FINANCE ACT 2010

Finance laws OF MalaYsIa act 719 FInance act 2011 1 2 Date of Royal Assent Laws of Malaysia Act 719 ... ... 17 January 2011 Date of publication in the Gazette ... ... ... 27 January 2011 Publisher’s copyright c Percetakan nasIOnal MalaYsIa berhad All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording and/or otherwise without the prior permission of Percetakan nasional Malaysia berhad (appointed Printer to the Government of Malaysia). Finance laws OF MalaYsIa act 719 FInance act 2011 ARRANGEMENT OF SECTIONS Chapter I Section 1. Short title 2. Amendment 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. Deletion of section 6C 6. Amendment of section 16 7. Amendment of section 34 8. Amendment of section 34C 9. Amendment of section 39 10. Amendment of section 46 11. Amendment of section 49 12. Amendment of section 50 13. Amendment of section 60f 14. Amendment of section 60h 15. Amendment of section 63b 16. Amendment of section 65 17. Amendment of section 74 18. Amendment of section 104 19. Amendment of section 107C 20. Amendment of section 111 3 4 Laws of Malaysia Act 719 Section 21. Amendment of section 132 22. New section 132a 23. Amendment of section 154 24. Amendment of Schedule 6 25. Amendment of Schedule 7a Chapter III AMENDMENTS TO THE STAMP ACT 1949 26. Commencement of amendments to the Stamp Act 1949 27. Amendment of section 8 28. Amendment of First Schedule 29. Amendment of Fifth Schedule Chapter IV AMENDMENTS TO THE PETROLEUM (INCOME TAX) ACT 1967 30. Commencement of amendments to the Petroleum (Income Tax) Act 1967 31. Amendment of section 16 32. Amendment of section 50 Chapter V AMENDMENTS TO THE REAL PROPERTY GAINS TAX ACT 1976 33. Commencement of amendments to the Real Property Gains Tax Act 1976 34. Amendment of section 14 35. Amendment of section 24 36. Amendment of Schedule 2 Chapter VI AMENDMENTS TO THE FINANCE ACT 2007 37. Commencement of amendments to the Finance Act 2007 38. Amendment of section 48 39. Amendment of section 49 Finance Chapter VII AMENDMENTS TO THE FINANCE ACT 2009 Section 40. Commencement of amendments to the Finance Act 2009 41. Amendment of section 48 42. Amendment of section 49 5 6 Laws of Malaysia Act 719 7 Finance laws OF MalaYsIa act 719 FInance act 2011 An Act to amend the Income Tax Act 1967, the Stamp Act 1949, the Petroleum (Income Tax) Act 1967, the Real Property Gains Tax Act 1976, the Finance Act 2007 and the Finance Act 2009. [ ] enacted by the Parliament of Malaysia as follows: Chapter I PRELIMINARY short title 1. This Act may be cited as the Finance Act 2011. amendment of acts 2. The Income Tax Act 1967 [Act 53], the Stamp Act 1949 [Act 378], the Petroleum (Income Tax) Act 1967 [Act 543], the Real Property Gains Tax Act 1976 [Act 169], the Finance Act 2007 [Act 683] and the Finance Act 2009 [Act 693] are amended in the manner specified in Chapters II, III, IV, V, VI and VII respectively. 8 Laws of Malaysia Act 719 Chapter II AMENDMENTS TO THE INCOME TAX ACT 1967 commencement of amendments to the Income tax act 1967 3. (1) Subparagraphs 4(a)(ii), (iii) and (iv) and paragraph 4(b) are deemed to have come into operation on 11 February 2010. (2) Sections 5, 6, 8, paragraph 9(a), sections 10, 11, 12, 13, 14, 15, 16, 24 and 25 have effect for the year of assessment 2011 and subsequent years of assessment. (3) Section 7 is deemed to have effect from the year of assessment 2010. (4) Paragraphs 9(b), (c) and (d) have effect from 1 January 2011 for the year of assessment 2011 and subsequent years of assessment. (5) Subparagraph 4(a)(i), sections 17, 18, 20, 21, 22 and 23 commence on the coming into operation of this Act. (6) Section 19 has effect for the year of assessment 2012 and subsequent years of assessment. amendment of section 2 4. The Income Tax Act 1967, which is referred to as the “principal Act” in this Chapter, is amended in section 2— (a) in subsection (1)— (i) in the definition of “foreign tax” by inserting after the word “Malaysia” the words “and in relation to paragraph 132(4)(d) or section 132a includes other taxes of every kind imposed by or under the laws of that territory”; (ii) by inserting after the definition of “Inland Revenue Board of Malaysia” the following definitions: ‘ “Labuan business activity” has the meaning assigned to it in the Labuan Business Activity Tax Act 1990 [Act 445]; Finance 9 “Labuan company” means a Labuan company incorporated under the Labuan Companies Act 1990 [Act 441] and includes a foreign Labuan company registered under that Act, Labuan limited partnership established and registered under the Labuan Limited Partnerships and Limited Liability Partnerships Act 2010 [Act 707], Labuan trust as defined in the Labuan Trusts Act 1996 [Act 554] and a Malaysian bank as defined in the Labuan Financial Services and Securities Act 2010 [Act 704];’; (iii) by deleting the definition of “offshore business activity”; and (iv) by deleting the definition of “offshore company”; and (b) by inserting after subsection (9) the following subsection: ‘(10) Any reference in this Act to— (a) “Labuan Offshore Business Activity Tax Act 1990” is construed as reference to “Labuan Business Activity Tax Act 1990”; (b) “Labuan Offshore Financial Services Authority” is construed as reference to “Labuan Financial Services Authority”; (c) “offshore business activity” is construed as reference to “Labuan business activity”; (d) “Offshore Companies Act 1990” is construed as reference to “Labuan Companies Act 1990”; and (e) “offshore company” is construed as reference to “Labuan company”.’. deletion of section 6c 5. The principal Act is amended by deleting section 6C. 10 Laws of Malaysia Act 719 amendment of section 16 6. Section 16 of the principal Act is amended by substituting for the words “his widow” wherever appearing the words “that person’s widow or widower”. amendment of section 34 7. Section 34 of the principal Act is amended in paragraph 34(6)(k) by substituting for the words “Ministry of Culture, Arts and Heritage” the words “Ministry of Information, Communication and Culture”. amendment of section 34c 8. Section 34C of the principal Act is amended— (a) by inserting after subsection (1) the following subsections: “(1a) For the purpose of subsection (1), where by reason of an insufficiency or absence of gross income of a company from a source consisting of discount or premium for the basis period for a year of assessment, effect cannot be given or cannot be given in full to any amount of discount falling to be deducted to that company for that basis period in relation to that source, that amount which has not been so deducted shall be allowed as a deduction in arriving at the adjusted income of that company from any source or sources consisting of a business for that basis period: Provided that the proceeds from the issuance of the bond that relates to that amount are utilized wholly by that company for the production of gross income from any source or sources consisting of that business. (1b) This section shall not apply if in the basis period for a year of assessment the bond issued or subscribed forms part of the stock in trade of a business of a company.”; and Finance 11 (b) in subsection (2), by inserting after the words “subsection (1)” the words “or (1a)”. amendment of section 39 9. Subsection 39(1) of the principal Act is amended— (a) in paragraph (d), by inserting after the word “widows” the word “, widowers”; (b) in paragraph (f), by substituting for the proviso the following proviso: “Provided that— (i) this paragraph shall not apply if the payer has paid the amount referred to in subsection (2) of that section; and (ii) where such tax is deducted or such amount is paid after the due date for the furnishing of a return for a year of assessment that relates to such payment, the tax or amount so paid shall not prejudice the imposition of penalty under subsection 113(2) if a deduction on such payment is made in such return or is claimed in the information given to the Director General in arriving at the adjusted income of the payer;”; (c) in paragraph (i), by substituting for the proviso the following proviso: “Provided that— (i) this paragraph shall not apply if the payer has paid the amount referred to in subsection (2) of that section; and (ii) where such tax is deducted or such amount is paid after the due date for the furnishing of a return for a year of assessment that relates to such payment, the tax or amount so paid shall not prejudice the imposition of penalty under subsection 113(2) if a deduction on such payment is made in such return or is claimed in 12 Laws of Malaysia Act 719 the information given to the Director General in arriving at the adjusted income of the payer;”; and (d) in paragraph (j), by substituting for the proviso the following proviso: “Provided that— (i) this paragraph shall not apply if the payer has paid the amount referred to in subsection (2) of that section; and (ii) where such tax is deducted or such amount is paid after the due date for the furnishing of a return for a year of assessment that relates to such payment, the tax or amount so paid shall not prejudice the imposition of penalty under subsection 113(2) if a deduction on such payment is made in such return or is claimed in the information given to the Director General in arriving at the adjusted income of the payer;”. amendment of section 46 10. Section 46 of the principal Act is amended by substituting for paragraph (1)(c) the following paragraph: “(c) an amount limited to a maximum of five thousand ringgit in respect of medical treatment, special needs or carer expenses expended in that basis year by that individual for his parents and the claim is evidenced by certification of a medical practitioner that the medical conditions of the parents require medical treatment or special needs or carer and— (i) in the case of medical treatment or special needs, a receipt on the amount expended; or (ii) in the case of carer, a written certification or receipt from, or work permit of, the carer: Provided that for the purpose of this paragraph— (a) “carer” shall not include that individual, his wife or her husband or the child of the individual; Finance 13 (b) “parents” shall be individuals resident in Malaysia; (c) the medical treatment and care services are provided in Malaysia; and (d) the medical practitioner is registered with the Malaysian Medical Council.”. amendment of section 49 11. Section 49 of the principal Act is amended— (a) in paragraph (1)(a), by deleting the words “other than an insurance policy to which subsection (1C) applies”; (b) in paragraph (1)(c), by inserting after the word “widows” the word “, widowers”; and (c) by deleting subsection (1C). amendment of section 50 12. Subsection 50(2) of the principal Act is amended by deleting the words “or for any insurance policy determined by the Employees Provident Fund Board referred to in subsection 49(1C),”. amendment of section 60f 13. Subsection 60f(2) of the principal Act is amended by inserting after the definition of “business of holding of an investment” the following definition: ‘ “dividend” is deemed to include income distributed by a unit trust;’. amendment of section 60h 14. Subsection 60h(5) of the principal Act is amended by inserting after the definition of “closed-end fund company” the following definition: ‘ “dividend” is deemed to include income distributed by a unit trust;’. 14 Laws of Malaysia Act 719 amendment of section 63b 15. Subsection 63b(2) of the principal Act is amended by inserting before the definition of “permitted expenses” the following definit