TAXATION 1

ATX20103

Topic 2:
RESIDENCE STATUS
RESIDENT STATUS FOR INDIVIDUAL
• Learning objectives
1. Able to explain the benefits of being resident
for tax purpose
2. Able to determine the individual residency
status in Malaysia
 WHAT….
• Resident = a person who lives somewhere
permanently or on long-term basis
• Resident individual is an individual
resident in Malaysia for the basis year for
a year of assessment as determined
under section 7 and its subsection of the
ITA 1967
 WHY….Benefits of being resident
RESIDENT NON-RESIDENT

TAX RATE SCALE RATE: FIXED RATE:

0-28% (2017) 28% (2017)

TAX RELIEF ENTITLE NOT ENTITLE

Eg: SELF, WIFE, CHILD

REBATE ENTITLE for a rebate if NOT ENTITLE

chargeable income<RM35K
 RESIDENT NON-RESIDENT

WITHOLDING Applicable on only certain Applicable receipts:

TAX cash receipts such as: - Interest income
- Income from real estate - Royalties
investment trust (REITs) - Public entertainer
sect 109D ita1967 income
- Interest from persons on - Special classes on
the finance and banking income
industry (s.109C ITA1967) - Real estate
income
- Income fro family
fund, retakaful etc
- Other income
 RESIDENT NON-RESIDENT
INCOME ENTITLE FOR: NOT ENTITLE
EXEMPTED FROM • Royalties from
TAX literary or
artistic work
• Income from
cultural
performance
approved by
Minister
• Income from
musical
composition
 DETERMINING RESIDENCE STATUS

• 4 CIRCUMSTANCES:
1. Sect 7 (1) (a) of ITA 1967
2. Sect 7 (1) (b) of ITA 1967
3. Sect 7 (1) (c) of ITA 1967
4. Sect 7 (1) (d) of ITA 1967
An individual is not Malaysian tax residence if
does not fall under either one of these 4
circumstances
 Sect 7 (1) (a) of ITA 1967
• Physically in Malaysia for 182 or more days
• Period of stay need not be consecutive
• Example: Mr Ravi presence in Malaysia as
follows:
Period of stay Remarks No of days
1.3.2012-30.6.2012 In Malaysia
1.7.2012-31.7.2012 Seminar in Paris
1.8.2012-30.9.2012 In Malaysia

Required: Determine the resident status of Mr

Ravi for YA2012
 Sect 7 (1) (b) of ITA 1967
• In Malaysia in the basis year for a period LESS THAN
182 DAYS and that period is LINKED by or to
another period of 182 OR MORE CONSECUTIVE
DAYS immediately preceding or following that
particular year of assessment.
• YA? Min 1 days in Malaysia
• YA ? __R_ : YA? linked to YA.R following year

• __R_ __YA ? : YA? linked by YA.R in preceding year

 S 7 (1) (b) continued

Temporary absence from Malaysia form part of

182 consecutive days and short period:
number of days
Matters related to service in No limit on number
Malaysia, attending conferences, of days
seminar or study abroad

Due to ill health involving himself or No limit on number

a member if his immediate family of days
(parents, children, spouse)

Social visit, include holidays/vacation Not exceeding 14

besides vacation in home country days in aggregate
• Example:
Mr Chan recorded the following periods of stay
in Malaysia.
Year Period of stay No of days
2011 1.7.2011-31.12.2011 184 days
2012 1.1.2012-31.1.2012 31 days

Required:
Determine the resident status of Mr Chan for YA
2011 and 2012
 • Mr Sim recorded the following period of stay
in Malaysia
Year Period of stay No of days
2011 1.7.2011-28.12.2011 182 days in M’sia
29.12.2011-31.12.2011 1 days social visit
2012 1.1.2012-12.1.2012 12 days social visit
13.1.2012-31.1.2012 19 days in M’sia

• Required:
Determine the resident status of Mr Sim for YA
2011 and YA2012
Stapa arrived in Malaysia on 1 Nov 2010 as a contract
lecturer at UM for 2 years and 6 months.
The following is his patterns of stay in Malaysia.
Determine his Malaysian residence status for YA 2010,
YA2011, YA 2012
Period of stay No of days Remarks
1.11.2010-28.12.2010 58 In M’sia
29.12.2010-4.1.2011 7 Visit relatives in Perth
5.1.2011-31.5.2011 147 In M’sia
1.6.2011-15.6.2011 15 Conference in Bangkok
16.6.2011-5.11.2011 153 In M’sia
3.2.2012-6.6.2012 125 In M’sia
YA Ex 2.9PERIOD NO OF DAYS REMARKS
2011 1.7.2011-31.12.2011 184 M’sia
2012 1.1.2012-19.3.2012 79 M’sia
20.3.2012-22.32012 3 Hawaii, business
conference = work
23.3.2012 1 M’sia
24.3.2012-6.4.2012 13 China
7.4.2012-1.9.2012 148 M’sia
2.9.2012 1 S’pore, work
3.9.2012-16.12.2012 105 M’sia
17.12.2012-28.12.2012 12 SV Hong Kong
29.12.2012-31.12.2012 3 Msia
2013 1.1.2013 1 SV Bali
2.1.2013-28.2.2013 58 M’sia
 Ex 2.5
YA PERIOD NO OF DAYS REMARKS
2012 1.12.2012-30.12.2012 30 M’sia
31.12.2012 1 China, SV
2013 1.1.2013-4.1.2013 4 China, SV
5.1.2014-3.7.2013 180 M’sia
 Sect 7 (1) (c) of ITA 1967
• In Malaysia for 90 days or more (not
necessary consecutive days) in the basis year
AND
• in 3 out of 4 immediate preceding (before)
basis year, he is either a:
 resident OR
 in Malaysia for 90 days more (need not
be consecutive)
Eg
2010 2011 2012 2013 2014
R NR 90days R YA?
90days
• Example:
En. Ali has recorded the following period of stay
in Malaysia
YA Period of stay No of days
2008 1.3.2008-20.3.2008 20
2009 1.5.2009-15.8.2009 107
2010 1.1.2010-30.9.2010 273
2011 1.3.2011-31.10.2011 245
2012 1.1.2012-20.4.2012 110
 Sect 7 (1) (d) of ITA 1967
• May not be in Malaysia at all during the
basis year under review
• BUT
• resident for the 3 immediately preceding
basis years and for the immediately
following basis year.
2010 2011 2012 2013 2014
R R R ? R
• Example
En. Razak recorded the following period of stay
in M’sia

Period of stay No of days

14.10.2008-31.12.2008 79
1.1.2009-31.12.2009 365 days
1.1.2010-30.9.2010 273
1.4.2011-4.4.2011 4
3.4.2012-31.12.2012 273
Determine En. Razak’s residence status for
YA2008-2012