CHAPTER 5:

Statutory Income From Sec 4(c)to 4(f)

and Sec 4A Source
 Learning Outcome
Upon completion of this chapter, students would
be able to:

1. Identify the derivation of income from Sec. 4(c) to 4(f)

and Sec. 4A
2. Calculate the adjusted income
3. Determine the exemptions for the income
 INTRODUCTION

OTHER INCOME

Sec. 4(c) Sec. 4(d) Sec. 4(e) Sec. 4(f)

• Dividends • Rent • Pension • Other profits
• Interests • Royalties • Annuities
• Discounts • Premium • Other
Periodical
Payments
 Sec. 4(c)
• Dividends
• Interests
• Discounts
 It is an amount of profit
distributed by a company.
 Normally in a form of cash
or cash equivalent.
 Can also be in kind (dlm
bentuk benda).
 Deemed derived from
Malaysia if it is paid by a
Malaysian company.
 Dividend received by
shareholders are exempted
from tax. (byr sekali ja tax)
TAX EXEMPT DIVIDEND
 Can be defined as the premium or
consideration paid for the use of sum of
money or property to the lender or from
the settlement of debts
 Interest from bank savings or fixed
deposits, dividends from savings at
Tabung Haji or profits from savings at
Bank Islam (example)
 DERIVATION OF INTEREST INCOME
Sec. 15
Responsibility of Deemed Interest charged as
payment lies on derived from outgoing expense again
Government or Malaysia income accruing in or
State Government derived from Malaysia

Responsibility of payment Payment of interest on

lies on Resident Person + debts is secured by
Malaysian loan property or assets
situated in Malaysia
 TAX EXEMPT INTEREST INCOME

 a co-operative society registered under the Co-operative Societies Act 1993

 Sec. 4(d)
• Rent
• Royalties
• Premium
 RENTAL INCOME
DERIVATION OF INCOME

Immovable properties Movable properties

(landed properties) (eg. Lease of plant)

Properties are situated Depends on where

in Malaysia the property is
used/placed
 RENTAL INCOME
 Rental is assessable under Sec. 4(c), if it is an
investment income.

 Rental income is deemed derived in Malaysia if

rented asset is located in Malaysia.

 Advanced rental – taxable in the basis period

when it was received (irregardless whether it is
refunded or not) kena campur dlm total income.
 RENTAL INCOME
 Deductible expenses (wholly and exclusively
incurred in the production of rental income)
 Cost of repair & maintenance
 Insurance premium on burglary/fire
 Cost of supervision and rental collection
 Cost of obtaining tenant to replace old tenant
 Interest paid on loan facility
 Cost of renewing rental agreement
 Quit rent and assessment
 Security services
 Repainting rented premises
 RENTAL INCOME
 Expenses not allowed:
 Cost of obtaining 1st tenant (initial cost) including
advertising, commission and legal expense on the first
rental agreement
 Why? The expenses were incurred to create a
source of income and not in the production of the
income. Tk termasuk sbb baru nk mula
 ROYALTY INCOME
CATEGORIES
A. B.
• Patent, trademark, The right to use or the right
copywrite to reproduce
• Artistic or scientific • Tapes for radio or
works television broadcasting
• Designs or models, • Motion picture films,
plan; and films, video tapes; and
• Secret processes • Visual images or sounds
transmitted by satellite,
cable, fibre optic.
C.
The right to use know
how, information
concerning technical,
industrial, commercial
or scientific
knowledge, experience
or skills
 ROYALTIES INCOME
DERIVATION OF INCOME
Royalty income is deemed derived from Malaysia if:
Responsibility for payment lies with the
government, state government or local
authority
Responsibility of payment lies with a person
who is resident for that basis year
Royalty is charged as an outgoing or expenses
against any income accruing in or derived in
Malaysia
 ROYALTIES INCOME
EXEMPTION / Dikecualikan

A. Translation of
i. publication; books/literary work at i. publication;
ii. Use; the request of MOE/ ii. Use;
iii. Right to use. iii. Right to use.
MOHE/ AG Chamber
Artistic work(other than Any literary work/original
original painting) painting
RM12,000
Para 32A
B
Recording disks/tapes RM20,000
Para 32B
RM10,000
Para 32
 Sec. 4(e)
• Pension
• Annuities
• Other Periodical
Payments
 PENSION INCOME
 Pension is a periodical payment made to an individual
who has permanently ceased to exercise an
employment.
 Exemption:
 Pension paid to a person reaching the age of 55 or
compulsory retirement age.
 Pension due to ill health
 Sec. 4(f)
• Other profits
• Side
income,commission