Chapter 5 - TAXATION

 CO-OPERATIVES
 https://www.skm.gov.my/images/indeks_100_koperasi_terbaik_mal
aysia/tahun-2021/SKM%20-
%20100%20koperasi%20Terbaik%202021.pdf

1  CHARITABLE INSTITUTIONS
 Co-operative: Scope of Taxation
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 Co-operative society is an unincorporated

body and is exempted if the following
conditions are met:
• For the first five years from the date of
registration
• After 5 years, if the member’s funds do not
exceed RM750,000 at the beginning of the
basis period, the YA will continue to be tax
exempt on all its income.
 What is Member’s Fund?
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a) Paid-up capital, exclude bonus shares

issued from capital reserve (revaluation
of fixed asset);
b) Statutory reserve fund;
c) Other reserves
d) Share premium acc
e) Profit & Loss Appropriation Acc
 Choong (2022) Adv Tax pg 236, e.g 19.1
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 Choong (2022) Adv Tax pg 237, e.g 19.2
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 Special Deduction for co-
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operative societies and Tax Rates

A special deduction is given under sec

65A against the total income of a co-
operative
Adjusted loses & unabsorbed capital
allowance during tax-exempt period can
be carried forward to post-exemption
period.
There are two types of deductions
o Special deduction under sec 65A(a)
o Member’s fund sec 65A(b).
 Deductions Under sec 65A(a) + 65A(b)
7 Sec 65A(a)
Any sums transferred or paid during the basis period to a
statutory reserve fund or any educational institution or co-
operative organization – subject to a maximum of 25% of
the audited net profits
Sec 65A(b)
8% of the member’s fund at the beginning of the basis
period for the year of assessment
 Choong (2022) Adv Tax pg 240-241, e.g 19.3
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 Choong (2022) Adv Tax pg 241, e.g 19.3
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 Real Property Gain Tax (RPGT)
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Holding Period of RPGT RPGT (1/1/2019 –
Property (1/1/2022) 31/12/2021)

1st 3 years 30% 30%

4th year 20% 20%

5th year 15% 15%

> 5 years 10% 5%

 Choong (2022) Adv Tax pg 241, e.g 19.4
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 Choong (2022) Adv Tax pg 242, e.g 19.4
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 Choong (2022) additional questions e.g 19.4
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Chargeable Income YA 2020 RM539,000
Tax Payable YA2020 (refer to chart in pg 14)
1st RM500,000 RM83,500
Next RM39k@23% 8,970
RM92,470

Chargeable Income YA 2022 RM486,000

Tax Payable YA2022 (refer to chart in pg 14)
1st RM250,000 RM31,000
Next RM236k@21% 49,560
RM80,560
 Income tax rates for Co-OPERATIVE Society
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Chargeable Income (RM) Tax rate Cumulative tax
(2015-2022) (RM)
RM1 – RM30,000 0% nil
RM30,001 – RM40,000 5% RM500
RM40,001 – RM50,000 5% RM1,000
RM50,001 – RM60,000 5% RM1,500
RM60,001 – RM100,000 10% RM5,500
RM100,000 – RM150,000 15% RM13,000
RM150,001 – RM250,000 18% RM31,000
RM250,001 – RM500,000 21% RM83,500
RM500,001 – RM750,000 23% RM141,000
RM750,001 and above 24%
 CHARITABLE INSTITUTIONS

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 CHARITABLE INSTITUTIONS
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Scope of Taxation
 Charitable bodies are established for the relief of poverty,
advancement of education, religion or for communal
benefits.
 The organization must be established in Malaysia,
 No operated primarily for profit
 Must register with the Registrar of Societies Malaysia
 Tax exempt under s 44(6), e.g, public universities (e.g
USM, UM), Adventist hospital,
 CHARITABLE INSTITUTIONS
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Scope of Taxation
 Charitable bodies are exempted on the income derived from
business carried out in pursuit of its charitable purposes under s
44(6)
 currently about 2,000 charitable organisations in Malaysia which
have been granted the tax-exempt status.
 tight controls in place, which allowed the authorities to withdraw
the exemption status in the event the organisation was found to
be involved in activities that were against its charitable
objectives.
 since 2016, the organisations are required to get the status
renewed once every five years, subject to an audit by the
authorities,
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19 Example of receipt
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 Choong (2022) Adv Tax pg 251, e.g 20.1
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