 1 July 2012.

PII was first made mandatory for all members in public practice on 1 October 1998 where the minimum mandatory limit of indemnity was set at RM100,000.00 per partner per firm. The increase takes into consideration the need to have a higher insured policy limits to cater for higher costs of civil liabilities. The increment is also in line with several regulated professions in Malaysia and several international professional accountancy bodies which have a similar mandatory requirement for PII.

Consequently, the current Section 510 of the Institute’s By-Laws (On Professional Ethics, Conduct and Practice) has been amended as follows:



510.3 (1) Every member in public practice must maintain a policy of professional indemnity insurance with a minimum coverage of Ringgit Malaysia Two Hundred and Fifty Thousand (RM250,000.00), upon commencement of public practice.
(2) Proof of such coverage is required for the purpose of the annual renewal of the member’s practising certificate pursuant to Rule 9 of the Malaysian Institute of Accountants (Membership and Council) Rules 2001.
(3) The Membership Affairs Committee of the Council or any other Committee so delegated by the Council for this purpose, may reject the application of any professional accountant for the renewal of the practising certificate if there is non-compliance with the requirements of Rule 9 of the Malaysian Institute of Accountants (Membership and Council) Rules 2001 or with the above requirement without proper excuse. Any professional accountant aggrieved with such a decision, may appeal to the Council whose decision on the same is final.
510.4 Where a member in public practice carries on practice under more than one firm, that member is required to have separate policies of professional indemnity insurance with a minimum coverage of Ringgit Malaysia Two Hundred and Fifty Thousand (RM250,000.00) each, for himself or herself in each of these firms.


With the amendments, all member firms are required to maintain a PII policy with the minimum coverage of RM250,000.00 per partner per firm and are required to make the necessary arrangement to increase the sum insured for the firm’s existing policy/ies.

Member firms with PII policies obtained from the Institute’s appointed broker, Marsh are required to increase the coverage in the coming renewal. For those who have renewed their policies earlier, please contact your insurance broker/company to increase the sum insured and notify the Institute thereafter.

Please provide us with a copy of your firm’s revised PII policy latest by 31 July 2012. The policy can be faxed to 03 – 22799386 or emailed to memberfirm@mia.org.my. For any clarification, please contact the Membership Department of the Institute at 03-22799200.

Thank you.

HO FOONG MOI (MS)
Acting Chief Executive Officer

AMENDMENTS TO THE CLAIM CODES IN THE 2011 AND 2012 FORM C GUIDEBOOKS

The IRB has recently made amendment to the Claim Codes listed in Appendix D of Section 1: Special Deduction and Other Claims of the 2011 and 2012 Form C Guidebooks as appended below:

a. Appendix D to Form C 2011 Guidebook


- Additional code “147” for “Deduction for payment of premium to Malaysia Deposit Insurance Corporation”


b. Appendix D to Form C 2012 Guidebook


- Additional code “147” for “Deduction for payment of premium to Malaysia Deposit Insurance Corporation”
- Additional code “148” for “Deduction for expenditure on franchise fee”
- Code “119” for “Implementation of RosettaNet” is removed with effect from year of assessment 2012

For further details, please refer to the respective year of Form C Guidebook which is available on the IRB’s website at http://www.hasil.gov.my under the heading “Borang” > “Syarikat” (Bahasa Melayu version) and “Forms” > “Company”(English version).

PUBLIC RULING NO. 2/2012

Members are hereby informed that the Inland Revenue Board (IRB) has on 3 May 2012 issued Public Ruling (PR) No. 2/2012: Foreign Nationals Working in Malaysia – Tax Treaty Relief. This PR, provides an explanation on the application of tax treaty relief to foreign nationals from treaty countries seconded to Malaysia by their employers that are not resident in Malaysia.

The above PR can be downloaded from the IRB's website at the following link:http://www.hasil.gov.my/pdf/pdfam/PR2_2012.pdf.

MASB SEEKS VIEWS ON MANAGEMENT COMMENTARY

The Malaysian Accounting Standards Board (“MASB”) has, on 30 April 2012, issued MASB ED 76 Management Commentary (“Guidance”) for public comment.

The ED 76 provides a broad, non-binding framework for the presentation of management commentary that relates to financial statements that have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRSs”).

The [draft] guidance is not governed under the MFRS Framework. The objective of the [draft] guidance is to assist management in presenting useful management commentary that supplements and complements information presented in the financial statements. Such commentary includes management’s view of the entity’s performance, position and progress. Management should also include forward-looking information that explains the management’s objectives for the entity and its strategies for achieving those objectives.

MASB believes that it is critical for affected parties to provide feedback on the [draft] guidance.

The ED 76 is available for download on the MASB website at http://www.masb.org.my.

Members are encouraged to study the ED 76 and provide feedback to the Institute attechnical@mia.org.my by 23 July 2012 for onward deliberations with the MASB.

We look forward to receiving your comments.

MALAYSIAN CODE ON CORPORATE GOVERNANCE 2012

The Securities Commission (SC) has released the Malaysian Code on Corporate Governance 2012 (MCCG 2012) as a key deliverable of the Corporate Governance Blueprint (Blueprint) and supersedes the Malaysian Code on Corporate Governance 2007 (2007 Code). It sets out broad principles and specific recommendations on structures and processes which companies should adopt in making good corporate governance an integral part of their business dealings and culture. It also elaborates on the need for boards to recognize and manage risks as well as to encourage shareholder participation.

This new code on corporate governance focuses on clarifying the role of the board in providing leadership, enhancing board effectiveness through strengthening its composition and reinforcing its independence. It also encourages companies to put in place corporate disclosure policies that embody principles of good disclosure. Companies are advised to make public their commitment to respecting shareholder rights.

The MCCG 2012 adopts a new structure and encompasses recommendations from the Blueprint and parts of the 2007 Code. It sets out eight (8) broad principles as follows:
1) Establish clear roles and responsibilities
2) Strengthen composition
3) Reinforce independence
4) Foster commitment
5) Uphold integrity in financial reporting
6) Recognise and manage risks
7) Ensure timely and high quality disclosure
8) Strengthen relationship between company and shareholders

The MCCG 2012 will be effective on 31 December 2012. In other words, listed companies with financial year ending 31 December 2012 onwards will be required to report on MCCG 2012 and disclosure should be made in the annual report published in 2013.

Members can view the copy of the MCCG 2012 and a set of Frequently Asked Questions (FAQs) attached or download them from the SC website at www.sc.com.my.

TECHNICAL GUIDELINE ISSUED BY THE IRB

The IRB has on 9 April 2012 updated the List of Certification Bodies under Subparagraph 34(6)(ma) Income Tax Act 1967, which can be downloaded from the IRB's website at the following link: http://www.hasil.gov.my/pdf/pdfam/CertBodies9April2012.pdf.

POSTPONEMENT OF THE SECOND READING OF GOODS AND SERVICES TAX (GST) BILL 2009

Please be informed that the Second Reading of GST Bill 2009 which is scheduled on 19 April 2012 has been postponed to another date.

INLAND REVENUE BOARD (IRB) CLARIFIES ON SECTION 83A OF THE INCOME TAX ACT 1967 (THE ACT) AND BEWARE OF SYNDICATE COLLECTING TAX

Members are hereby informed that the IRB has on 10 April 2012 provided clarification pertaining to Section 83A of the Act for the purpose of preparing Form CP 58 [2011] and Income Tax Return Form (ITRF) for year 2011.

The announcement comprises the following:


a. For companies paying cash and non-cash incentives in year 2011(incentives received based on sales performance on products or services; whether or not specified in the contract) to an agent, dealer or distributor, the Form CP 58 shall be furnished to the agent, dealer or distributor not later than 31 May 2012. However, concession are granted to the paying companies for not furnishing the Form CP 58 for year 2011 provided that such information on both cash and non-cash incentives (January 2011 to December 2011) are duly declared in the annual statement issued to the agent, dealer or distributor.

Commencing from year ending 31 December 2012 and years onwards, the paying companies are required to prepare and furnish Form CP 58 to an agent, dealer or distributor, in respect of cash and non-cash incentives in excess of RM5,000.

b. For non-cash incentives, the amount disclosed shall be equivalent to the value/actual amount expended by the paying companies. As such, Items No. 2a and 2b of Part C in Guide Notes on Filling Out Form CP 58 are deleted.

c. Cash and non-cash incentives received by an agent, dealer or distributor are business income. As such, an agent, dealer or distributor is required to declare the incentives received for year 2011 in his/her 2011 ITRF.


To view the announcement, please refer to the IRB's website at the following link:http://www.hasil.gov.my/pdf/pdfam/PENGUMUMANSEK83A_1.pdf.

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).

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.

CIRCULAR NO. 5/2012

15 Feb 2012 Circular 05/2012

TO ALL ACCOUNTANTS

PUBLIC RULING NO. 1/2012, CAREER FAIR INCENTIVE, INLAND REVENUE BOARD OF MALAYSIA (AMENDMENT) ACT 2012 – ACT A1418, PERUMAHAN RAKYAT 1MALAYSIA ACT 2012 – ACT 739 AND FINANCE ACT 2012 – ACT 742

1. PUBLIC RULING NO. 1/2012

Members are hereby informed that the Inland Revenue Board (IRB) has on 27 January 2012 issued Public Ruling (PR) No. 1/2012: Compensation for Loss of Employment. This PR, which is effective from year of assessment 2012 and subsequent years of assessment, provides an explanation on the characterisation of lump sum payments received by employees upon the termination of their employment as compensation for loss of employment and the related tax treatment pertaining to the compensation for loss of employment.

The above PR can be downloaded from the IRB's website at the following link:http://www.hasil.gov.my/pdf/pdfam/PR1_2012.pdf.

2. CAREER FAIR INCENTIVE

Following the 2012 Budget announcement, the Talent Corporation Malaysia Berhad (TalentCorp) has provided some general information pertaining to the Career Fair Incentive (CFI) in relation to expenses incurred by companies for participating in the career fairs abroad endorsed by TalentCorp will be given double deduction. The claim is effective from year of assessment 2012 until 2016. This CFI is expected to be launched by the end of the first quarter of 2012.

This incentive is applicable to any organisation or company that participates in TalentCorp overseas career fairs. The TalentCorp will issue a letter of endorsement to the participating companies upon receiving the list of participating companies from the organisers of endorsed career fairs after the event. The company has to ensure that its participation in the career fair is reported by the organiser to TalentCorp. In order to benefit from this incentive, the companies must actively participate in the endorsed career fair. Registration alone is not deemed to be participation.

For further development and updates of the incentive, members are advised to leave their email address at the following link: http://www.talentcorp.com.my/malaysians-abroad/career-fair-incentive-cfi/.

3. INLAND REVENUE BOARD OF MALAYSIA (AMENDMENT) ACT 2012 – ACT A1418

Please be informed that the Inland Revenue Board of Malaysia (Amendment) Act 2012 (Act A1418), which was gazetted on 9 February 2012, effected the amendment to Section 6A of the Inland Revenue of Malaysia Act 1995 and included a new Section 10B.

The amended Section 6A provides for the appointment of two or more deputy chief executive officers.

The new Section 10B prescribes the additional function of the Board with regard to the management of any moneys allocated by the Government for implementation of any programme and the disbursement of the moneys to any person.

In this regard, the Act A1418 is attached for members’ attention.

4. PERUMAHAN RAKYAT 1MALAYSIA ACT 2012 – ACT 739

As proposed in the 2012 Budget announcement, the Perumahan Rakyat 1Malaysia Act 2012 (Act 739) was gazetted on 9 February 2012.

This Act provides for and regulates matters relating to the development and construction of housing accommodation, infrastructure and facilities under the Perumahan Rakyat 1Malaysia Programme.

In this regard, the Act 739 is attached for members’ attention.

5. FINANCE ACT 2012 – ACT 742

Please be informed that the Finance Act 2012 (Act 742) was gazetted on 9 February 2012. However, some of the amendments that have not taken effect are as follows:

a. the proposed amendments to Sections 80, 106 and 107D of the Income Tax Act 1967 as indicated in the Finance (No. 2) Bill 2011.
b. the new subsections 81(2) and 81(3) of the Income Tax Act 1967 as proposed in the Finance (No. 2) Bill 2011.

For further details, the Act 742 is attached for members' attention.

Please be guided accordingly.


HO FOONG MOI (MS)
Executive Director
On behalf of the Registrar

GUIDE TO PRACTICE MANAGEMENT FOR SMALL AND MEDIUM-SIZED PRACTICES (SECOND EDITION)

The Institute is pleased to inform you that the Small and Medium Practices (SMP) Committee of the International Federation of Accountants (IFAC) has released the second edition of its Guide to Practice Management for Small- and Medium-Sized Practices (PM Guide). First released in 2010 and developed with CPA Australia, the new edition of the guide features guidance on several new topics, including cloud computing and updated resources for further reading.

To help practitioners improve the management of their accounting practices, this guide includes an extended case study, a sample office procedures manual, and numerous checklists and other worksheets. The comprehensive guide is comprised of eight standalone modules that include developing a growth strategy, managing staff and client relationships, risk management, succession planning, and more. An updated companion guide to help members make the best use of the PM guide will be released in early 2012.

The second edition of the PM Guide can be downloaded free of charge at IFAC website at https://www.ifac.org/publications-resources/guide-practice-management-small-and-medium-sized-practices .

Please be guided accordingly.

CIRCULAR MF23/2011: CLARIFICATION IN RESPECT OF CIRCULAR MF21/2011 DATED 19 OCTOBER 2011

17 November 2011

Circular MF23/2011

ALL MEMBER FIRMS

CLARIFICATION IN RESPECT OF CIRCULAR MF21/2011 DATED 19 OCTOBER 2011

It has been observed that certain member firms are seeking clarification in respect of circular MF 21/2011 dated 19 October 2011 issued by the Institute in respect of delivery of the bank confirmation request.

The points raised are in respect of the implementation date and the proper process flow for the delivery of bank confirmation request.

The Institute has since met with representatives from the 23 commercial banks at a dialogue arranged by the Association of Banks in Malaysia (ABM) on 14 November 2011 to clarify on this issue in particular, and to further discuss on how auditors and banks can have a better working relationship moving forward.

In this regard, it was clarified that the list of designated contact persons from the 23 commercial banks is only for the purpose of following-up on overdue responses on bank confirmation requests, and not for the delivery of bank confirmation request at present. Auditors should still send their bank confirmation requests to the address to which previous requests have been addressed, until further notification by the Institute.

The Institute will be having on-going discussions in the near future with the ABM and the banks. The Institute will inform members on the agreed procedures to be followed by auditors when requesting confirmation from the banks on an entity being audited when an agreement has been reached with the ABM and the banks.

Please be guided accordingly.


Thank you.


HO FOONG MOI (MS)
Executive Director
On behalf of the Registrar

DELIVERY OF THE BANK CONFIRMATION REQUEST

19 Oct 2011

Circular MF21/2011

TO ALL MEMBER FIRMS

DELIVERY OF THE BANK CONFIRMATION REQUEST

Historically, banks have requested auditors to send the requests of bank confirmation letter to a particular branch. However, many of the larger banks have now centralized such processes.

To enable auditors to send requests directly to a central address, the Institute has requested from The Association of Banks in Malaysia (ABM) for a list of designated contact persons for receipt of confirmation letter from 23 commercial banks (updated as at October 2011). We enclose herewith the said list for members’ reference. The turnaround time should be shortened by sending the bank confirmation request to the right processing department/branch.

Please be guided accordingly.


HO FOONG MOI (MS)
Executive Director
On behalf of the Registrar


Click HERE to download the List of Bank's Contact Person.

RPG 10 - GUIDANCE ON THE ROLE OF REPORTING ACCOUNTANT IN A DUE DILIGENCE WORKING GROUP

The Institute is pleased to inform members that the Council has approved the issuance of the Recommended Practice Guide (“RPG”) 10 as guidance to members.

RPG 10 is issued to provide clarification on certain aspects regarding the participation by Reporting Accountants (“RA”) in Due Diligence Working Groups established in connection with submissions to the Securities Commission, Circular to Shareholders and offering documents such as Prospectuses. It also provides guidance on the manner in which the RA expresses the terms of participation and reports on the RA’s work, and specifically also addresses the issuance of comfort letters.

The guidance is jointly developed by the Institute and the Malaysian Institute of Certified Public Accountants.

Members can download RPG 10 – Guidance on the Role of Reporting Accountant in a Due Diligence Working Group from the Institute's website at this link http://www.mia.org.my/new/1_tech_detail.asp?tid=1&rid=4&id=950.

Please be guided accordingly.


HO FOONG MOI (MS)
Executive Director
On behalf of the Registrar


Click HERE to download the RPG 10 - Guidance on the Role of Reporting Accountant in a Due Diligence Working Group.

RPG' 8 – ILLUSTRATIVE LETTER OF ENGAGEMENT – STATUTORY AUDIT FOR SINGLE ENTITY AND GROUP

10 Aug 2011

Circular MF19/2011

TO ALL MEMBER FIRMS

MIA RELEASES REVISED RECOMMENDED PRACTICE GUIDE (''RPG'') 8 – ILLUSTRATIVE LETTER OF ENGAGEMENT – STATUTORY AUDIT FOR SINGLE ENTITY AND GROUP

The Institute is pleased to inform members that the Council has approved the release of the revised Recommended Practice Guide (''RPG'') 8 as guidance to members.

The guidance is revised pursuant to the clarified International Standard on Auditing 210, Agreeing the Terms of Audit Engagements which is effective for audits of financial statements for periods beginning on or after 1 January 2010.

Members can download RPG 8 – Illustrative Letter of Engagement – Statutory Audit for Single Entity and Group from the Institute's website at this link http://www.mia.org.my/new/1_tech_detail.asp?tid=1&rid=4&id=951.

Please be guided accordingly.


HO FOONG MOI (MS)
Executive Director
On behalf of the Registrar


Click HERE to download the RPG 8 - Illustrative Letter of Engagement - Statutory Audit for Single Entity and Group.