Finance Act 1981

Original Language Title: Finance Act 1981

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Laws of MALAYSIA Act 241 RE-PRINTING of the FINANCE ACT 1981 Contains all amendments to 1 January 2006 PUBLISHED by the COMMISSIONER of law revision, UNDER the AUTHORITY of law REVISION ACT 1968 in COLLABORATION with PERCETAKAN NASIONAL MALAYSIA BHD 2006 laws of Malaysia ACT 2412 FINANCE ACT 1981 date of Assent............... 12 January 1981 date published in the Gazette......... January 15, 1981 REPRINT BEFORE Reprinting the first............ 2001 3 Financial laws of MALAYSIA Act 241 of the FINANCE ACT 1981 ARRANGEMENT of SECTIONS CHAPTER I preliminary section 1. Short title and commencement 2. Amendment of acts and Ordinances CHAPTER II AMENDMENTS to the INCOME TAX ACT 1967 3. Commencement of the amendments to the income tax Act 1967 4. Amendment of section 5 5. New section 6B 6. Amendment of section 7 7. New section 13A 8. Amendment of section 18 9. Amendment of section 22 10. Amendment of section 39 11. Amendment of section 47 12. Amendment of section 49 13. Amendment of section 108 14. Amendment of section 109 15. Amendment of section 128 laws of Malaysia ACT 2414 16. Amendment of Schedule 1 17. Amendment of Schedule 3 18. Amendment of table 6 CHAPTER III AMENDMENTS to the INCOME TAX ACT 1967 19 EXTRA. Commencement of the amendments to the income tax Act 1967 20 Extra. Amendment of section 16 of CHAPTER IV AMENDMENTS to the REAL PROPERTY GAINS TAX ACT 1976 21. Commencement of the amendments to the real property gains tax Act 1976 22. Amendment of section 2 23. Amendment of section 8 24. Amendment of section 47 25. Amendment of Schedule 1 26. Amendment of Schedule 2 27. Amendment of Schedule 4 28. Amendment of table 5 of CHAPTER V AMENDMENTS to the STAMP ORDINANCE 1949 29. Commencement of the amendment Ordinance 1949 30 Stamps. New section 5A 31. Amendment of first schedule Section 5 Financial laws of MALAYSIA Act 241 of the FINANCE ACT 1981 an act to amend the income tax Act 1967, Additional Income Tax Act 1967, real property gains tax Act 1976 and the stamp Ordinance 1949, and to provide for matters connected therewith.
[] 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 and commencement 1. This Act shall be called the Finance Act 1981 and shall take effect or be deemed to be effective as provided in this Act.
Amendment of the Act and Ordinance 2. The income tax Act 1967 [Act 53], * Extra Income Tax Act 1967 [Act 54], the real property gains tax Act 1976 [Act 169] and * * Stamp Ordinance 1949 [Ord. 59/1949] are amended respectively in the manner specified in Chapters II, III, IV and V of this Act.
* NOTE — Supplementary Income Tax Act 1967 [Act 54] has been repealed by the Finance Act 1993 [Act 497]-see subsection 16 (1) of Act 497. ** The ENTRIES — Stamp Ordinance 1949 [Ord. 59/1949] has been revised as the stamp Act 1949 [Act 378].
Laws of Malaysia ACT 2416 CHAPTER II AMENDMENTS to the income tax Act 1967 of commencement of amendments to the income tax Act 1967 3. (1) the provisions of this chapter [except section 8, paragraph 10 (b), 11, 12, 16 and paragraph 18 (a)] shall have effect for the year of assessment in 1981 and the next year of assessment.
(2) section 8, paragraph 10 (b), 11, 12, 16 and paragraph 18 (a) shall be deemed to have effect for the year of assessment in 1980 and the following year of assessment.
Amendment of section 5 4. Section 5 of the income tax Act 1967, called the principal Act in this chapter, is amended by inserting after subsection (3), subsection (4) that follows — "(4) In ascertaining the chargeable income of a company for the purpose of section 3A there shall not be taken into account dividend income derived from Malaysia.".
New section 6B 5. The principal Act is amended by inserting after section 6A, 6B the following section — "Tax rebate on loan to a small business 6B. (1) Subject to this section, income tax charged for each year of assessment upon the chargeable income of a person who gives any loan to a small business shall be rebated by an amount equivalent to two per cent per annum pro rated, or such other rate as may be comes from time to time by the Minister, on the outstanding balance of the loan Finance 7 calculated on term loan basis before any set off is made under section 110 and any credit is allowed under section 132 or section 133: Likely that where the rebate exceeds the income tax charged (before any such rebate) for any year of assessment, the for excess shall not be paid to that person and shall not be available as a credit to set off any tax liability for that year of assessment but it shall be available as a credit to set off any income tax chargeable for any year of assessment I.
(2) ' Loan to a small business ' means a loan that conforms to the guidelines laid down by ' an appropriate authority designated by the Minister from time to time. ".
Amendment of section 7 6. The principal Act is amended by substituting for paragraph 7 (l) (b) with the following — "(b) he is in Malaysia in that base year for a period of less than one hundred and eighty-two days of the month and that forms part of a period of more than one hundred and eighty-two consecutive days (hereinafter referred to in this paragraph as such period) throughout which he is in Malaysia in the basis year for the year of assessment immediately in conjunction to that particular year of assessment or in that base year for the year of assessment immediately following that particular year of assessment: Likely that any temporary absence from Malaysia — (i) connected with his service in Malaysia and owing to service matters or attending conferences or seminars or study abroad;
(ii) owing to ill-health involving himself or a member of his immediate family; and (iii) in respect of social visits not exceeding fourteen days in the aggregate, shall be taken to form part of such period; ".
Laws of Malaysia ACT 2418 new section 13A 7. The principal Act is amended by inserting after section 13, section 13A follows — "Special provisions as to employment income while aboard the ship 13A. (1) Notwithstanding paragraph 13 (2) (e) income from a period of employment exercised aboard a ship while it is engaged in international traffic shall not be deemed to be derived from Malaysia if the ship is a Malaysian-registered ship and is used in a business operated by a person resident in Malaysia for the basis year for a year of assessment.
(2) For the purposes of this section, in any calendar year the period of leave and return visits to Malaysia not exceeding sixty days in the aggregate calculated by reference to the number of days of battle aboard the ship upon the total number of days in a calendar year shall be deemed to be employment exercised aboard the ship.
(3) For the purposes of this section, ' international traffic ' means any voyage excluding a voyage solely between ports in Malaysia or a voyage commencing from any port in Malaysia to any port in Singapore or vice versa. ".
Amendment of section 18 8. The principal Act is amended by deleting the word "manufactured timber (table 5 shows felled or otherwise)" in the interpretation of "crops" in section 18.
Amendment of section 22 9. Section 22 of the principal Act is amended — (a) by inserting the words "or deemed to have been received" after the words "any sums receivable" in subsection (2);
(b) by deleting the word "and" in subparagraph (2) (a) (ii);
9 financial (c) by replacing the full stop in paragraph (2) (b) by a colon and the word "and"; and (d) by inserting the following after paragraph (2) (b) — "(c) a rebate under section 6B.".
Amendment of section 39 10. Section 39 of the principal Act is amended — (a) by inserting the words "or royalty" after the word "interest" in paragraph (1) (f); and (b) by deleting "sign)" after the words "State Government" and enter an ")" after the words "a statutory authority" and before the words "for the use of" in paragraph (1) (g).
Amendment of section 47 11. Section 47 of the principal Act is amended — (a) by substituting for the brackets and figures "(4)" and "(5)" in subsection (1) with brackets and figures "(3)" and "(4)";
(b) by replacing the brackets and figures "(4)" in subsection (2) with brackets and figures "(3)"; and (c) by substituting for the brackets and figures "(3)" after the words "" and "in subsection (3) with brackets and figures" (2) ".
Amendment of section 49 12. The principal Act is amended by inserting the words "five hundred" after the words "three thousand" in the proviso to subsection 49 (1).
Laws of Malaysia ACT 24110 Amendment for section 108 13. The principal Act is amended by inserting the words "any rebate under section 6B or" after the word "less" in subsection 108 (4).
Amendment of section 109 14. The principal Act is amended by substituting subsection 109 (1) with the following —

"Deduction of tax from interest or royalty in certain cases 109. (1) Where any person (in this section referred to as the payer) is liable to pay interest or royalty derived from Malaysia to any other person not known to him to be resident or to have a place of business in Malaysia, he shall upon paying or crediting the interest (other than interest on an approved loan or long-term loan or interest of the kind referred to in paragraph 33 of Part I , Schedule 6) or royalty deduct therefrom tax at the rate incurred to such interest or royalty, and (table 5 shows or not that tax is so deducted) shall within one month after paying or crediting the interest or royalty rendering an account and pay the amount of that tax to the Director General:, likely that the Director General may — (a) give notice in writing to the payer requiring him to deduct and pay tax at some other rates or to pay or credit the interest or royalty payments without deduction of tax; or (b) under special circumstances allow extension of time for tax deducted to be paid over. ".
Amendment of section 128 15. The principal Act is amended by substituting subsection 128 (1) with the following — "Exemption from tax: residential premises and premises where, owing to circumstances, owner is compelled to vacate. 128. (1) Subject to this section — (a) where an individual who is the owner of a residence occupies the residence (hereinafter referred to in this section as that residence) as owner throughout the basis period 11 for a year of assessment (that your period and that year being referred to in this section as the relevant period and the relevant year respectively) or during any part of the relevant period , his gross income from the occupation for the relevant period or for that part of the relevant period, as the case may be, shall be disregarded for the purposes of this Act; or (b) where an individual is an employee, on satisfying the Director General that as a result of being transferred by his employer to another part of Malaysia or as a result of taking up a new employment in another part of Philippines he is compelled to vacate that residence in order to occupy another residence (not owned by him) located at a place beyond a distance of twenty miles from that residence for the rent receivable by him from that residence shall be disregarded for the purposes of this Act; or (c) where an individual is not an employee, on satisfying the Director General that he is compelled to vacate that residence in order to occupy another residence (not owned by him) located at a place beyond a distance of twenty miles from that residence immediately following a change in his business operations from one part of Malaysia to another part of Malaysia the rent receivable by him from that residence shall be disregarded for the purposes of this Act. ".
Amendment of Schedule 1 16. The principal Act is amended by deleting the letter "s" in the word "provides" in paragraph 1 of part I of Schedule 1.
Amendment of Schedule 3 17. Schedule 3 of the principal Act is amended — (a) by inserting after paragraph 11, paragraph 11A the following — "11A. Subject to this Schedule, where in the basis period for a year of assessment a person has for the purposes of a business of his which consists of the construction of any works, roads, structures and buildings laws of Malaysia ACT 24112 incurred qualifying plant expenditure on the provision of machinery or plant used directly in the construction of such works, roads , structures and buildings, there shall be made to him in relation to the source consisting of that business for that year an allowance instead of the allowance under paragraph 10 equal to three-tenths of the expenditure, unless he elects in writing, when claiming an allowance for that year in respect of that expenditure, that the allowance be equal to one-fifth of that expenditure. ";
(b) by inserting the words "or 11A" after digit "11" wherever they appear in paragraph 13 (b), (c) by deleting the words "of the residual expenditure at the end of that period" and inserting the words "of that expenditure" after the words "may be comes" in paragraph 15;
(d) by inserting after paragraph 15, paragraph 15A that follows — "15A. Subject to this Schedule, where a person has for the purposes of a business of his incurred qualifying plant expenditure in relation to an asset more than six years prior to the beginning of the basis period for the year of assessment, 1981 and an annual allowance was made to him in relation to that source consisting of that business for a year of assessment prior to the year of assessment in respect of that 1981 expenditure , he may elect in writing that an annual allowance be made to him equal to one-half of the residual expenditure, if any, for the year of assessment in 1981 and the following year of assessment, likely that he was the owner of the asset and it was in use for the purposes of his business at the end of the basis period for each of those years of assessment. ";
(e) by inserting the numeral "15" after the words "under paragraph" in paragraph 18;
(f) by replacing the words "residual expenditure" in paragraph 19, the words "qualifying plant expenditure"; and finance 13 (g) by substituting for the word "value" after the words "exceeds the residual" in paragraph 35 the word "expenditure".
Amendment of Schedule 6 18. Part I of Schedule 6 to the principal Act is amended — (a) by inserting after paragraph 25 paragraph 25B that follows — "25B. Sums received by way of gratuity paid out of public funds on termination of a contract of employment (less the employer's contribution to the Employees Provident Fund, if any, and interest thereon). "; and (b) by inserting after paragraph 33, paragraph 34 that follows — "34. Income under section 13A remitted to Malaysia. ".
CHAPTER III AMENDMENTS to the INCOME TAX ACT 1967 of commencement of ADDITIONAL amendments to the income tax Act 1967 19 Extra. The provisions of this chapter shall have effect for the year of assessment in 1981 and the next year of assessment.
Amendment of section 16 20. Additional Income Tax Act 1967 is amended by replacing section 16 with the following — "Amount of development tax chargeable 16. Subject to this Part, the amount of development tax chargeable for a year of assessment shall be — (a) in the case of a person other that an individual, an amount calculated at the rate of five per cent on every ringgit of the development of income of that person for that year; and the laws of Malaysia ACT 24114 (b) in the case of an individual, an amount calculated at the rate of five per cent on every ringgit of his development income for that year in for excess of five thousand dollars: Likely that where his development income for that year does not vehicles five thousand ringgit, he shall be exempt from development tax for that year. ".
CHAPTER IV AMENDMENTS to the REAL PROPERTY GAINS TAX ACT 1976 commencement amendments to the real property gains tax Act 1976 21. (1) the provisions of this chapter (except sections 24, 25 and 26) shall be deemed to have come into operation on 18 October 1980.
(2) sections 24, 25 and 26 shall be deemed to have come into operation on 7 November 1975.
Amendment of section 2 22. Real property gains tax Act 1976, referred to the principal Act in this chapter, is amended by inserting in the appropriate place in subsection 2 (1) the interpretation of the "joint proprietor", "belonging to the joint" and "permanent residents" that follows — ' "the proprietor together" and "jointly owned" has the meaning given to them respectively by the national land code [Act 56 of 1965]; ';
' "permanent resident" means a person who is regarded as such under any written law relating to immigration; '.
15 amendment of section 8 23. The principal Act is amended by inserting the words "who is a citizen or an individual who is not a citizen but is a permanent residents" after the words "to one individual" in section 8.
Amendment of section 47 24. Interpretation of "person who classified" in subsection 47 (5) of the principal Act is amended — (a) by deleting the word "or" in paragraph (b), (b) by inserting the words "or" after a semicolon at the end of paragraph (c), and (c) by inserting after paragraph (c) of paragraph (d) the following — "(d) the Director General and public officers under the direction and control;".
Amendment of Schedule 1 25. Schedule 1 to the principal Act is amended — (a) by substituting for the words "of persons and partnerships" in the marginal note to paragraph 1 the words "group of people, sharing and belonging to together"; and (b) by inserting after subparagraph 1 (2) subparagraph (3) of the following — "(3) in respect of the jointly owned by a disposal of jointly owned about share of taxable assets shall be deemed to be a disposal of part of an asset by himself and it can be assessed and taxed on the profit taxable as a result of the disposal of it.".
Laws of Malaysia ACT 24116 Amendments for Schedule 2 26. Schedule 2 to the principal Act is amended by inserting after subparagraph 24 (2) subparagraph (3) of the following — "(3) for the purposes of this paragraph the term ' instalment ' refers to two payments or more than the price of acquisition (other than any deposit or advance payment as specified in the agreement) as agreed by the parties.".
Amendment of Schedule 4

27. Schedule 4 to the principal Act is amended by inserting the words "to an individual who is a citizen or an individual who is not a citizen but is a permanent residents" after the words "tax accrued" in paragraph 2.
Amendment of Schedule 5 28. Schedule 5 to the principal Act is amended — (a) by inserting the following between the word "TAX rates" and "Disposal" Category — "part I part II unless this table is applicable, the tax rates the following shall apply:";d an (b) by entering the following at the end of the table — "PART II a person that is not a citizen and not a permanent resident shall be charged a rate of 40 percent on every juice that of taxable profit on the disposal of an asset that can be taxed obtained by him after 17 October 1980. ".
Financial 17 Chapter V AMENDMENTS to the STAMP ORDINANCE 1949 commencement amendment to the Stamp Ordinance 1949 29. The provisions of this chapter shall be deemed to have come into operation on 1 January 1981.
New section 5A 30. Stamp Ordinance 1949, referred to in this Act, the Ordinance is amended by inserting after section 5, section 5 as follows — "Loan for the purposes of small business.
5a. "Every instrument being the only or principal or primary security for the payment or repayment of a loan to a small business shall be endorsed by an authority approved by the Minister of Finance that the loan was made for the purposes of a small business.".
Amendment of first schedule 31. The first schedule to the Ordinance is amended — (a) with the number 27 (a) subbutiran as a sub subbutiran 27 (a) (i);
(b) by inserting after the sub subbutiran 27 (a) (i) sub subbutiran 27 (a) (ii) the following — "(ii) Being instruments under section 5A — Not exceeding RM250, 000 RM 1.00 for every of the aggregate loans in a RM1, 000 or calendar year fractional part thereof.
For each additional RM1, 000 RM 5.00 "; and or part thereof the laws of Malaysia ACT 24118 (c) by substituting for the sub subbutiran 49 (1) (a) with the following — "(a) Without fine or When the Lease is for a period Not Exceeding Exceeding premiums when the average rent one but not exceeding three years calculated for a one year exceeding or for any whole year — three years indefinite period (i) Does not NIL NIL NIL vehicles RM2 , 400 (ii) For every RM1.00 RM2.00 rm4.00 RM250 or part thereof in for excess of RM2, 400 "finance 19 laws of MALAYSIA Act 241 of the FINANCE ACT 1981 LIST AMENDMENT law short title force amend from – no – laws of Malaysia ACT 24120 laws of MALAYSIA Act 241 of the FINANCE ACT 1981 LIST of SECTION AMENDED Section Power amend with effect from – THERE are –