FINANCE (NO. 2) ACT 2000

LAWS OF MALAYSIA REPRINT Act 608 FINANCE (No. 2) ACT 2000 Incorporating all amendments up to 1 January 2006 PUBLISHED BY THE COMMISSIONER OF LAW REVISION, MALAYSIA UNDER THE AUTHORITY OF THE REVISION OF LAWS ACT 1968 IN COLLABORATION WITH PERCETAKAN NASIONAL MALAYSIA BHD 2006 2 FINANCE (No. 2) ACT 2000 Dated of Royal Assent … … … Date of Publication in the Gazette … 21 December 2000 … 23 December 2000 PREVIOUS REPRINT First Reprint ... ... ... ... ... 2001 3 LAWS OF MALAYSIA ACT 608 FINANCE (No. 2) ACT 2000 ARRANGEMENT OF SECTIONS CHAPTER I PRELIMINARY Section 1. Short title 2. Amendments of Acts CHAPTER II AMENDMENTS TO THE INCOME TAX ACT 1967 3. Commencement of amendments to the Income Tax Act 1967 4. Amendment of section 2 5. Amendment of section 6A 6. Amendment of section 34 7. Amendment of section 39 8. Amendment of section 44 9. Amendment of section 45 10. New section 45A 11. Amendment of section 46 12. Amendment of section 49 13. Amendment of section 50 14. Amendment of section 60 15. Amendment of section 60AA 16. Amendment of section 103 17. Amendment of section 110 4 Laws of Malaysia ACT 608 Section 18. Amendment of section l27 19. New section 127A 20. Amendment of section 128 21. New section 129A 22. Amendment of section 130 23. Amendment of section 156 24. Amendment of Schedule 3 25. Amendment of Schedule 4C 26. Amendment of Schedule 6 27. Special provision relating to paragraph 13 of Schedule 6 CHAPTER III AMENDMENTS TO THE PETROLEUM (INCOME TAX) ACT 1967 28. Commencement of amendments to the Petroleum (Income Tax) Act 1967 29. Amendment of section 16 30. Amendment of section 18 31. Amendment of section 22 32. Amendment of section 33 33. Amendment of section 45 34. Amendment of section 46 35. Amendment of section 54 36. Amendment of Second Schedule 37. Amendment of Third Schedule CHAPTER IV AMENDMENTS TO THE REAL PROPERTY GAINS TAX ACT 1976 38. Commencement of amendment to the Real Property Gains Tax Act 1976 39. Amendment of section 18 Finance (No. 2) CHAPTER V AMENDMENTS TO THE STAMP ACT 1949 Section 40. Commencement of amendments to the Stamp Act 1949 41. Amendment of section 2 42. Amendment of section 7 43. Amendment of section 9 44. Special provision relating to section 9 45. Amendment of section 32A 46. Substitution of section 47A 47. Amendment of section 80 48. Amendment of First Schedule 5 6 Laws of Malaysia ACT 608 Finance (No. 2) 7 LAWS OF MALAYSIA Act 608 FINANCE (No. 2) ACT 2000 An Act to amend the Income Tax Act 1967, the Petroleum (Income Tax) Act 1967, the Real Property Gains Tax Act 1976 and the Stamp Act 1949. [ ] ENACTED by the Parliament of Malaysia as follows : CHAPTER I PRELIMINARY Short title 1. This Act may be cited as the Finance (No. 2) Act 2000. Amendments of Acts 2. The Income Tax Act 1967 [Act 53], the Petroleum (Income Tax) Act 1967 [Act 543], the Real Property Gains Tax Act 1976 [Act 169] and the Stamp Act 1949 [Act 378] are amended in the manner specified in Chapters II, III, IV and V respectively. CHAPTER II AMENDMENTS TO THE INCOME TAX ACT 1967 Commencement of amendments to the Income Tax Act 1967 3. (1) Sections 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26 and 27 shall have effect for the year of assessment 2001 and subsequent years of assessment. 8 Laws of Malaysia ACT 608 (2) The amendment in section l5 shall be deemed to have effect from the year of assessment 1986 and subsequent years of assessment. Amendment of section 2 4. The Income Tax Act 1967, which in this Chapter is referred to as the “principal Act”, is amended in subsection 2(l)— (a) by inserting after the definition of “Hindu joint family” the following definition: ‘ “husband who elects” means the husband who is referred to in paragraph 45(2)(b);’; and (b) by inserting after the definition of “wife” the following definition: ‘ “wife who elects” means the wife who is referred to in paragraph 45(2)(a);’. Amendment of section 6A 5. The principal Act is amended by substituting for subsection 6A(2) the following subsection: “(2) A rebate shall be granted for a year of assessment in the following amounts: (a) three hundred and fifty ringgit in the case of an individual who has been allowed a deduction under paragraph 46(l)(a) for that year of assessment where his chargeable income for that year of assessment does not exceed thirty-five thousand ringgit; (b) three hundred and fifty ringgit in the case of an individual who has been allowed a deduction under subsection 47(1) or (2) for that year of assessment where his chargeable income for that year of assessment does not exceed thirtyfive thousand ringgit; (c) three hundred and fifty ringgit in the case of a wife who has been allowed a deduction under section 45A for that year of assessment where her chargeable income for that year of assessment does not exceed thirty-five thousand ringgit.”. Finance (No. 2) 9 Amendment of section 34 6. Subsection 34(6) of the principal Act is amended— (a) in paragraph (h), by substituting for the words “and infrastructure” the words “, infrastructure and information and communication technology”; (b) by deleting the word “and” at the end of paragraph (j), (c) in paragraph (k), by substituting for the full stop at the end of the proviso the words “; and”; and (d) by inserting after paragraph (k) the following paragraphs: “(l) an amount equal to the expenditure incurred by the company in the relevant period on the provision of a scholarship to a student for any course of study leading to an award of a diploma, or degree (including a degree at a Masters or Doctorate level) or the equivalent of a diploma or degree undertaken at a higher educational institution established or registered under the laws regulating such establishment or registration in Malaysia or authorised by any order made under section 5A of the Universities and University Colleges Act 1971 [Act 30]: Provided that the scholarship— (a) shall only be given to a student— (i) who is receiving full-time instruction at such higher educational institution; (ii) who has no means of his own; and (iii) the total monthly income of whose parents or guardian, as the case may be, does not exceed five thousand ringgit; and (b) shall not include payments other than payments required by such higher educational institution relating to the course of study, and educational aids and reasonable cost of living expenses during the student’s period of study at such higher educational institution; and 10 Laws of Malaysia ACT 608 (m) an amount equal to the expenditure, not being capital expenditure, incurred by the company in the relevant period for the purposes of obtaining certification for recognized quality systems and standards, and halal certification, evidenced by a certificate issued by a certification body as determined by the Minister: Provided that the expenditure incurred in the relevant period shall be deemed to be incurred by the company in the basis period for the year of assessment in which the certificate is issued.”. Amendment of section 39 7. Paragraph 39(l)(k) of the principal Act is amended by substituting for the words “(other than a lorry, truck, bus, mini bus, van, station wagon or taxi cab licensed or permitted, by the appropriate authority, for commercial transportation of goods or passengers)” the words “, other than a motor vehicle licensed by the appropriate authority for commercial transportation of goods or passengers,”. Amendment of section 44 8. Section 44 of the principal Act is amended— (a) in subsection (6)— (i) by substituting for the full stop at the end of the subsection a colon; and (ii) by inserting after subsection (6) the following proviso: “Provided that the amount to be deducted from the aggregate income of a company for the relevant year in respect of any gift of money made by that company to any institution or organization approved for the purposes of this section by the Director General shall not exceed five per cent of the aggregate income of the company in the relevant year.”; and Finance (No. 2) 11 (b) in subsection (7), in the definition of “organization”— (i) by substituting for the full stop at the end of paragraph (h) the words “; or”; and (ii) by inserting after paragraph (h) the following paragraphs: “(i) an international organization as defined under the International Organization (Privileges and Immunities) Act 1992 [Act 485] carrying out such charitable activities as determined by the Minister; or (j) an organization established and maintained exclusively to administer or augment a fund established or held for the purpose of carrying out projects towards the acculturation of the community in information and communication technology, approved by the Minister; or (k) a benevolent fund or trust account established or held for the sole purpose of providing relief or aid to an individual who has no, or insufficient means, or in the case of a dependent individual whose parents or guardian has no, or insufficient means, to pay for the cost of the medical treatment required by such individual to treat a serious disease as defined in subsection 46(2).”; and (c) by inserting after subsection (7) the following subsections: “(7A) An institution or organization referred to in subsection (7)— (a) may apply not more than twenty-five per cent of its accumulated funds as at the beginning of the basis period for the year of assessment for the carrying on of, or participation in, a business: Provided that the profits or income derived therefrom shall be used solely for charitable purposes or for the primary purpose for which the institution or organization was established; or 12 Laws of Malaysia ACT 608 (b) may carry out charitable activities outside Malaysia with the prior consent of the Minister. (7 B ) The reference to the carrying on of, or participation in, a business in paragraph (7A)(a) shall not include the carrying on of a business by an institution or organization where— (a) the business is carried on in the course of the actual carrying out of the primary purpose of the institution or organization; or (b) the work in connection with the business is mainly carried on by persons for whose benefit the institution or organization was established.”. Amendment of section 45 9. Section 45 of the principal Act is amended— (a) by substituting for subsection (2) the following subsection: “(2) Subject to this section, where an individual and his wife were living together in the basis year for a year of assessment and did not in that basis year cease to live together or to be husband and wife of each other— (a) the wife may elect in writing (wife who elects) that her total income shall be aggregated with the total income of her husband and assessed in his name for that year of assessment; or (b) the husband may elect in writing (husband who elects) that his total income shall be aggregated with the total income of his wife and assessed in her name for that year of assessment: Provided that where the wife who elects or the husband who elects is not resident for the basis year for a year of assessment, such wife or husband, as the case may be, may elect under this subsection only if she or he is a citizen.”; Finance (No. 2) 13 (b) by substituting for subsection (3) the following subsection: “(3) For the purposes of paragraph (2)(b)— (a) for any year of assessment, that paragraph shall only apply if there is no election made by a wife or wives under paragraph (2)(a) for that year of assessment; and (b) the election shall only be made with one wife.”; and (c) by inserting after subsection (3) the following subsections: “(4) Where under subsection (2) the total income of the wife who elects falls to be aggregated with that of her husband or the total income of the husband who elects falls to be aggregated with t