FINANCE (NO. 2) ACT 2014

sections 11, 13 and 14, paragraph 15(a), sections 17, 18

and 19, subsubparagraph 20(a)(iv)(A) and paragraph 22(a) come into operation on the coming into operation of this Act.

Paragraph 15(b) comes into operation on 1 January 2015.

amendment of section 5

in subsection (1)—

in paragraph (f), by substituting for the colon at the end of that paragraph a full stop; and

by inserting after subsection (1) the following subsection:

“(1a) For the purpose of ascertaining the chargeable income of a person under subsection (1), any amount or income received by that person which is subject to deduction of tax under section 109C, 109e or 109g shall be excluded.”.

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amendment of section 29

in subsection (3)—

in paragraph (a), by deleting the word “or” at the end of that paragraph; and

by inserting after subsection (3) the following subsections:

“(4) subject to subsection (3) and for the purposes of this section, where a relevant person is entitled to any gross income—

accruing in or derived from Malaysia to which section 25, section 27 other than subsection 27(1a), or section 28 applies;

the amount of which relates to any transactions—

between persons one of whom has control over the other;

the amount of which first becomes receivable to the relevant person in the relevant period, the relevant person is deemed to be able to obtain on demand the receipt of such amount in the basis period immediately following the relevant period.

in this section, “relative” and “transaction”

have the meanings assigned to them under subsection 140(8).”.

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amendment of section 46

in paragraph (d), by substituting for the word “five” the word “six”; and

in paragraph (g), by substituting for the word “five” the word “six”.

amendment of section 48

in paragraph (5)(b)—

in subparagraph (iii), by inserting after the word

“business” the words “carried out in accordance with the principle of mudharabah”; and

in paragraph (7)(b)—

in subparagraph (iii), by inserting after the words

“Malaysian general certificate” the words “of that business carried out in accordance with the principle of mudharabah”; and

in subsection (9)—

in paragraph (a)—

in subparagraph (iii), by substituting for the words “family fund, general fund, inward re-takaful fund, offshore fund or family re-takaful fund” the words “general fund, inward re-takaful fund, offshore fund or family re-takaful fund, or any other fee receivable in respect of an investment fund from the family fund”;

in subparagraph (iv), by deleting the word

“and” at the end of that subparagraph; and

by inserting after subparagraph (v) the following subparagraph:

“(vi) the amount of actuarial surplus from the family fund that is transferred to the shareholders’ fund; and”; and

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in subparagraph (iii), by substituting for the words “family and general businesses”

the words “general business carried out in accordance with the principle of wakalah”;

and

in subparagraph (iv), by inserting after the words

“general business” the words “carried out in accordance with the principle of wakalah”;

in subsection (10)—

in paragraph (a)—

in subparagraph (iii), by substituting for the words “family fund, general fund, inward re-takaful fund, offshore fund or family re-takaful fund” the words “general fund, inward re-takaful fund, offshore fund or family re-takaful fund, or any other fee receivable in respect of an investment fund from the family fund”;

in subparagraph (iv), by deleting the word

“and” at the end of that subparagraph; and

by inserting after subparagraph (v) the following subparagraph:

“(vi) the amount of actuarial surplus from the family fund that is transferred to the shareholders’ fund; and”; and

in subparagraph (iii), by substituting for the words “family and general businesses”

the words “general business carried out in accordance with the principle of wakalah”;

and

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in subparagraph (iv), by inserting after the words

“general business” the words “carried out in accordance with the principle of wakalah”;

and

by inserting after subsection (10) the following subsection:

“(10a) For the purposes of ascertaining the adjusted income of the family fund, general fund or shareholders’ fund referred to in subsection (3), (4),

, (7), (9) or (10), as the case may be, the cost of acquiring and realizing any investments or rights for the basis period for a year of assessment shall include expenses incurred in managing those investments or rights, and such expenses incurred shall be determined in accordance with the following formula:

A x c b where

A is the cost of acquiring any investments or rights which is realized in that period in respect of such fund;

b is the total cost of acquiring all investments or rights held during that period in respect of such fund; and c is the total expenses incurred in that period for managing all investments or rights held during that period in respect of such fund.”.

amendment of section 60i

every partner of the partnership shall continue to be personally assessable and chargeable to tax for that year of assessment and for any previous year of assessment before the conversion in respect of his chargeable income for any such year of assessment; and

the limited liability partnership shall be assessable and chargeable to tax for that year of assessment and for any previous year of assessment before the conversion in respect of the chargeable income of the company for any such year of assessment.

Where the limited liability partnership is so assessable and chargeable under paragraph (3)(b), it shall be assessable and chargeable to tax in like manner and to the like amount as the company would have been assessed and charged to tax prior to the conversion.”.

amendment of section 77c

in paragraph (a), by deleting the words “other than gains or profits in respect of the use or enjoyment of benefits provided by his employer under paragraph 13(1)(b) or

in subsection (4a), by inserting after the words “where a company” the words “resident and incorporated in

Malaysia”; and

in subsection (12), in the definition of “due date” by substituting for the word “tenth” the word “fifteenth”.

new section 110c

Where—

For the purposes of this section, tax charged on the chargeable income of an operator from its shareholders’ fund in respect of family business shall consist of an amount of tax before taking into account the tax set-off under section 110.

The portion of the surplus referred to in subsection (1)

shall be ascertained in accordance with the formula prescribed by the Minister.”.

amendment of section 112

in Part i—

by substituting for paragraph 1 the following paragraph:

“1. Except where paragraphs 1a, 2, 2a, 2d, 3 and 4 provide otherwise, income tax shall be charged for a year of assessment upon the chargeable income of every person at the following rates:

Chargeable Income

RM

Rate of

Income Tax

For every ringgit of the first 5,000 0 per cent

For every ringgit of the next 15,000 1 per cent

For every ringgit of the next 15,000 5 per cent

For every ringgit of the next 15,000 10 per cent

For every ringgit of the next 20,000 16 per cent

For every ringgit of the next 30,000 21 per cent

For every ringgit of the next 150,000 24 per cent

For every ringgit of the next 150,000 24.5 per cent

For every ringgit exceeding 400,000 25 per cent”;

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in subparagraph (f), by substituting for the full stop at the end of that subparagraph a comma; and

by substituting for the words “26 per cent for the year of assessment 2008 and 25 per cent for the subsequent years of assessment” the words “25 per cent for the year of assessment 2015 and 24 per cent for the subsequent years of assessment”;

by inserting after the words “company resident”

the words “and incorporated”; and

in column “Rate of income tax”—

(AA) by substituting for the words

“20 per cent” the words “20 per cent for the year of assessment 2015

and 19 per cent for the subsequent years of assessment”; and

(bb) by substituting for the words

“26 per cent for the year of assessment 2008 and 25 per cent for the subsequent years of assessment”

the words “25 per cent for the year of assessment 2015 and 24 per cent for the subsequent years of assessment”; and

in paragraph 2d, in column “Rate of Income

Tax”—

by substituting for the words “20 per cent” the words “20 per cent for the year of assessment 2015 and 19 per cent for the subsequent years of assessment”; and

by substituting for the words “25 per cent” the words “25 per cent for the year of assessment 2015 and 24 per cent for the subsequent years of assessment”; and

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in Part iV, in column “Rate of income tax”—

by substituting for the words “20 per cent” the words “18 per cent”;

in subparagraph 8(1), by substituting for the words “incurred by a person” the words “incurred only by a person who has a concession or licence to extract timber”; and

in subparagraph 19a(1)—

by substituting for the words “one thousand” the words “one thousand three hundred”;

in paragraph 12b, by substituting for the words “of this

Act” the words “of ascertaining the adjusted income of the person”;

in paragraph 20a, by inserting after the words “central bank of Malaysia” the words “and any adjusted loss from the investment in respect of the deferred annuity shall be disregarded for the purposes of the Act”; and

in paragraph 35a, by inserting after the words “islamic banking Act 1983” the words “, or any development financial institution regulated under the Development

Financial institutions Act 2002”.

amendment of schedule 7A

in paragraph 2a—

by renumbering the existing provision as subparagraph (1); and

by inserting after paragraph 4 the following paragraph:

“4A. statutory income referred to in paragraphs 3

and 4 shall be construed as the amount of statutory income of a person from a source consisting of a business in respect of a qualifying project referred to in paragraph 8.”.

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section 26 comes into operation on 1 January 2015.

amendment of section 39

in subparagraph 4(3), by substituting for subsubparagraph (d) the following subsubparagraph:

“(d) the market value of the asset as at the date of the death of the deceased person referred to in subparagraph 19(3)”; and

by substituting for paragraph 12 the following paragraph:

“Gifts

Where the donor and recipient referred to in subparagraph (1) are husband and wife, parent and child, or grandparent and grandchild—