This document outlines the key concepts of basis period in Malaysian company taxation. It defines basis period as the taxable period of income for a year of assessment. It discusses various scenarios related to failure year, change in accounting year end, and commencement of business that impact the determination of basis period. These include normal year end of 31 December, accounting periods less than or greater than 12 months, and requirements under law of incorporation place. The document concludes by providing an outline for the next week's lecture on allowances under Schedules 3, 4A and 2 of the Malaysian Income Tax Act 1967.

1. Andy Lee
andylee@ums.edu.my
BP34203
TAXATION II
SPE, UMS

2. Week 2 Corporate Tax
Malaysian Company Taxation
SPE, UMS

3. Lecture outline
Basis Period
SPE, UMS

4. Basis Period
Definition
Failure year
Change in Accounting Year End
Commencement of business

5. Definition
Refers to the taxable period of income of a
year of assessment.
Example:
Year ended 31 December 2012
Year ended 31 March 2013

6. Failure year
The first year where the entity fails to
prepare its accounts for a financial year or
period.
Year ended 31 July 2012
Assuming the next year end is:
30 November 2013
31 January 2013
31 August 2013

7. Accounts – 12 months
01 Oct 2008 – 30 Sept 2009
The basis period for all sources of income
for the year of assessment (YA) 2009
1st
Jan 2008 – 31st
Dec 2008
The basis period for all sources of income
for YA 2008

8. Change in accounting date
Change in accounting period, the basis period is
depended upon the normal year end:
I. normal year end on 31st
Dec
i. new accounts prepared < 12 months
ii. new accounts prepared > 12 months
II. normal year end NOT 31st
Dec
i. new accounts prepared < 12 months
ii. new accounts prepared > 12 months

9. Change in accounting date
I. Normal accounting year end on 31st
Dec
i. New accounting date ends in the same year (< 12
months)
 The basis period in the year of change REMAINS
the year ending 31st
Dec. Thereafter, the 12-month
accounting period will be the basis period
 XYZ, which normally closes its accounts on 31st
Dec changes its year end to 31st
Oct in 2008, and
subsequently closes on 31st
Oct (12mths).
YA 2008: 1st
Jan 2008 – 31st
Dec 2008
YA 2009: 1st
Nov 2008 – 31st
Oct 2009

10. Change in accounting date
I. Normal accounting year end on 31st
Dec
ii. New accounting date ends in the subsequent
year (> 12 months), the basis period REMAINS
31 Dec until 12-mth accounting period
 AAA, which normally closes its accounts on 31st
Dec changes its year end to 31st
Jul in 2009, and
subsequently closes on 31st
Jul (12mths). It
prepares its account from 1st
Jan 2008 – 31st
Jul
2009
 YA 2008: 1st
Jan 2008 – 31st
Dec 2008
 YA 2009: 1st
Jan 2009 – 31st
Dec 2009
 YA 2010: 1st
Aug 2009 – 31st
Jul 2010

11. Change in accounting date
II. Normal accounting year end NOT 31st
Dec
i. New accounts prepared < 12 months; and
a. New accounts ending in the following year
 The new accounting period in the year of
change is the basis period for that year of
assessment

12. Change in accounting date
II. Normal accounting year end NOT 31st
Dec
i. New accounts prepared < 12 months; and
a. New accounts ending in the following year
 BBB, which normally closes its accounts on
31st
Oct changes its year end to 31st
Aug in
2008, and subsequently closes on 31st
Aug.
 Accounts prepared in the year of change:
1st
Nov 2007 – 31st
Aug 2008
 YA 2008: 1st
Nov 2007 – 31st
Aug 2008
 YA 2009: 1st
Sep 2008 – 31st
Aug 2009

13. Change in accounting date
II. Normal accounting year end NOT 31st
Dec
i. New accounts prepared < 12 months; and
b. New accounts ending in the same year
 The new accounting period in the year of
change together with the subsequent year’s
accounting period is the basis period for the
following YA. (Cannot have two same YA)

14. Change in accounting date
II. Normal accounting year end NOT 31st
Dec
i. New accounts prepared < 12 months; and
b. New accounts ending in the same year
 CCC, which normally closes its accounts on
30th
Apr changes its year end to 31st
Oct in
2008, and subsequently closes on 31st
Oct.
 Accounts prepared in the year of change:
1st
May 2008 – 31st
Oct 2008
1st
Nov 2008 – 31st
Oct 2009
 YA 2008: 1st
May 2007 – 30th
Apr 2008 [done]
 YA 2009: 1st
May 2008 – 31st
Oct 2009 [new]

15. Change in accounting date
II. Normal accounting year end NOT 31st
Dec
i. New accounts prepared > 12 months; and
a. New accounts ending in the following year
 DDD, which normally closes its accounts
on 31st
May changes its year end to 31st
Jul in
2009, and subsequently closes on 31st
Jul.
 Accounts prepared in the year of change:
1st
Jun 2008 – 31st
Jul 2009 (14mths)
 YA 2008: 1st
Jun 2007 – 31st
May 2008 [done]
 YA 2009: 1st
Jun 2008 – 31st
Jul 2009 [new]

16. Change in accounting date
II. Normal accounting year end NOT 31st
Dec
i. New accounts prepared > 12 months; and
a. New accounts ending in the third year
 EEE, which normally closes its accounts on 30th
Sep changes its year end and prepared accounts
from 1st
Oct 2006 to 30th
Apr in 2008. Accounts
prepared 1st
Oct 2006 – 30th
Apr 2008 (19 months)
apportioned into 2 periods
 YA 2007: 1st
Oct 2006 – 31st
Jul 2007 (10mths)
 YA 2008: 1st
Aug 2007 – 30th
Apr 2008 (9mths)
 YA 2009: 1st
May 2008 – 30th
Apr 2009 [normal]

17. Commencement of business
Accounts prepared for 12 months
Accounts prepared < > 12 months but ending 31st
Dec
Accounts prepared < > 12 months ending < > 31st
Dec

18. Commencement of business
1. Accounts prepared for 12 months
 If first accounts are made up for 12 months, that
accounting period is the basis period for the YA
in which the accounts are closed
 ABC commenced operations on 1st
May 2008 and
its first set of accounts closed on 30th
Apr 2009.
 The basis period:
YA 2009 is 1st
May 2008 – 30th
Apr 2009.
No basis period for YA2008.

19. Commencement of business
2. Accounts prepared < > 12 months but ending 31st
Dec
 If first accounts are made up for < > 12 months
but ending 31st
Dec, the basis period for the YA is
the period ending on 31st
Dec
 ABC commenced operations on 10th
May 2008
and its first set of accounts closed on 31st
Dec
2008.
 The basis period:
YA 2008 is 10th May 2008 – 31st Dec 2008.

20. Commencement of business
2. Accounts prepared < > 12 months but ending 31st
Dec (cont’)
 DEF commenced operations on 10th
May 2008
and its first set of accounts closed on 31st
Dec
2009.
 The basis period:
YA 2008 is 10th May 2008 – 31st Dec 2008
YA 2009 is 1st Jan 2009 – 31st Dec 2009

21. Commencement of business
3. Accounts prepared < > 12 months and ending < >
31st
Dec
 If first accounts are made up for < > 12 months
ending < > 31st
Dec, the basis period for the YA is
the year ending on 31st
Dec each year until
accounts are made up for a period of 12 months

22. Commencement of business
3. Accounts prepared < > 12 months and ending < >
31st
Dec (cont’)
 DEF commenced operations on 10th
Jun 2008 and
its first set of accounts closed on 31st
Mar 2009
and subsequently 31st
Mar annually (12mths).
 The basis period:
YA 2008 is 10th
Jun 2008 – 31st
Dec 2008
YA 2009 is 1st
Jan 2009 – 31st
Dec 2009
YA 2010 is 1st
Apr 2009 – 31st
Mar 2010

23. Commencement of business
3. Accounts prepared < > 12 months and ending < >
31st
Dec (cont’)
 JKL commenced operations on 20th
Sep 2008 and
its first set of accounts closed on 30th
Nov 2009
and subsequently 30th
Nov annually (12mths).
 The basis period:
YA 2008 is 20th
Sep 2008 – 31st
Dec 2008
YA 2009 is 1st
Jan 2009 – 31st
Dec 2009
YA 2010 is 1st
Dec 2009 – 30th
Nov 2010

24. Commencement of business
A. Company with existing operations commences
new operations.
 The basis period for the existing operations is
also the basis period for the new operation
 MNO, with existing operations closes its
accounts on 30th
Jun each year, starts a new
operation on 1st
Apr 2009.
 The basis period for the new operation for
YA2009 is 1st
Apr 2009 – 30th
Jun 2009

25. Commencement of business
B. Same accounting date as related companies in a
group.
 A company commences an operation and makes
up accounts to the same day as that of the other
related companies in a group, the first basis
period for the company is from the date it
commences the operation to the date the
accounts are closed.

26. Commencement of business
B. Same accounting date as related companies in a
group.
 PQR, being a member of Group ZZZ,
commences operations on 20th
Feb 2008 and
closes its first accounts on 30th
Nov 2008 to
coincide with the financial year end of Group
ZZZ, and subsequently closes its accounts on 30th
Nov annually.
 The basis period:
YA 2008 is 20th
Feb 2008 – 30th
Nov 2008
YA 2009 is 1st
Dec 2008 – 30th
Nov 2009

27. Commencement of business
C. Requirement under the law of place of
incorporation
 Where a company commences operations in the
place where the law requires it to close its
accounts on a particular date, the period from
the date of commencement to that accounting
date is the basis period for the first year of
assessment.

28. Commencement of business
C. Requirement under the law of place of
incorporation
 STU, commences operations on 15th
Dec 2008
and makes its first accounts to 30th
Jun 2009 as
required by the law of the place of its
incorporation.
 The basis period:
YA 2009 is 15th
Dec 2008 – 30th
Jun 2009.
There is no basis period for YA2008.

29. Next week - Allowances Chp 12
Schedule 3 of ITA
Capital Allowance on Plant & Machinery
Industrial Building Allowance
Agriculture Allowance (p. 542) √
Forest Allowance (p. 549) √
Schedule 4A of ITA
Approved Agriculture Project (p. 549) √
Schedule 2
Mining Allowance (p. 529)
Schedule 4 of ITA
Prospecting Expenditure (p. 539)