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Chapter 1 Chapter 1 Presentation Transcript

  • CHAPTER 1:INTRODUCTION TOMALAYSIAN TAXATION1ATXB213 MALAYSIAN TAXATION I
  • LEARNING OBJECTIVEExplain the definition of taxationUnderstand history and background oftaxationSources of Malaysian Taxation LawIdentify types of taxesTax Avoidance and Tax Evasion2ATXB213 MALAYSIAN TAXATION I
  • DEFINITION OF TAXATION Oxford dictionary:Contribution levied on persons, property, or business for thesupport of govt. Law cases:A compulsory exaction of money by a public authority for publicpurposes enforceable by law (Matthews v The ChicoryMarketing Board, 1938).Raising money for the purposes of govt by means ofcontributions from individual persons (R v Barger, 1908) IRB Tax guideIs an amount of money which is taken from your earnings tohelp towards some of the cost of services we received in thiscountry3ATXB213 MALAYSIAN TAXATION I
  • BACKGROUND OF TAXATIONIncome Tax Ordinance 1947 with effect from 1January 1948Replaced by Income Tax Act 1967 with effectfrom 1 January 19684ATXB213 MALAYSIAN TAXATION I
  • SOURCES OF MALAYSIAN TAXATIONLAWThere are 3 sources of revenue law in the Malaysiancontext and they are:Statute law (referred to as the legislationCase Law (judge made laws)Practice of the Malaysian Inland Revenue Board (IRB)Implementation of Tax Laws:IRB is responsible for all policies relating to direct taxes andadminister which are Income Tax, Petroleum Income Tax,Real Property Gains Tax and Stamp Duty.5ATXB213 MALAYSIAN TAXATION I
  • CHARACTERISTICS OF TAXATIONCompulsory paymentRaised for government purposesThe exactions do not constitute payment forservices renderedThe payments are not penaltiesThe exactions are not arbitraryEnforced under any written lawThe exactions should not be incontestableNo specific right is transferred6ATXB213 MALAYSIAN TAXATION I
  • PURPOSE OF TAXATIONRevenueEnsuring stable growth in revenue to finance the annualbudgetGrowthProviding incentives within the tax system to promotegrowth, especially in the private sector7ATXB213 MALAYSIAN TAXATION I
  • TYPES OF TAXES IN MALAYSIADirect taxesPaid directly by those on whom it is levied.Example of direct tax : Income Tax, RPGT, Stamp Duty andPetroleum Income Tax.Indirect taxesCollected via third party.Example of indirect tax : Sales Tax, Service Tax and GST.8ATXB213 MALAYSIAN TAXATION I
  • CHARACTERISTIC OF INCOMERegularityIncome distinguished from savingIncome must be receivedCustomary receipts are incomeIllegality is of no relevance to assess abilitySpeculation is not incomeReward for servicesGift is not an income9ATXB213 MALAYSIAN TAXATION I
  • CLASS OF INCOMESection 4 of ITA 1967Sec 4(a): gain or profit from a businessSec 4(b): gain or profit from employmentSec 4(c): dividends, interest or discountsSec 4(d): rents, royalties or premiumSec 4(e): Pension, annuities or other periodical paymentsSec 4(f): gain or profits10ATXB213 MALAYSIAN TAXATION I
  • CHARGEABLE INCOMEGross IncomeAdjusted IncomeStatutory IncomeAggregate IncomeTotal Income• Sec 5 of ITA 1967ChargeableIncome11ATXB213 MALAYSIAN TAXATION I
  • TAX RATESResident individual tax rates (pg 17-18)Tax Rebates (pg 19)12ATXB213 MALAYSIAN TAXATION I
  • TAX AVOIDANCE AND TAX EVASIONTax avoidance are supported by commercialsubstance, motivated by commercial viability andmost importantly are within the jurisdiction of theAct.Tax evasion on the other hand involves theemployment of artificial or fictitious transactionssuch as inflating the expenses claimed, putting inphantom employees for salary deductions, underreporting cash sales with the sole intention to payless tax.13ATXB213 MALAYSIAN TAXATION I
  • THANK YOUQ & A14ATXB213 MALAYSIAN TAXATION I