FINANCE ACT 1992

Finance LAWS OF MALAYSIA REPRINT Act 476 FINANCE ACT 1992 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 1 2 FINANCE ACT 1992 Date of Royal Assent ... ... ... … … 30 January 1992 Date of publication in the Gazette … … 20 February 1992 PREVIOUS REPRINT First Reprint ... ... ... ... ... 2001 3 LAWS OF MALAYSIA Act 476 FINANCE ACT 1992 ARRANGEMENT OF SECTIONS CHAPTER I PRELIMINARY Section 1. Short title 2. Amendments and repeal CHAPTER II AMENDMENTS TO THE INCOME TAX ACT 1967 3. Commencement of amendments to the Income Tax Act 1967 4. Amendment of section 18 5. Amendment of section 34 6. Amendment of section 43 7. Amendment of section 44 8. Amendment of section 46 9. Amendment of section 47 10. Amendment of section 48 11. Amendment of section 49 12. Amendment of section 50 13. Amendment of section 60 14. Amendment of section 60D 15. Amendment of section 60E 16. Amendment of section 95 17. Amendment of Schedule 1 18. Amendment of Schedule 3 19. Amendment of Schedule 6 4 Laws of Malaysia A CT 476 CHAPTER III AMENDMENT TO THE SUPPLEMENTARY INCOME TAX ACT 1967 Section 20. Commencement of amendment to the Supplementary Income Tax Act 1967 21. Amendment of section 16 CHAPTER IV AMENDMENTS TO THE REAL PROPERTY GAINS TAX ACT 1976 22. Commencement of amendments to the Real Property Gains Tax Act 1976 23. Amendment of section 16 24. Amendment of section 17 25. Amendment of section 21B 26. Amendment of Schedule 2 CHAPTER V AMENDMENTS TO THE SERVICE TAX ACT 1975 27. Commencement of amendments to the Service Tax Act 1975 28. Amendment of section 3 29. Amendment of section 4 30. Amendment of section 7 31. Amendment of section 8 CHAPTER VI AMENDMENTS TO THE STAMP ACT 1949 32. Commencement of amendments to the Stamp Act 1949 33. Amendment of section 2 34. Deletion of section 34 35. Amendment of section 42 36. Amendment of section 43 37. Amendment of section 44 Finance Section 38. Amendment of section 45 39. Substitution of section 47 40. Deletion of sections 54 and 62 41. Amendment of section 63 42. Amendment of section 65 43. Amendment of First Schedule 44. Amendment of Second Schedule CHAPTER VII REPEAL OF THE ESTATE DUTY ENACTMENT 1941, THE ESTATE DUTY ORDINANCE OF SABAH, THE ESTATE DUTY ORDINANCE OF SARAWAK, THE FINANCE (ESTATE DUTY) ACT 1965, THE FINANCE (ESTATE DUTY) ACT 1971, THE FINANCE (ESTATE DUTY) ACT 1979 AND THE FINANCE (ESTATE DUTY) ACT 1980 45. Commencement of this Chapter 46. Repeal of the Estate Duty Enactment 1941, etc., and saving 5 6 Laws of Malaysia A CT 476 Finance 7 LAWS OF MALAYSIA Act 476 FINANCE ACT 1992 An Act to amend the Income Tax Act 1967, the Supplementary Income Tax Act 1967, the Real Property Gains Tax Act 1976, the Service Tax Act 1975 and the Stamp Act 1949, and to repeal the Estate Duty Enactment 1941, the Estate Duty Ordinance of Sabah, the Estate Duty Ordinance of Sarawak, the Finance (Estate Duty) Act 1965, the Finance (Estate Duty) Act 1971, the Finance (Estate Duty) Act 1979 and the Finance (Estate Duty) Act 1980. [ ] BE IT ENACTED by the Seri Paduka Baginda Yang di-Pertuan Agong with the advice and consent of the Dewan Negara and Dewan Rakyat in Parliament assembled, and by the authority of the same, as follows: CHAPTER I PRELIMINARY Short title 1. This Act may be cited as the Finance Act 1992. Amendments and repeal 2. (1) The Income Tax Act 1967 [Act 53], the *Supplementary Income Tax Act 1967 [Act 54], the Real Property Gains Tax Act 1976 [Act 169], the Service Tax Act 1975 [Act 151] and the Stamp Act 1949 [Act 378] are amended in the manner specified in Chapters II, III, IV, V and VI respectively. *NOTE—The Supplementary Income Tax Act 1967 [Act 54] has since been repealed by the Finance Act 1993 [Act 497]–see subsection 16(1) of Act 497. 8 Laws of Malaysia A CT 476 (2) The Estate Duty Enactment 1941 [FM.S. 7/1941], the Estate Duty Ordinance of Sabah [Sabah Cap. 42], the Estate Duty Ordinance of Sarawak [Sarawak Cap. 29], the Finance (Estate Duty) Act 1965 [Act 29 of 1965], the Finance (Estate Duty) Act 1971 [Act 38], the Finance (Estate Duty) Act 1979 [Act 219] and the Finance (Estate Duty) Act 1980 [Act 224] are repealed in the manner specified in Chapter VII. CHAPTER II AMENDMENTS TO THE INCOME TAX ACT 1967 Commencement of amendments to the Income Tax Act 1967 3. (1) Except for sections 6, 7, 11, 12 and paragraph 18(a), this Chapter shall have effect for the year of assessment 1992 and subsequent years of assessment. (2) Sections 6, 11, 12 and paragraph 18(a) shall be deemed to have effect for the year of assessment 1991 and subsequent years of assessment. (3) Section 7 shall be deemed to have come into force on 1 January 1990. Amendment of section 18 4. Section 18 of the Income Tax Act 1967 [Act 53], which in this Chapter is referred to as the “principal Act”, is amended by inserting, immediately after the definition of “defined value”, the following new definition: ‘ “disabled person” means any individual certified in writing by the Department of Social Welfare to be a disabled person;’. Amendment of section 34 5. Section 34 of the principal Act is amended— (a) in subsection (6)— (i) by deleting the word “and” at the end of paragraph (c); Finance 9 (ii) by substituting for the full stop at the end of paragraph (d) the word “; and”; and (iii) by inserting, immediately after paragraph (d), the following new paragraph (e): “(e) an amount equal to the amount of expenditure incurred by the relevant person in the relevant period on the provision of any equipment necessary to assist any disabled person employed by him in the production of gross income of his from the business.”; and (b) by substituting for subsection (8) the following: “(8) Where any deduction in respect of any matter is capable of being made under this section, no deduction or allowance in respect of that matter shall be made under section 33 or Schedule 3, as the case may be.”. Amendment of section 43 6. Section 43 of the principal Act is amended by substituting for the words “, 4 A or 4B ” in paragraph (1)(c) the words “or 4A ”. Amendment of section 44 7. Section 44 of the principal Act is amended in subsection (7)— (a) by deleting the word “or” at the end of paragraph (d) in the definition of the word “organization”; (b) by substituting for the full stop at the end of paragraph (e) in the definition of the word “organization” the word “; or”; and (c) by inserting, immediately after paragraph (e) in the definition of the word “organization”, the following new paragraphs (f) and (g): “(f) a Government-assisted organization engaged solely in addressing problems relating to industrial and commercial development and promoting and enhancing the relationship between the public sector and the private sector; or 10 Laws of Malaysia A CT 476 (g) a Government-assisted organization established and maintained exclusively to administer and augment a fund established or held solely for promoting national unity.”. Amendment of section 46 8. Section 46 of the principal Act is amended— (a) by deleting the word “and” at the end of paragraph (b); (b) by substituting for the full stop at the end of paragraph (c) the word “; and”; and (c) by inserting, immediately after paragraph (c), the following new paragraph (d): “(d) an amount limited to a maximum of three thousand ringgit expended in that basis year by that individual for the purchase of any necessary basic supporting equipment for his own use, if he is a disabled person, or for the use of his wife, child [as defined in subsection 48(9)] or parent, who is a disabled person.”. Amendment of section 47 9. Section 47 of the principal Act is amended by deleting the colon and the proviso thereto in subsection (1). Amendment of section 48 10. Section 48 of the principal Act is amended— (a) in subsection (1)— (i) by substituting for the word “sixteen” in paragraph (a) the word “eighteen”; (ii) by substituting for paragraph (d) the following: “(d) pays (wholly or in part) in that basis year for the maintenance at any time in that basis year of an unmarried child if it is proved to the satisfaction of the Director General that the child is physically or mentally disabled,”; Finance 11 (b) in subsection (2), by inserting, immediately after the words “one thousand” in paragraph (b), the words “six hundred”; and (c) in subsection (3), by substituting for the word “sixteen” in paragraph (a) the word “eighteen”. Amendment of section 49 11. Section 49 of the principal Act is amended— (a) by deleting the colon and the proviso thereto in subsection (1); and (b) by inserting, immediately after subsection (1), the following new subsection (1A): “(1 A ) Where paragraph 50(3)(b) or (c) applies, there shall be allowed for that year of assessment, in addition to the deduction allowed under subsection (1), a deduction of the aggregate amount of the payments or contributions or both made by the wife or a deduction of three thousand five hundred ringgit, whichever is the less: Provided that where the wife has no total income the total deduction under subsection (1) and this subsection shall not exceed three thousand five hundred ringgit.”. Amendment of section 50 12. Section 50 of the principal Act is amended by substituting for paragraph (3)(b) the following: “(b) where the wife makes an election under subsection 45(2) or where the wife has no total income for the year of assessment to which the relevant year relates any premium for any insurance or deferred annuity within the meaning of paragraph (a) which is paid by the wife in the relevant year shall be deemed to have been paid by the husband;”. 12 Laws of Malaysia A CT 476 Amendment of section 60 13. Section 60 of the principal Act is amended by substituting for subsection (7) excluding the proviso the following: “(7) Where an insurer carrying on general business has— (a) re-insured the risk or part of the risk with a re-insurer who either does not carry on the business of insuring risks of that kind in Malaysia or does not re-insure the risk through a branch in Malaysia; or (b) re-insured the risk or part of the risk with an insurer licensed under the Offshore Insurance Act 1990 [Act 444], there may be deducted under subparagraph (5)(b)(ii) or (6)(b)(ii) in respect of such risks which are re-insured only ninety-five per cent of the amount which would otherwise be deductible:”. Amendment of section 60 D 14. Section 60 D of the principal Act is amended— (a) by substituting for the word “two” in the proviso to subsection (1) the word “three”; (b) by substituting for subsection (3) the following: “(3) Where a venture capital company incurs a loss on the disposal of shares in a venture company or on the liquidation of a venture company in the basis period for a year of assessment, such loss shall be allowed as a deduction under subsection 43(2) or 44(2) in computing the aggregate income or total income of the venture capital company, as the case may be.”; and (c) by substituting for the proviso to subsection (4) the following: “Provided that where, by reason of an absence or insufficiency of such total income for that year of assessment, effect cannot be given or cannot be given in full to any deduction falling to be made to the venture capital company under this section for that year, that deduction which has not been so made shall be made to the company for any subsequent year of assessment.”. Finance 13 Amendment of section 60 E 15. Section 60E of the principal Act is amended— (a) by inserting, immediately after subsection (4), the following new subsection (4A ): “(4 A ) The chargeable income of an approved operational headquarters company, resident in Malaysia for the basis y