TOPIC 2

RESIDENCE STATUS
FOR INDIVIDUAL
TAX467: TAXATION 1
NAME: NURSHAMIMI BINTI SABLI
OFFICE ROOM NO: AC651, LEVEL 6
TELEPHONE NO: 03-3258 7417 / 013-222 6491
 TOPIC LEARNING
OUTCOME
Able to:
• Determine the resident status of
individual & its relevant sections under
ITA 1967
• Identify the importance of resident
status
 INTRODUCTION
• The concept of ‘Resident’ is important in the Act
• An individual who is a tax resident in Malaysia would be given an ‘overall
preferential tax treatment’ as compared to non resident individual
• Determination of resident status for individual – quantitative test:
 Generally, residence status for tax purposes is determined based on the
number of physical presence of that individual in Malaysia in a basis
period for a YA and not by his nationality or citizenship.
 An individual is considered to be physically present in Malaysia for a
whole day although he is present in Malaysia for part(s) of a day.
 In short, PART of a day will be COUNTED AS ONE DAY in Malaysia
• Sec 7 of ITA 1967 contained relevant subsections to determine the resident
status of individual:

Sec 7(1)(a)-(d) Sec 7(1A) Sec 7(1B)

INTRODUCTION
1. Sec 7(1)(a)

6. Sec 7(1B) 2. Sec 7(1)(b)

Resident Status
for Individual
(Sec 7 of ITA
1967)

3. Sec 7(1)(c)
5. Sec 7(1A)

4. Sec 7(1)(d)
 QUANTITATIVE TEST
DETERMINATION OF RESIDENT STATUS
(INDIVIDUAL)

COUNT : No of days in COUNT : No of days in the

M’sia in the Current basis Preceding basis year OR the
year for a YA Following basis year for a YA
 SEC 7 (1) (a)
• In Malaysia in that basis year for a total of 182 DAYS OR MORE
• Must have physical presence in Malaysia in the current year
• Consecutive/Non consecutive days in a year (single period /
multiple periods):
• Single period
Year 2018
xxxxxxxxxxxxxxxxxxxxxxxxxxx
Jan 1 ≥182 days Dec 31

• Multiple periods
Year 2018
xxx xxxxx xxxxxxxxx
Jan 1 I II III Dec 31

I + II + III ≥182 days

 EXAMPLE OF SEC 7 (1) (a)
• Aaron, a petroleum engineer from German was in Malaysia
to conduct a research project. His period of stay was as
follows:
Period of Stay in Malaysia Number of Days

01.03.2018 – 31.10.2018 245 days

• Identify his resident status in YA 2018

• Answer:
YA Period of stay No of Resident Reason
days Status
2018 01.03.2018 – 245 R - Sec 7(1)(a) He was physically
31.10.2018 presence in Malaysia
for more than 182 days
 SEC 7 (1) (b)
• In Malaysia in that basis year for a period of LESS THAN 182 days
and that period is linked by or to:
a) another period of 182 days or more consecutive days throughout
which he was in Malaysia in the basis year for the YA
immediately preceding that particular YA; or
b) another period of 182 days or more consecutive days throughout
which he is in Malaysia in the basis year for the YA immediately
following that particular YA
including temporary absence.
 SEC 7 (1) (b)

Individual in M’sia in the basis year

for a period of < 182 days (SHORT PERIOD)

LINKED BY a period of 182 or more LINKED TO a period of 182 or more

consecutive days from the consecutive days for the
immediate PRECEDING basis year Immediate FOLLOWING basis year
(LONG PERIOD) (LONG PERIOD)
 SEC 7 (1) (b) –
TEMPORARY ABSENCE
• Temporary absence (TA) is the period or the number of days the
individual not physically present in M’sia and permitted by law
• Relaxation is given where the period of temporary absence shall
be taken to form part of that:
a) period of less than 182 days (Short period); and/or
b) period of 182 days or more consecutively (Long period);
provided that the individual must be in Malaysia immediately
prior to and after that temporary absence
• TA applies to Sec 7(1)(b) only.
 TEMPORARY ABSENCE (TA)
• TA must be:

connected with his service in M’sia and owing to service

matters or attending conferences or seminars or study
abroad.

Owing to ill health (him/herself or immediate family

member- spouse/children/parent only).

Social visits ≤ 14 days in the aggregate (include

holidays/vacations outside Malaysia and vacation to home
country (PR11/2017)
 TA IN BOTH SHORT &
LONG PERIODS
w.e.f YA 2002:
Temporary Absence (TA) can happen in both
period i.e short period and long period

Temporary Absence
Short period
> 182 days
< 182 days 31/12/18
Long period
Temporary Absence
YA 2018 YA 2019
 EXAMPLE: (WITHOUT TA)
• Arrived in M’sia 1/12/2018 and stay in M’sia until 30/9/2019

Linked to

2018 1/1/19 2019

1/12/18 31/12/18 30/9/19

31 days
273 days
• Answer:
YA Resident Status Section
2018 R S 7(1)(b)
2019 R S 7(1)(a)
 EXAMPLE: (WITH TA)
• Harris periods of stay in M’sia were as follow:
 1/7/2018 – 24/8/2018 ( 55 days – in M’sia)
 25/8/2018 – 31/8/2018 (7 days – social visit to China)
 1/9/2018 – 30/11/2018 (91 days – in M’sia)
 1/12/2018 – 10/12/2018 (10 days – seminar in UK)
 11/12/2018 – 17/12/2018 (7 days – social visit to China )
 18/12/2018 – 31/12/2018 (14 days – in M’sia)
 1/1/2019 – 8/1/2019 (8 days – in M’sia)

• Determine resident status of Harris for the year of

assessment 2018 and 2019.
 Answer:
RESIDENT
Y/A PERIOD OF STAY DAYS REASON
STATUS
2018 •1/7/18 – 24/8/18 •55 NR •Does not apply
•25/8/18– 31/8/18 •7 (TA-SV) sec 7.
•1/9/18 –30/11/18 •91 •His physical
•1/12/18-10/12/18 •10 (TA) presence in
•11/12/18-17/12/18 •7 (TA-SV) Malaysia is only
•18/12/18 –31/12/18 •14 160 days
160 (55+91+14)

2019 •1/1/19- 8/1/19 •8 R •He is in M’sia ≤

Sec 7(1)(b) 182 days in the
basis year, but
the period is
LINKED BY at
least 182
consecutive
days including
TA in YA 2018.
 SEC 7(1)(c)
• In Malaysia for at least 90 days (need not be consecutive) but < 182
days (90-181 days) in the current year and;
• 3 out of 4 immediate preceding basis years:
 He was a Resident; or
 He was in Malaysia for of at least 90 days (need not be consecutive).

YA YA YA YA YA 2019 – R under
2015 2016 2017 2018 sec 7(1)(c)
xxxx
3 out 4 immediate preceding 1/1 31/12
years (R @ ≥ 90 days in M’sia)
≥90 days
 EXAMPLE:
Basis Year Status / Section
No of days
2015 NR - 90 days

2016 NR – 20 days

2017 R

2018 R

2019 R – 90 days Sec 7(1)(c)

 SEC 7(1)(d)
• In Malaysia for less than 90 days or none, but
1. He was a Resident in the following year, and:
2. He was also Resident in 3 immediate preceding years

YA YA YA YA YA
2015 2016 2017 2018 2019

R R R R - s 7 (1) (d)
R

The person need not be present in M’sia for a single day & yet can
be a R if the above 2 conditions fulfilled
 EXAMPLE:
• Nurliyana was in M’sia for the following periods:

 11/10/2015 – 31/12/2015 [82 days]

 1/1/2016 – 31/12/2016 [365 days]
 1/1/2017 – 30/9/2017 [273 days]
 1/4/2018 – 4/4/2018 [4 days]
 1/4/2019 – 31/12/2019 [275 days]
 Answer:
YA Period of stay No of Resident Reason
days Status

2015 11/10 – 31/12 82 R She was in M’sia less than 182

S 7(1) (b) days in the basis year, but the
period can be linked to another
182 consecutive days in YA 2016
including TA.
2016 1/1 – 31/12 365 R She was in Malaysia for a period
S 7(1) (a) of 182 days or more in the basis
year
2017 1/1 – 30/9 273 R She was in Malaysia for a period
S 7(1) (a) of 182 days or more in the basis
year
2018 1/4– 4/4 4 R She was resident for 3 immediate
S 7(1) (d) preceding years ( YA 2015, 2016,
2017) and resident for the
following year (YA 2019).

2019 1/4– 31/12 275 R She was in Malaysia for a period

S 7(1) (a) of 182 days or more in the basis
year
 SEC 7(1A)
• an individual shall be deemed to be in Malaysia for a day if he is
present in Malaysia for part of that day and in ascertaining the period
for which he is in Malaysia during any year, any day (within paragraphs
1(a) and (c) for which he is in Malaysia shall be taken into account
whether or not that day forms part of a continuous period of days
during which he is in Malaysia
• Part of a day in Malaysia is considered as physically present for a
whole day in Malaysia
 DEEMED RESIDENT UNDER SEC 7(1B)
• W.e.f YA 2009, a M’sian citizen who:
a) Works with M’sian govt (public service) / stat. bodies outside Malaysia;
b) Not in M’sia for any day in a particular YA due to:
 Exercising employment outside M’sia; or
 Attending course of study in any professional institution outside M’sia
fully sponsored by employer

• He is deemed Resident under sec 7 (1B) for that YA and subsequent YAs.
• There is no requirement to make reference to the number of days in
Malaysia as per s 7, so long that such employee is a government
employee
IMPORTANCE OF RESIDENT STATUS
R NR
TAX RATE Scaled rate (0%-30%) Flat rate - 30%
TAX RELIEF / PERSONAL Entitled Not entitled
DEDUCTION (SEC 46-50)
TAX REBATE (CHARGEABLE Entitled Not entitled
INCOME < RM35,000)
BUSINESS INCOME Taxable if deemed Taxable if through
derived permanent
establishment
EMPLOYMENT INCOME Taxable Exempted if satisfies
DERIVED FROM M’SIA 60days test (Para 21
Sch 6)
WITHOLDING TAX Not Applicable Applicable (10%-
15%)
TAX EXEMPTIONS Given exemption from No exemption given.
tax on certain income Mostly has to pay tax
in full