RESIDENCE STATUS FOR

INDIVIDUAL

 The

determination of resident
status for individual falls under
Section 7 of the ITA by reference
to the number of days that an
individual has in Malaysia.
For this purpose, part of a day will
be counted as a day in Malaysia.
The citizenship or permanent
resident status of an individual is
never relevant for such
determination.

7(1)(b)
7(1)(a)
Residence status
of individuals

NON
RESIDENT

7(1)(d)

7(1)(c)

An individual is a resident in Malaysia

for the basis year for a particular year of
assessment under any of the following
circumstances:

SECTION 7(1)(a)

If he is in Malaysia in the basis year for

a period or periods amounting to a total
of 182 days or more.
Can be in one period or multiple periods

S7(1)(a)

Single period
XXXXXXXXXXXXXX
>= 182 days

Multiple periods
1
XXXXXX

2
XXXXXX
1+2+3>=182
days

3
XXXXX

Example 1:
Wendy was in Malaysia from 1.2.2016
to 30.9.2016. What is the residence
status of Wendy for YA 2016?
Resident because she was in
Malaysia for a period of more than
182 days i.e 243 days in 2016

Example 2:

Anna was in Malaysia for the following

periods:
Period
No. of days
1.3.2016 to 30.6.2016
122
1.8.2016 to 30.9.2016
61
= 183 days
Anna is resident in Malaysia for the basis
year for the YA 2016

Example 3:
Amina first arrived in Malaysia from Indonesia on
13 March 2016. Her passport shown that she left
Msia on 19 Sept 2016. Therefore Amina is
resident base on the following determination:

13 Mar 2016 31 Mar 2016 = 19 days

1 Apr 2016 30 Apr 2016 = 30 days
1 May 2016 31 May 2016 = 31 days
1 June 2016 30 June 2016 = 30 days
1 July 2016 31 July 2016 = 31 days
1 Aug 2016 31 Aug 2016 = 31 days
1 Sept 2016 18 Sept 2016 = 18 days

190
days

SECTION 7(1)(b)

If an individual is in Malaysia in the

basis year for a period of less than
182 days and the period is linked by
or to another period of 182 or more
consecutive days throughout which
he/she is in Malaysia in the basis year
for the year of assessment
immediately preceding or immediately
following that particular year of
assessment.

W.e.f YA 2002 the requirement for an

individual to be in Malaysia on 31/12
and 1/1 of the following year has been
abolished.
Temporary absence from Malaysia of
the following nature are regarded as
forming part of the period of 182 or
more consecutive days:

Temporary absence
1. Absence connected with employees
service in Malaysia and owing to service
matters or attending conferences or
seminars or study abroad;
applies to individual who is exercising
employment in Malaysia.
2. Absence owing to ill-health involving
himself or a member of his immediate
family;
immediate family member would
comprise spouse, children and parents.

3. Absence in respect of social visits

not exceeding 14 days in the
aggregate.
The 14 days absence for social visit
need not be consecutive and it relates
to any one of the two YAs. It can be at
the beginning, middle or at the end of
the period.
Social visits include any form of
vacation outside Malaysia besides
vacation to home country.

Resident status??

XXXXXXXXXX
>= 182
days

Year 2009
Year 2008

the physical presence of 31/12 and 1/1 are no longer

required to establish the link period.
Temporary absence is allowed to form part of that period (
Jan. 2009) or such period ( longer period - YA 2008) if he
is in Malaysia immediately prior to or after that temporary
absence.

Resident status ??

XXXXXXXXXX

Year 2008
1/1

>= 182 days

Year 2009

31/12/08

31/12/09

Example 4:

Peter was in Malaysia and Australia for the

following periods:
Year

Period of stay

2015

15.5.2015 23.12.2015 ( Malaysia )

24.12.2015 31.12.2015( Australia ) -social
visit

2016

1.1.2016 2.1.2016 (Australia )- social visit

3.1.2016 31.3.2016 (Malaysia)

Peter left Malaysia on 1 April 2016.

Peter is resident for the year of assessment
2016 for the following reasons:
i. His absence in Malaysia on 31.12.2015
and 1.1.2016 is regarded as temporary
absence;
ii. He fulfills the requirement of
temporary absence in respect of social
visit not exceeding 14 days;
iii. He was in Malaysia before and after his
temporary absence.

Example 5:
Kim arrived in Malaysia on 5 January 2016.
Her employment contract in Malaysia was
for one year ending on 4 January 2017. On
23 December 2016, Kim left for Seoul to visit
her family and never returned to Malaysia
after that.
Even though Kim was away from Malaysia
on social visit for les than 14 days, that
period is not regarded as temporary
absence since she was not in Malaysia
after her absence. Therefore, she is not
resident in Malaysia for the basis year for
the YA 2017.

Example 6:
Using Example 5 above, Kim returned
to Malaysia on 4 January 2017 before
leaving for Seoul two days later.
The period between 23.12.2016 to
4.1.2017 (13 days) is regarded as
temporary absence as Kim was
present in Malaysia after her
absence. She is resident in Malaysia
for the basis year for the YA 2017.

Example 7:

Larry has the following record of stay in Malaysia,

Singapore and USA :
Year

Period of stay

2015

1.12 22.12 ( Malaysia )

23.12 28.12 ( Singapore) - social visit
29.12 29.12 (Malaysia).
30.12 31.12 (USA) social visit

2016

1.1 10.1 (USA ) social visit

11.1 31.12 (Malaysia)

Larry is resident in Malaysia for the

basis year for the YA 2015 as the
period between 30.12.2015 to
10.1.2016 is considered as temporary
absence. The period between
23.12.2015 to 28.12.2015 is not
considered as part of the period that
linked the two years.

Malaysian citizen exercising employment

in public services (S7(1B)
W.e.f YA2009, an individual is deemed to be a
resident for the basis year and for subsequent
basis years when he or she is not in Malaysia for
the following reasons:
a)the individual is a citizen of Msia and is employed
in the public services or service of a statutory
authority; and
b)he or she is not in Msia at any day in the basis
year due to:
i- having & exercising his/her employment; or
ii- attending any course of study in any institution
or professional body outside Msia which is fully
sponsored by the employer

SECTION 7(1)(c)

He is in Msia in that basis year for a period

or periods amounting in all to 90 days or
more having been with respect to each of
any 3 of the basis years for the 4 YAs
immediately preceding that particular YA
either:Resident in Msia within the meaning of
this Act for the basis year in question,
In Msia for a period or periods amounting
in all to 90 days or more

Section 7(1)(c) cont

Resident status??

2012

2013

2014

XXX

2015

2016

3 out of 4 immediate preceding years >=90 days

* he must be in Malaysia
(i) for a period of 90 days or more AND
(ii) 3 out of 4 immediately preceding basis years either
resident or 90 days or more (period/ periods)

Example 8:

Lenny has the following periods of stay in

Malaysia:
Year

Period of stay

No. of days

2012
2013
2014

1.5 15.8
1.5 - 20.5
1.1 30.9

107
20
273

2015
2016

1.3 30.10
1.1 20.2
1.4 31.5

244
51
61
112

The residence status of Lenny is as follows:

2012

Not Resident

2013

Not Resident

2014

Resident

2015

Resident

2016

Resident

S7(1)(a)
S7(1)(a)
S7(1)(c)

For the basis year 2016, Lenny is resident

by virtue of S7(1)(c) as she:
- Was in Malaysia for a period or periods
amounting in all 90 days or more in the
basis year 2016 (112 days); and
- Was resident or was in Malaysia for 90
days or more in any 3 out of four
immediately preceding basis years.

SECTION 7(1)(d)

An individual is considered to be
resident for a basis year if he is
resident for the immediately
following basis year and had been
resident for the three (3)
immediately preceding basis years.

SECTION 7(1)(d) cont

Resident status??

XXXX

2012

2013

2014

2015

2016

** He must be resident in the following year (2016)

AND 3 immediate preceding years as a resident.

SECTION 7(1)(d) cont

Notes:
An individual shall be deemed resident
for year 2015 even though he was not
in Malaysia for a single day in 2015.

Example 9:
Vicky has the following periods of stay in
Malaysia:
Year

Period of stay

No of days

2012

11.10 31.12

81

2013

1.1 - 31.12

365

2014

1.1 30.9

273

2015

1.4 4.4

2016

1.4 31.12

275

Example 9: cont

The residence status of Vicky is as follows:

2012

Resident

S7(1)(b)

2013

Resident

2014

Resident

2015

Resident

S7(1)(a)
S7(1)(a)
S7(1)(d)

2016

Resident

S7(1)(a)

Example 10:

Stanley has the following periods of stay in

Malaysia:

Year

Period of stay

2012

1.1 31.10
1.1 - 31.12
1.1 21.1
Was not in Malaysia
15.5 23.12

2013
2014
2015

2016

Example 10: cont..

The residence status of Stanley is as

follows:
2012

Resident

S7(1)(a)

2013

Resident

S7(1)(a)

2014

Resident

S7(1)(b)

2015

Resident

S7(1)(d)

2016

Resident

S7(1)(a)

Example 10: cont..

Even though Stanley was never

actually in Malaysia for the basis year
2015, he is resident for that basis year
as he:
Is resident for the basis year 2016, that is
the following basis year; and
Is resident for each of three immediately
preceding basis years that is 2012, 2013
and 2014

Advantageous of being tax resident

1.

2.
3.

4.

The taxable income of resident individuals are

subject to a scale rate from 0 to 26%, but NR
individuals are subject to a flat rate 26%.
Resident individuals are entitled to personal
reliefs while NR are not entitled.
Resident individuals are entitled to a rebate if the
chargeable income does not exceed RM35,000,
but none for NR.
Numerous types of income are exempted from
tax for resident, but not for NR. (eg: Royalties from
literary or artistic work, income from cultural performance
approved by the Minister of Culture, Arts and Tourism, and
Income from musical composition)

RESIDENCE STATUS FOR COMPANY AND

BODY OF PERSONS

Governed by section 8 of ITA 1967

Body of person defined by Section 2 of the
Act:
an unincorporated body of persons
(not being a company), including a Hindu
joint family but excluding partnership.
Hindu Joint Family defined by Section 2 of
the Act:
means what in any system of law prevailing
in India is known as a Hindu joint family or
coparcenary

A company is resident in Malaysia for a

basis year for the year of assessment if at
any time during the basis year, the
management and control of one of its
business are exercised in Malaysia.
Where a company has been determined as
resident in Malaysia for a given basis year,
that company is considered resident in
Malaysia for each subsequent year of
assessment until the contrary is proved.

Management and control of a companys

business means where the companys real
business is carried out. Real business is
not meant to be place of the physical
trading operations of the company but the
place where decisions are taken to direct
and control the company.
Section 8(1) sets up the test of resident
status as follows:

Resident
Status

Hindu joint
family

Company or
body of
persons

Carrying on
business(es)

Not carrying on
business(es)

Carrying on business(es)
-Mgmt and control of any one of its
businesses exercised in Msia at any
time during the calendar year
Not carrying on business(es)
- mgmt and control of its affairs are
exercised in Msia at any time during
the calendar year

Example:

Gold Star ltd, a United Kingdom

company, has its business in the
UK, South Africa, Hong Kong and
Malaysia. The company makes up
its account to 30 September. All
major decisions affecting the
company are made at the directors
board meeting, all of which are held
in UK, except for one which was
held in Kuala Lumpur on 1
November 2016.

The determination of resident status for a company

is by reference to the basis year for a year of
assessment, which will be in accordance with the
financial year of the company and not the calendar
year. The basis period for year of assessment
2016 for Gold Star Ltd would be 1.10.2015
30.9.2016. As a result, Gold Star Ltd would be a
tax resident from year of assessment 2016 and its
subsequent years of assessment. A company is
resident for a full YA.

Note: one management and control decision is

enough to render the company to be a resident for
the whole YA and in the subsequent years of
assessment.

ITS TIME TO TAKE A

BREAK.