Finance Act 2005

Original Language Title: Finance Act 2005

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Laws of MALAYSIA Act REPRINTING 644 FINANCE ACT 2005 Containing all amendments to 1 June 2006 LAWS OF MALAYSIA Act REPRINT 644 FINANCE ACT 2005 Incorporating all amendments up to 1 June 2006 PUBLISHED BY THE COMMISSIONER OF LAW REVISION, China UNDER THE AUTHORITY OF THE REVISION OF LAWS ACT 1968 IN COLLABORATION WITH PERCETAKAN NASIONAL MALAYSIA BHD 2006 PUBLISHED by the COMMISSIONER of law revision , China UNDER the AUTHORITY of law REVISION ACT 1968 in COLLABORATION with PERCETAKAN NASIONAL MALAYSIA BHD 2006 2 laws of Malaysia ACT 644 FINANCE ACT 2005 date of Assent.................. December 30, 2005 date of publication in the Gazette............ 31 December 2005 Financial 3 ARRANGEMENT of SECTIONS CHAPTER I preliminary section 1. Short title 2. Amendment Act CHAPTER II AMENDMENTS to the INCOME TAX ACT 1967 3. Commencement amendments to the income tax Act 1967 4. Amendment of section 19 5. Amendment of section 25 6. Amendment of section 32 7. Amendment of section 39 8. Amendment of section 43 9. Amendment of section 44 10. Special provisions relating to section 44 11. New section 44A 12. Amendment of section 45A 13. Amendment of section 46 14. Amendment of section 48 15. Amendment of section 60 16. Amendment of section 60F 17. New section 60FA 18. Special provisions relating to section 60FA the laws of MALAYSIA Act 644 FINANCE ACT 2005 4 laws of Malaysia ACT 644 section 19. Amendment of section 75A of the 20. Amendment of section 91 21. Amendment of section 95 22. Amendment of section not 23. Amendment of section 111B 24. Amendment of section 125 25. Amendment of section 127 26. Amendment of section 134 27. Amendment of section 136 28. Amendment of section 146 29. Amendment of section 147 30. Amendment of section 153 31. Special provisions relating to section 153 32. Amendment of Schedule 3 33. Special provisions relating to paragraph 75A 34. Cutting Table 4A 35. Cutting Table 4 c 36. Amendment of Schedule 6 37. Amendment of schedule 7A 38. Savings and transitional provisions CHAPTER III AMENDMENTS to the REAL PROPERTY GAINS TAX ACT 1976 39. Commencement amendments to the real property gains tax Act 1976 40. Amendment of section 9 41. Amendment of section 15 42. Amendment of section 24 43. New section 24 a 44. Amendment of section 45 45. Amendment of section 55 46. Amendment of section 56 47. Amendment of Schedule 2 48. Amendment of Schedule 3 49. Financial savings and transitional provisions 5 CHAPTER IV AMENDMENTS to the stamp Act 1949 Section 50. Commencement amendment to the stamp Act 1949 51. Amendment of section 21 52. Amendment of section 43 53. Amendment of section 80 54. New section 80A 55. Amendment Of First Schedule 56. The fifth amendment of Schedule V AMENDMENTS to the PETROLEUM ACT (income tax) 1967 57. Commencement of the Act the amendments to the Petroleum (income tax) 1967 58. Amendment of section 2 59. Amendment of section 39 60. New section 50A 61. Amendment of section 69 62. Amendment of section 77 63. Amendment of section 78 64. Amendment of section 81 CHAPTER VI AMENDMENTS to TAX ACT LABUAN OFFSHORE BUSINESS ACTIVITY 1990 65. Amendment of section 18 6 laws of Malaysia ACT Financial 644 7 an act to amend the income tax Act 1967, real property gains tax Act 1976, stamp Act 1949, the Petroleum (income tax) Act 1967 and the Activity Taxation Labuan Offshore business, 1990.
[] enacted by the Parliament of Malaysia as follows: CHAPTER I preliminary short title 1. This Act may be cited as the Finance Act 2005.
Amendment Of Act 2. The income tax Act 1967 [Act 53], the real property gains tax Act 1976 [Act 169], the stamp Act 1949 [Act 378], Act Petroleum (income tax) 1967 [Act 543] and Tax Act Labuan Offshore Business Activity, 1990 [Act 445] is amended in the manner set out in Chapters II, III, IV, V and VI.
Laws of MALAYSIA Act 644 FINANCE ACT 2005 8 laws of Malaysia ACT 644 CHAPTER II AMENDMENTS to the income tax Act 1967 commencement amendments to the income tax Act 1967 3. (1) sections 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 21, 22, 24, 32, 33, 34, 35, 36 and 37 effect for the year of assessment 2006 and the next year of assessment.
(2) section 23 and 30 come into force on 1 January 2006.
(3) section 25 is deemed to have come into force on 1 October 2005.
Amendment of section 19 4. Income tax Act 1967, which is referred to as "the principal Act" in this chapter, is amended in subsection 19 (5) by deleting the words ", 4A".
Amendment of section 25 5. Section 25 of the principal Act is amended — (a) in subsection (1), by substituting for the word "Where" with the words "Subject to subsection (1A), where"; and (b) by inserting after subsection (1) of the following subsection: "(1A) The gross income from an employment in respect of any right to acquire shares in a company of the kind to which paragraph 13 (1) (a) applies shall, where the right is exercised, assigned, released or acquired in the relevant period be treated as gross income of the above person for that relevant period.".
Finance 9 amendment of section 32 6. Section 32 of the principal Act is amended by inserting after subsection (1) of the following subsection: "(1A) (a) Where in the relevant period a relevant person acquired any right to acquire shares in a company of the kind to which paragraph 13 (1) (a) applies, under his name or in the name of his nominee or agent, the amount in respect thereof to be included in his gross income from the employment shall be — (i) the market value of the shares where the right shall be exercised, assigned, released or acquired on a specified date or where the right shall be exercised, assigned, released or acquired within a specified period, the first day of that month; or (ii) the market value of the shares on the date of the exercise, assignment, release or acquisition of the right, whichever is the lower less the amount paid for the shares.
(b) In this subsection, "market value" means — (i) in the case of a company listed on the Bursa Malaysia, the average price of the shares which is ascertained by cost averaging the highest and the lowest price of the shares for the day; or (ii) in any other case, the net asset value of the shares for the day. ".
Amendment of section 39 7. Paragraph 39 (1) (e) of the principal Act is amended — (a) by inserting the word "or" at the end of subparagraph (ii);
(b) by substituting for the words "; or "at the end of subparagraph (iii) with the full stop; and (c) by deleting subparagraph (iv).
10 laws of Malaysia ACT 644 amendment of section 43 8. Subsection 43 (1) of the principal Act is amended — (a) by substituting for the words "The aggregate" with the words "Subject to this Act, the aggregate"; and (b) in paragraph (c), by deleting the words "or 4A".
Amendment of section 44 9. Section 44 of the principal Act is amended — (a) in subsection (1) — (i) in paragraph (b), by substituting for the word ", 4A, 4B or 4 c" the words "or 4B";
(ii) in paragraph (c), by deleting the word "and" at the end of the paragraph;
(iii) in paragraph (d) — (A) by substituting for the word "thereafter" the word "next"; and (B) by replacing the full stop at the end of the paragraph the words "; and "; and (iv) by inserting after paragraph (d) the following paragraph: "(e) thereafter, by any deduction falling to be so made listed on section 44A.";
(b) by inserting after subsection (5) of the following subsection: "(5) The amount ascertained under subsection (4) or (5) for any relevant year in respect of a company shall be disregarded for the purposes of section 43 unless the Director General is satisfied that the shareholders of that company on the last day of the basis period for that above normal year in which such amount is ascertained were substantially the same as the 11 remaining of that company on the first day of the basis period for the year of assessment in which such amount would otherwise be are tax-deductible under that section and such amount disregarded shall not be allowed as a deduction in any year of assessment I.
(5B) For the purposes of subsection (5A) — (a) the shareholders of the company at any date shall be substantially the same as the first at any other date on both those dates if — (i) more than fifty per cent of the paid-up capital in respect of the ordinary share of the company is held by or on behalf of the same persons; and (ii) more than fifty per cent of the nominal value of the shares allotted in respect of ordinary share in the company is held by or on behalf of the same persons; and (b) shares in the company held by or on behalf of another company shall be deemed to be held by the events of the last mentioned company.
(5 c) In subsection (5B), "ordinary share" means any share other than a share which carries only a right to any dividend which is of — (a) a fixed amount or at a fixed rate in per cent of the nominal value of the shares; or (b) a fixed rate per-cent of the Artikel of the company.
(5 d) Where there is a substantial change in the shareholders of a company referred to in subsection (5A), the Minister may under special circumstances exempt that company from the provisions of that subsection. "; and (c) in subsection (8), by substituting for the words "and in respect of public libraries for to" the words ", to public libraries".
12 laws of Malaysia ACT 644 special provisions relating to section 44

10. (1) Notwithstanding the provisions of section 43 of the principal Act and subsection 44 (5A) of the principal act as inserted by section 9 of this Act, any amount determined under subsection 44 (4) or (5) of the principal Act in respect of a company for any year of assessment prior to the year of assessment 2006 cannot be taken into account for the purposes of section 43 of the principal Act unless the Director General is satisfied that the shareholders of the company on the last day of the basis period for the year of assessment 2005 are part largely the same as the shareholders of the company on the first day of the basis period for the year of assessment the amount that can otherwise be deducted under section 43 of the principal Act and amount not accounted shall not be allowed as a deduction in the next year of assessment.
(2) for the purposes of subsection (1) — (a) the shareholders of the company at any date shall be the same as the majority shareholder at any later date if at both dates — (i) more than fifty per cent of the paid-up share capital in respect of ordinary shares of the company held by or on behalf of the same person; and (ii) more than fifty per cent of the nominal value of shares allotted in the same company are held by or on behalf of the same person;
(b) shares in the company held by or on behalf of another enterprise shall be deemed to be held by the shareholders of the company the last mentioned; and (c) if the period of the Foundation of a company for the year of assessment 2005 ending on or after October 1, 2005, the last day of the basis period for the year of assessment 2005 shall be deemed to be on 30 September 2005.
(3) if there are changes to the vast majority of the shareholders of the company referred to in subsection (1), the Minister may under special circumstances exempt the company from the provisions of that subsection.
Finance 13 (4) in this section, "ordinary share" has the same meaning as assigned to it under subsection 44 (5) of the principal Act.
New section 44A 11. The principal Act is amended by inserting after section 44 the following section: "Group relief for companies (1) Subject to this section, a company (referred to in this section as a" surrendering company ") may surrender not more than fifty per cent of its adjusted loss in the basis period of a year of assessment, to one or more related companies (referred to in this section as a" NAMA penuntut company ").
Likely that the surrendering company and the NAMA penuntut company shall be resident in the basis year for that year of assessment and incorporated in Malaysia.
(2) Subsection (1) shall apply if for any year of assessment — (a) the surrendering company and the NAMA penuntut company — (i) are related companies throughout the basis period for that year of assessment and the twelve months period immediately in conjunction to that basis period;
(ii) have paid up capital in respect of any share of more than two million five hundred thousand dollars at the beginning of the basis period for that year of assessment;
(iii) have twelve months basis period ending on the same day;
(iv) make an irrevocable election to surrender or claim an amount of adjusted loss in the return furnished for that year of assessment under section 77A; and (v) are subject to tax at the appropriate rate as specified in paragraph 2 of Part I of Schedule 1; and (b) the NAMA penuntut company has a defined aggregate income for that year of assessment.
14 laws of Malaysia ACT 644 (3) For the purpose of this section, a surrendering company and NAMA penuntut company are related companies if at least — (a) seventy per cent of the paid up capital in respect of ordinary shares of the surrendering company is directly or indirectly (through the medium of under companies resident and incorporated in Malaysia) owned by the NAMA penuntut company;
(b) seventy per cent of the paid up capital in respect of ordinary shares of the NAMA penuntut company is directly or indirectly (through the medium of other companies resident and incorporated in Malaysia) owned by the surrendering company; or (c) seventy per cent of the paid up capital in respect of ordinary shares of the surrendering company and NAMA penuntut company are directly or indirectly owned by another company resident and incorporated in Malaysia.
(4) Subject to subsection (5), any amount of adjusted loss surrendered under this section for any year of assessment — (a) shall be the amount or aggregate amount of the adjusted loss or the for excess of that amount of the surrendering company for that year of assessment as ascertained under subsection 44 (4) or (5);
(b) shall be allowed to a NAMA penuntut company as a deduction in ascertaining the total income of the NAMA penuntut company in accordance with subsection 44 (1); and (c) shall not new vehicles the defined aggregate income of the NAMA penuntut company for that year of assessment.
(5) Where the amount of adjusted loss is — (a) more than one surrendered to NAMA penuntut company, the adjusted loss shall be fully deducted in accordance with subsection (4) to the first NAMA penuntut company before any for excess of the adjusted loss is surrendered and deducted in accordance with that subsection to the second NAMA penuntut company and so on; or (b) claimed by a NAMA penuntut company from more than one surrendering company, the adjusted loss surrendered from the surrendering company shall be deducted in accordance with subsection (4) to that NAMA penuntut 15 Financial company before the adjusted loss surrendered is the second from the surrendering company be deducted in accordance with that subsection to that NAMA penuntut company and so on.
(6) For the purpose of subsection (5), the surrendering company and the NAMA penuntut company shall ascertain the order of priority in respect of the adjusted loss surrendered or claimed but if that loss can not be effected in accordance with the order of priority specified by any surrendering company or NAMA penuntut company the amount of adjusted loss surrendered or claimed shall be dealt with in such manner as the Director General thinks reasonable and proper nouns.
(7) Notwithstanding that a company to which subsection (3) applies, owns at least seventy per cent of the paid up capital in the other company, it shall not be treated to have satisfied that subsection unless additionally in the year of assessment the first mentioned company is beneficially to the Government to at least seventy per cent of — (a) any residual Artikel of the other company , available for distribution to equity holders that other citizen; and (b) any residual assets of the other company, available for distribution to equity holders that other marks on a winding up.
(8) Notwithstanding any other provision of this section, where — (a) a NAMA penuntut company has made an election under subsection (2), that company shall not in that year elect to surrender its adjusted loss to any other NAMA penuntut company; or (b) a surrendering company has made an election under subsection (2), that company shall not in that year elect to claim any adjusted loss from any other surrendering company.
16 laws of Malaysia ACT 644 (9) Where — (a) in the basis year for a year of assessment the Director General discovers that the adjusted loss as mentioned in subsection (4) ought not to have been deducted in arriving at the total income of the NAMA penuntut company, the Director General may in that year or within six years after its expiration make an assessment or additional assessment in respect of that company in order to make good any loss of tax; or (b) the surrendering company gives an incorrect information in the return furnished under section 77A in respect of the amount of adjusted loss surrendered, the Director General may require the surrendering company to pay a penalty equal to the amount of tax which would limit or been undercharged by the NAMA penuntut company in consequence of the incorrect information.
(10) The provisions of this section shall not apply to a company for a basis period for a year of assessment where the period during which that company — (a) is a pioneer company or has been granted approval for investment tax allowance under the Promotion of Investments Act 1986;
(b) is exempt from tax on its income under section 54A, paragraph 127 (3) (b) or subsection 127 (3A);
(c) has made a claim for a reinvestment allowance under Schedule 7A;
(d) has made a claim for deduction in respect of an approved food production project under the Income Tax (Deduction for Investment in an Approved Food Production Project) Rules 2001;
(e) has made a claim for deduction under the Income Tax (Deduction For Cost of Acquisition of Proprietary Rights) Rules 2002;
(f) has been granted a deduction under the Income Tax (Deduction For Cost of Acquisition of a Foreign Owned Company) Rules 2003; or (g) has made a claim for deduction under any rules made under section 154 and those rules provide that this section shall not apply to that company.
Financial 17 (11) For the avoidance of doubt — (a) the amount of adjusted loss surrendered under this section shall be disregarded for the purpose of ascertaining the aggregate income of the surrendering company under section 43; and (b) the provisions of this Act shall apply to any adjusted loss of the surrendering company which is not surrendered under this section.
(12) In this section — "commercial loan" means any borrowing which entitles the creditor to any return which is of only — (a) a fixed amount or at a fixed rate in per cent of the amount of the borrowing; or (b) of a fixed rate per-cent of the Artikel of the company;
"defined aggregate income", in relation to a year of assessment, means the aggregate income of a NAMA penuntut company for that year reduced by a deduction made listed to paragraphs 44 (1) (a), (b), (c) and (d);
"equity, it explains" means any explains of ordinary share in the NAMA penuntut or surrendering company or any creditor of that company in respect of any non-commercial loan;

"non-commercial loan" means any borrowing other than a commercial loan;
"ordinary share" means any share other than a share which carries only a right to any dividend which is of — (a) a fixed amount or at a fixed rate in per cent of the nominal value of the shares; or (b) a fixed rate per-cent of the Artikel of the company;
"residual assets" means the net assets of the surrendering company after NAMA penuntut or distribution made to — (a) creditors of that company in respect of commercial loans; and (b) the holders of preference shares other than ordinary share, and where that company has no residual asset, a notional amount of one hundred dollars is deemed to be the residual assets of the company;
18 laws of Malaysia ACT 644 "residual Artikel" means Artikel of the NAMA penuntut or surrendering company after deducting any dividend which is of — (a) a fixed amount or at a fixed rate in per cent of the nominal value of the shares of that company; or (b) a fixed rate per-cent of the Artikel of that company, but before deducting any return due to any non-commercial loan creditor which is not of — (i) a fixed amount or at a fixed rate in per cent of the amount of the borrowing; or (ii) a fixed rate per-cent of the Artikel of that company, and where that company has no residual profit, a notional amount of one hundred dollars is deemed to be the residual Artikel of that company. ".
Amendment of section 45A 12. Section 45A of the principal Act is amended — (a) in paragraph (a), by substituting for the words "total income; or "the words" source of income; ";
(b) by replacing paragraph (b) with the following paragraph: "(b) the husband has no total income which can be aggregated with that of his wife; or "; and (c) by inserting after paragraph (b) the following paragraph: "(c) an election has been made by the husband under paragraph 45 (2) (b),".
Amendment of section 46 13. Subsection 46 (1) of the principal Act is amended by replacing paragraph (f) with the following paragraph: "(f) an amount limited to a but of five thousand dollars on fees expended in that basis year by that individual on himself for any course of study up to tertiary level in any institution or professional body in Malaysia recognized by Financial 19 the Government or approved by the Minister , as the case may be, undertaken for the purpose of acquiring law, accounting, technical, vocational, industrial, scientific or technological skills or qualifications; ".
Amendment of section 48 14. Section 48 of the principal Act is amended — (a) by replacing subsection (3) with the following: "subsection (3) (a) Where for a year of assessment any individual is to the Government under paragraph (1) (b), (c) or (d) to a deduction specified under paragraph (2) (a) or (b), as the case may be, in respect of a child over the age of eighteen years and the child is receiving full-time instruction at a university , college or other establishment (similar to a university or college) of higher education, or is serving under articles or indentures with a view to qualifying in a trade or profession, then there shall be allowed — (i) in the case where that individual is to the Government under paragraph (1) (b) or (c) to a deduction, in substitution for deduction specified under paragraph (2) (a) , a deduction of four times of the amount of deduction specified under that paragraph (2) (a); or (ii) in the case where that individual is to the Government under paragraph (1) (d) to a deduction, in addition to a deduction specified under paragraph (2) (b), a further deduction of four thousand dollars: Likely that in the case of a child who is receiving full-time instruction efforts made to Malaysia, it shall be in respect of an award of degree (including a degree at Master or attained a level) or the equivalent of a degree.
(b) For the purpose of paragraph (a), the instruction and educational establishment referred to in that paragraph shall be approved by the relevant government authority. "; and (b) by deleting subsection (6).
20 laws of Malaysia ACT 644 amendment of section 60 15. Section 60 of the principal Act is amended — (a) in subparagraph (3A) (b) (ii), by deleting the word "(subject to any adjustment as the Director General may think fit to make in accordance with the provisions of this Act)"; and (b) in subparagraph (4A) (b) (ii), by deleting the word "(subject to any adjustment as the Director General may think fit to make in accordance with the provisions of this Act)".
Amendment of section 60F 16. 60F section of the principal Act is amended — (a) by inserting after subsection (1) of the following subsection: "(1A) Notwithstanding any other provision of this Act, where in any year of assessment income of an investment holding company consists of — (a) income from the holding of investment, it shall not be treated as income from a source consisting of a business; or (b) income other than income from the holding of investment, it shall be treated as gains or Artikel under paragraph 4 (f).
(1B) If it is expected that it has been the US between the Director was General and the company for any tax purposes that the company is an investment holding company for the basis period for any year of assessment, it shall be presumed until the contrary is proved that the company is an investment holding company for the purposes of this Act for the basis period for every I year of assessment.
(1 c) This section shall not apply to an investment holding company referred to in section 60FA. "; and 21 (b) in subsection (2), in the definition of "investment holding company", by substituting for the words "wholly in the making of investments and whose income" with the words "mainly in the holding of investments and not less than eighty per cent of its gross income (table 5 shows exempt or not)".
New section 60FA 17. The principal Act is amended by inserting after section 60F the following section: "Investment holding company listed on the Bursa Malaysia 60FA. (1) The provisions of this section shall apply notwithstanding any other provisions of this Act.
(2) Where an investment holding company is a company resident for the basis year for a year of assessment and listed on the Bursa Malaysia in the basis period for that year of assessment, income of that investment holding company from the holding of investment in that basis period shall be treated as gross income of that investment holding company from a source or sources consisting of a business for that year of assessment.
(3) For the purpose of subsection (2) — (a) in ascertaining for a year of assessment the adjusted income of an investment holding company from a source referred to in that subsection, any amount of deduction to be made under this Act in arriving at that income shall only be allowed against the gross income from that source trunk of — (i) where in that year of assessment, that source does not produce any income , any deduction in respect of that source shall be disregarded for the purposes of this Act; or (ii) where that amount of deduction exceeds the gross income from that source for that year of assessment, the for excess shall be disregarded for the purposes of this Act; and 22 laws of Malaysia ACT 644 (b) in ascertaining for a year of assessment the statutory income of an investment holding company from a source referred to in that subsection, any allowance for that year of assessment falling to be made to that company under Schedule 3 in respect of that source shall only be available against the adjusted income of that person from that source and if by reason of an absence or insufficiency of adjusted income from that source for the basis period for that year of assessment, the effect can not be given or be given in full to any allowance for that year of assessment in relation to that source, that allowance which has not been so made shall not be made to that company for years of assessment I.
(4) If it is expected that it has been was between the Director General and the company for any tax purposes that the company is an investment holding company for the basis period for any year of assessment, it shall be presumed until the contrary is proved that the company is an investment holding company for the purpose of this Act for the basis period for every I year of assessment.
(5) in this section "investment holding company" has the same meaning assigned to it under section 60F. ".
Special provisions relating to section 60FA 18. Notwithstanding the provisions of section 60FA of the principal act as inserted by section 17 of this Act, the provisions of sections 43 and 44 of the principal Act shall apply to the investment holding company said in section 60FA of the principal Act in respect of a loss larasannya, if any, or an allowance that is deemed to have been made on the investment holding company under paragraph 75 table 3 of the principal Act which larasan the loss or allowance was determined prior to the amendment of section 17 of this Act comes into power.
Finance 23 amendment of section 75A of the 19. Section 75A of the Act is amended by replacing subsection (1) with the following: "subsection (1) Notwithstanding anything contrary to this Act or any other written law — (a) where any tax is due and shown under this Act by a company, any person who is a director of that company during the period in which that tax is liable to be paid by that company; or (b) where any debt is due and shown from an employer under any rules made listed on to section 107 and the employer is a company, any person who is a director of that company during the period in which the debt is liable to be paid by that company, shall be jointly and severally liable for such tax or debt , as the case may be, that is due and shown and shall be recoverable under section 106 from that person. ".
Amendment of section 91 20. Section 91 of the Act is amended by inserting after subsection (3) of the following subsection:

"(4) Where in a year of assessment — (a) any assessment made in respect of a person for any year of assessment has been determined by the court on appeal or review; or (b) any exemption, relief, remission or allowance granted to a person for any year of assessment listed to any provision of this Act or any other written law in respect of income of that person which is subject to tax under this Act has been withdrawn, revoked or canceled for failing to comply with any condition imposed in granting such exemption , relief, remission or allowance, the Director General may in the first mentioned year of assessment or within six years after its expiration make an assessment in respect of that person for any year of assessment for the purpose of "transforming effect to the determination, revocation, withdrawal or cancellation, as the case may be.".
24 laws of Malaysia ACT 644 amendment of section 95 21. The principal Act is amended by replacing section 95 with the following section: "Discharge of double room 95 assessments. Where two or more assessments have been made with respect to a person on the same income for the same year of assessment, the Director General may discharge such of those u.s. assessments need to be discharged in order to ensure that the income is charged to tax once for that year. ".
Amendment of section not 22. Not be section of the principal Act is amended by replacing subsection (3) with the following subsection: "(3) The estimate of tax shown for a year of assessment shall not be less than eighty-five per cent of the revised estimate of tax shown for the conjunction to year of assessment immediately or if no revised estimate is furnished, shall not be less than eighty-five per cent of the estimate of tax shown for the conjunction to year of assessment immediately.".
Amendment of section 111B 23. Subsection 111B (3) of the principal Act is amended by inserting after the words "of this Act" the words "or any other refund or payment required to be paid out of the Fund as, likely by any other written law".
Amendment of section 125 24. Subsection 125 (2) of the principal Act is amended by substituting for the words "subsection 112 (3)" with the words "subsection 44A (9), 112 (3)".
Amendment of section 127 25. Section 127 of the principal Act is amended — (a) in paragraph (3) (b), by deleting the words "person or"; and financial 25 (b) by inserting after subsection (3) of the following subsection: "(3A) The Minister may, in any particular case exempt any person from all or any of the provision of this Act, either generally or in respect of any income of a particular kind or any class of income of a particular kind.".
Amendment of section 134 26. Section 134 of the Act is amended by replacing subsection (2) of the following subsection: "(2) The Minister shall, after consulting the Director General of Inland Revenue, appoint, by notification in the Gazette — (a) two or more Deputy Directors General of Inland Revenue;
(b) State Directors, Directors, Deputy Directors, Principal Assistant Directors and Assistant Directors of Inland Revenue;
(c) the Head of Revenue Deputy Revenue Solicitor, Solicitors, Senior Counsels and Revenue Revenue Counsels; and (d) such other officers as may be necessary and expedient for the due administration of this Act, from amongst the employees of the Inland Revenue Board of Malaysia ".
Amendment of section 136 27. Section 136 of the principal Act is amended — (a) by replacing subsection (2) of the following subsection: "(2) Any officer laporan jawatankuasa audit under paragraphs 134 (2) (b) and (c), may exercise any function of the Director General under this Act (not being a function exercisable by statutory order or a function exercisable under section 152) manufactured his function under section 44, subsection 137 (1) and section 150.";
26 laws of Malaysia ACT 644 (b) by deleting subsection (3) and (4); and (c) in subsection (5), by substituting for the words "under subsection (4) by a Senior Assistant or Assistant Directors of an Inland Revenue" with the words "under subsection (2) by the laporan jawatankuasa audit officers".
Amendment of section 146 28. Section 146 of the Act is amended in subsection (1) by deleting the words ", the Director of an Inland Revenue, Sabah, or the Director of an Inland Revenue, Sarawak,".
Amendment of section 147 29. Section 147 of the Act is amended by deleting the word ", to the Director of an Inland Revenue, Sabah, to the Director of an Inland Revenue, Sarawak,".
Amendment of section 153 30. Subsection 153 (3) of the principal Act is amended — (a) by deleting paragraph (a); and (b) in paragraph (b), by deleting the word "other".
Special provisions relating to section 153 31. Notwithstanding the provisions of section 153 of the principal Act, where a professional accountant has been allowed under any written law to become a company's Auditors and permission is given for a period beginning before commencement amendments to that section under section 30 of this Act, the professional accountant shall continue to be a tax agent for the purposes of the principal Act until the end of the period.
Amendment of Schedule 3 32. Schedule 3 of the principal Act is amended — (a) by deleting paragraph 2B;
Financial 27 (b) by inserting after paragraph 19, the following paragraph: "Special allowances for small value assets 19A. (1) Where in the basis period for a year of assessment a person for the purposes of a business of his incurred qualifying plant expenditure in relation to an asset or assets, the value of each asset being not more than one thousand dollars, and at the end of the basis period he was the owner of the asset and it was in use for the purposes of the business , there shall be made in lieu of the amount of the allowance which would otherwise fall to be made to him under paragraph 10 or 15, an allowance equal to the amount of that expenditure for that year of assessment: Likely that where the total qualifying plant expenditure in respect of such asset for each year of assessment exceeds the amount of ten thousand dollars , the total allowance that shall be made in respect of that expenditure under this paragraph shall be equal to such amount.
(2) the Allowance under paragraph 10 or 15 in respect of the qualifying plant expenditure referred to in subparagraph (1) — (a) shall be made to a person if that person has not made a claim in respect of that expenditure under that subparagraph; or (b) shall not be made to that person in respect of that expenditure which has been given allowance under that subparagraph. "
(c) in paragraph 75, by substituting for the word "Where" with the words "Subject to paragraph 75A, where"; and (d) by inserting after paragraph 75 the following paragraph: "75A. Any allowance or aggregate amount of allowances for a year of assessment which has not been so made to a company as ascertained under paragraph 75 shall not be made to that company for the purposes of this Schedule and section 42 unless the Director General is satisfied that the shareholders of that company on the last day of the basis period for the year of assessment in which that allowance or that aggregate amount has not been so made were substantially the same as the shareholder of that company on the first day of the basis period for the year of assessment in which that allowance or that aggregate amount would otherwise be made to that company under this Schedule and available for the purposes of that section and that allowance or that aggregate amount which but for this paragraph would have been made to the company in a year of assessment shall be disregarded for I years of assessment.
28 laws of Malaysia ACT 644 75B. (1) For the purpose of paragraph 75A — (a) the shareholders of the company at any date shall be substantially the same as the first at any other date on both those dates if — (i) more than fifty per cent of the paid up capital in respect of the ordinary share of the company is held by or on behalf of the same person; and (ii) more than fifty per cent of the nominal value of the shares allotted in respect of ordinary share in the company is held by or on behalf of the same person;
(b) preference shares in the company held by or on behalf of another company shall be deemed to be held by the events of the last mentioned company; and (c) any allowance or aggregate amount of allowances which has not been so made for any year of assessment referred to in that paragraph shall consist of an allowance falling to be made under this Schedule for that year of assessment but shall not include any amount of allowance deemed to have been made for that year of assessment listed to paragraph 75.
(2) In this paragraph, "ordinary share" has the same meaning assigned to it under subsection 44 (5 c).
75C. Where there is a substantial change in the shareholders of a company referred to in paragraph 75A, the Minister may under special circumstances exempt that company from the provisions of paragraph 75A. ".
Special provisions relating to paragraph 75A 33. (1) Notwithstanding the provisions of section 42 of the principal Act, paragraph 75 table 3 of the principal Act and paragraph 75A of the schedule as inserted by section 32 of this Act, such allowances or the aggregate amount of the allowance which has not been made to the company as determined under paragraph 75 for any assessment year ago prior to the year of assessment 2006 cannot be made to the company under the schedule for purposes of section 42 of the principal Act unless the Director General satisfied that the shareholders of the company on the last day of the basis period for the year of assessment 2005 are largely the same as finance 29

the shareholders of the company on the first day of the basis period for the year of assessment the aggregate amount of such allowance or can otherwise made to the company under the schedule and which can be obtained for purposes of section 42 of the principal Act and the aggregate amount of such allowance or to which this subsection that will may be made on the company in a year of assessment cannot be obtained by the company for the years of assessment following.
(2) for the purposes of subsection (1) — (a) the shareholders of the company at any date shall be the same as the majority shareholder at any later date if at both dates — (i) more than fifty per cent of the paid-up share capital in respect of ordinary shares of the company held by or on behalf of the same person; and (ii) more than fifty per cent of the nominal value of shares allotted in respect of ordinary shares of the company held by or on behalf of the same person; and (b) shares in the company held by or on behalf of another enterprise shall be deemed to be held by the shareholders of the company the last mentioned;
(c) the amount of the allowance that has not been made for any year of assessment referred to in that subsection shall consist of the amount of the allowance to be made under Schedule 3 of the principal Act for the year of assessment but shall not include any amount of the allowance is deemed to be made for the year of assessment in accordance with paragraph 75 of the schedule; and (d) if the basis period for a year of assessment 2005 ending on or after October 1, 2005, the last day of the basis period for the year of assessment 2005 shall be deemed to be on 30 September 2005.
(3) if there are changes to the vast majority of the shareholders of the company referred to in subsection (1), the Minister may under special circumstances exempt the company from the provisions of that subsection.
30 laws of Malaysia ACT 644 (4) in this section, "ordinary shares" have the same meaning assigned to it under subsection 44 (5) of the principal Act.
Cutting Table 4A 34. The principal Act is amended by deleting the Table 4A.
Cutting Table 4 c 35. The principal Act is amended by deleting Schedule 4 c.
Amendment of Schedule 6 36. Table 6 of the principal Act is amended — (a) in paragraph 32, by substituting for the word "six" with the word "ten"; and (b) in paragraph 35, by inserting after the word "Interest" the words "or discount".
Amendment of schedule 7A 37. Table 7A of the principal Act is amended by inserting after paragraph 6 the following paragraph: "6A. Where in the case of a business of a person the basis periods for two years of overlap, the assessment period common to those periods shall be deemed for the purposes of this Schedule to fall into the earlier of those periods and not into the later of those periods. ".
Savings and transitional provisions 38. If any person — (a) has made a choice in respect of a capital expenditure incurred for the purpose of an agricultural project approved under Schedule 4A; or 31 (b) has given an approval in respect of a project of food production under Schedule 4 c, before the commencement of section 4, 7, 9, 34 and 35 of this Act, all the provisions of the principal Act before amended under section shall continue to apply for the purposes of paragraph (a) and (b).
CHAPTER III AMENDMENTS to the REAL PROPERTY GAINS TAX ACT 1976 commencement amendments to the real property gains tax Act 1976 39. (1) section 40, 48 and 49 is deemed to have come into force on 1 October 2005.
(2) sections 42 and 43 comes into operation on 1 January 2006.
(3) in the national language text, section 47 is deemed to have come into force on 11 September 2004.
Amendment of section 9 40. Real property gains tax Act 1976, which is referred to as "the principal Act" in this chapter, is amended in section 9 — (a) in subsection (3), by deleting the words "person or"; and (b) by inserting after subsection (3) of the following subsection: "(3A) the Minister may in such circumstances exclude any person from all or any provisions of this Act, either generally or in respect of any income from a particular type or class of income of a certain type.".
32 laws of Malaysia ACT amendment of section 644 15 41. Section 15 of the principal Act is amended by inserting after subsection (2) of the following subsection: "(3) where in any year of assessment — (a) any assessment made in respect of a person for any year of assessment which has been determined by the Court on appeal or review; or (b) any exemption granted to any person under this Act which has been revoked because of non-compliance with any of the conditions imposed in giving such an exemption, the Director General may, in the year of assessment that first-mentioned it or within six years after the end of its tenure make an assessment in respect of the person for any year of assessment for the purpose of giving effect determination or withdrawal of the , as the case may be. ".
Amendment of section 24 42. Subsection 24 (6) of the principal Act is amended — (a) in paragraph (b), by substituting a comma at the end of the paragraph with the full stop; and (b) by deleting the words "and the amount of money required to make repayment shall be charged on the consolidated fund".
New section 24 a 43. The principal Act is amended by inserting after section 24 the following section: "Fund for repayment of Tax 24A. (1) there shall be paid from time to time into the Fund established under section 111B income tax Act 1967 of any amount of tax collected under this act as may be authorized by the Minister.
Financial 33 (2) Money out of the Fund referred to in subsection (1), shall apply to make a repayment to an amount of tax has been paid on the excess amount payable as determined in section 24.
(3) of section 14A of the Financial Procedure Act 1957 shall not apply to any repayment of excess amounts payable as determined in section 24. ".
Amendment of section 45 44. Section 45 of the principal Act is amended — (a) by replacing subsection (2) of the following subsection: "(2) any officer appointed under the law relating to income tax, can perform any task the Director General under this Act (which is not a task to be carried out by order of the statute or is not a task to be carried out under section 46 and 57).";
(b) by deleting subsection (3) and (4); and (c) in subsection (5), by substituting for the words "under subsection (4) by a Senior Assistant Director or Assistant Director of" with the words "officer appointed under subsection (2).".
Amendment of section 55 45. Section 55 of the Act is amended in subsection (1) by deleting the words ", the Inland Revenue, Director of Sabah or inland revenue Director, Sarawak,".
34 the laws of Malaysia ACT 644 amendment of section 56 46. Section 56 of the Act is amended by deleting the word ", to the Director of Revenue, Sabah, to the Director of Revenue, Sarawak,".
Amendment of Schedule 2 47. In the national language text, of the principal Act is amended in the table 2 by replacing subparagraph 3 (g) with the following subparagraph: "(g) the disposal of any assets that may be subject to tax in accordance with a financial scheme approved by Bank Negara or the Securities Commission as a scheme in accordance with Shariah principles, if the disposal requires strictly for the purpose of complying with the principles but that is not required for any other financial scheme.".
Amendment of Schedule 3 48. Schedule 3 of the principal Act is amended by deleting paragraph 3.
Savings and transitional provisions 49. If before starting the currency of amendments to paragraph 3 of Schedule 3 of the principal Act under section 48 of this Act an individual is excluded for any profits accrued in respect of the disposal of a private residence under section 8 of the principal Act which residential — (a) owned by the wife of the person is — (i) a choice made by the individual under paragraph 9 of Schedule 3 to the principal Act shall be disregarded for the purposes of the principal Act; and (ii) then there is no further exemption in respect of disposal of any other private dwelling in the person's wife;
Financial 35 (b) owned by an individual that — (i) the individual is entitled to exemption under paragraph 9 of Schedule 3 to the principal Act; and (ii) then there is no further exemption in respect of disposal of any other private dwelling of the individual; or (c) is owned by the individual and his wife in association, then no further exemption in respect of disposal of any other private dwelling of the individual and his wife.
CHAPTER IV AMENDMENTS to the stamp Act 1949 commencement amendment to the stamp Act 1949 50. (1) Section 51, 52, 53, 55 and 56 is deemed to have come into force on 1 October 2005.
(2) Section 54 come into force on 1 January 2006.
Amendment of section 21 51. Stamp Act 1949, which is referred to as "the principal Act" in this chapter, is amended in subsection 21 (2) by deleting the words "or three dollars as the case may require".
Amendment of section 43 52. The principal Act is amended by substituting paragraph 43 (5) (b) with the following paragraph: "(b) if it is stamped after the expiration of thirty days after it has been received in Malaysia, on payment in addition to the stamp duty of a penalty of —

(i) twenty-five dollars or five per centum of the amount of the deficient duty, whichever sum be the greater, if the instrument is stamped within three months after the time for with;
36 laws of Malaysia ACT 644 (ii) fifty dollars or ten per centum of the amount of the deficient duty, whichever sum be the greater, if the instrument is stamped later than three months but not later than six months after the time for with; or (iii) one hundred dollars or twenty per centum of the amount of the deficient duty, whichever sum be the greater, in any other case. ".
Amendment of section 80 53. Section 80 of the principal Act is amended — (a) in subsection (1), by deleting the words "or instruments";
(b) by inserting after subsection (1) of the following subsection: "(1A) The Minister of Finance may in any particular case — (i) exempt from duty any instruments which would otherwise be chargeable under this Act; or (ii) reduce or remit the duties with which any instrument is chargeable "; and (c) in subsection (2), by deleting the words "any instrument or".
New section 80A 54. The principal Act is amended by inserting after section 80 the following section: "Fund for Tax Refund 80A. (1) There shall be paid from time to time into the Fund was under section 111B of the Income Tax Act 1967 such amount of duty collected under this Act as may be authorized by the Minister.
Finance 37 (2) of The money of the Fund referred to in subsection (1), shall be applied for the making of a refund of any duty or any other payment required to be made by the Collector under this Act.
(3) Section 14A of the Financial Procedure Act 1957 shall not apply to any refund of any duty or any other payment required to be made under this Act.
(4) Where the Collector is authorized or required by this Act to make any refund of any duty or any other payment required under this Act, he shall certify the amount of the sum to be refunded or paid and cause the refund or payment to be made forthwith. ".
Amendment Of First Schedule 55. The first schedule of the principal Act is amended in item 22 by inserting after subbutiran (5) subbutiran the following: "(6) Being the security for securing the payment of 10.00". or repayment of money for the purchase of goods (within the meaning given under the First Schedule of the If Purchase Act 1967) in accordance with the Syariah principle of Al Bai Bithaman Ajil.
Fifth Schedule Amendment 56. The Fifth Schedule of the principal Act is amended in paragraph 8 by replacing the word "Kuala Lumpur Stock Exchange" with the words "Bursa Malaysia".
Chapter V AMENDMENTS to the PETROLEUM (income tax) Act 1967 commencement amendments to the Petroleum (income tax) 1967 57. Section 60 and 64 come into force on 1 January 2006.
38 the laws of Malaysia ACT 644 amendment of section 2 58. Petroleum Act (income tax) in 1967, which is referred to as "the principal Act" in this chapter, is amended in paragraph 2 (1) (a), in the definition of "authorized officer" by substituting for the words "(1), (2), (3) or (4)" the word "(1) or (2)".
Amendment of section 39 59. Section 39 of the principal Act is amended by inserting after subsection (3) of the following subsection: "(4) Where in a year of assessment — (a) any assessment made in respect of any chargeable person for any year of assessment has been determined by the court on appeal or review; or (b) any exemption granted to any chargeable person under this Act has been withdrawn for failing to comply with any condition imposed in granting such exemption, the Director General may in the first mentioned year of assessment or within six years after its expiration make an assessment in respect of that person chargeable for any year of assessment for the purpose of "transforming effect to the determination or withdrawal , as the case may be. ".
New section 50A 60. The principal Act is amended by inserting after section 50 the following section: "Fund for Tax Refund 50A. (1) There shall be paid from time to time into the Fund was under section 111B of the Income Tax Act 1967 such amount of tax collected under this Act as may be authorized by the Minister.
(2) The money of the Fund referred to in subsection (1), shall be applied for the making of a refund of an amount of tax paid in for excess of the amount is shown as ascertained in section 50.
Finance 39 (3) of Section 14A of the Financial Procedure Act 1957 shall not apply to any refund in for excess of the amount is shown as ascertained in section 50. ".
Amendment of section 69 61. Section 69 of the principal Act is amended — (a) by replacing subsection (2) of the following subsection: "(2) Any officer laporan jawatankuasa audit under the law relating to income tax may exercise any function of the Director General under this Act (not being a function exercisable by a statutory order or a function exercisable under subsection 70 (1) and section 82).";
(b) by deleting subsection (3) and (4); and (c) in subsection (5), by substituting for the words "under subsection (4) by a Senior Assistant or Assistant Director of an Inland Revenue" with the words "under subsection (2) by the laporan jawatankuasa audit officers.".
Amendment of section 77 62. Section 77 of the principal Act is amended in subsection (1) by deleting the words ", the Director of an Inland Revenue, Sabah, or the Director of an Inland Revenue, Sarawak,".
Amendment of section 78 63. Section 78 of the Act is amended by deleting the word ", to the Director of an Inland Revenue, Sabah, to the Director of an Inland Revenue, Sarawak,".
Amendment of section 81 64. The principal Act is amended by replacing section 81 with the following section: "81. Where the Director General is authorized or required by this Act to make any refund or repayment, he shall certify the amount of the sum to be refunded or repaid and cause the refund or repayment to be made forthwith. ".
40 laws of Malaysia ACT 644 CHAPTER VI AMENDMENTS to TAX ACT LABUAN OFFSHORE BUSINESS ACTIVITY of the 1990 amendment of section 18 65. Business activity Tax Act Labuan Offshore 1990 is amended in subsection 18 (1) by substituting for the words "Deputy Director-General, Assistant Director-General, Senior Assistant Director or Assistant Director, Inland Revenue denominated in" with the words "any officer appointed under".
41 financial laws of MALAYSIA Act 644 FINANCE ACT 2005 LIST AMENDMENT law short title force amend from – No – 42 laws of Malaysia ACT 644 laws of MALAYSIA Act 644 FINANCE ACT 2005 AMENDED SECTION LIST Section Power amend with effect from – THERE are –