RESIDENCE STATUS FOR

INDIVIDUAL

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 Determination of resident status

• Using a quantitative test by referring to the

number of days such an individual was present
in Malaysia
• The individual will be regarded as a resident in
Malaysia for the basis year for a year of
assessment when he/she full filled the
following condition stated under Sec. 7(1) (a)
to 7(1)(d)d of ITA 1967

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 S. 7(1) a

• individual must be physically present in that

calendar year, amounting to a minimum of 182
days.
– 182 days- can be made up of one period or
multiple periods.

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 S. 7(1)b
• He is in Malaysia in that basis year for a
period of less than 182 days and that period is
linked by or linked to another period of 182 or
more consecutive days.

• 182 or more consecutive days include any

temporary absence from Malaysia due to these
3 reasons;

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 Temporary absence;
i. Connected with his service in M’sia, due to service matters
or attending conferences or seminars or study abroad
(only for individual exercising employment in M’sia)
ii. due to ill-health involving himself or a member of his
immediate family (spouse, children and parents)
iii. Social visits not exceeding 14 days in the aggregate (need
not to be consecutive)
– Social visit:
• visit friends and families
• PR6/2011- social visit include any form of vacation
outside Malaysia

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 Pre-requisite for S. 7(1)b

i. linked period
ii. At least 182 consecutive days in link period
iii. In Malaysia prior and after that temporary
absence

Malaysian case; RAS &PAS v. Ketua Pengarah

Hasil Dalam Negeri (1997)
 Summary of section 7(1) b
No
In year of review in Malaysia
for less than 182 days

Yes

Year under review is connected No

to previous or following year Section 7(1)(b)
of ITA 1967
Yes
182 or more consecutive days No
(including temporary absence)
in previous or following year
Yes
No
Social visits <= 14 days

Yes Not Resident via

Resident via 7(1)(b) 7(1)(b)
 S. 7(1)c

• He is in Malaysia in that basis year for a

period or periods not less than 90 days or
more, provided that in 3 out of 4 Y/As
immediately preceding that Y/A he is either:
i. Resident in Malaysia; or
ii. He is in Malaysia for a period not less than 90
days

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 S. 7(1)d

• He is resident in that basis year for the Y/A if;

– he is resident in the following Y/A
– and also resident for each of the basis year for 3
Y/As immediately preceding that particular Y/A in
question.

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 Summary of section 7(1)
Yes
7(1)(a): >=182 days

No

7(1)(b): <182 days, but forms

part of period of more than 182
Yes Residence
consecutive days, before or
after
Status for
Individuals
No
7(1)(c): >= 90 days + Yes
Resident or >= 90days for
3 of 4 preceding basis years

No
7(1)(d): Resident for 3 preceding Yes
basis years + Resident for
following basis year

No Resident
Non-Resident
 Sec 7 (1B)

• Malaysian citizens employed in the public

service/statutory authority.
– Not in malaysia at any day in the basis year for
that particular YA by reasons of
• Having or exercising his employment outside Malaysia;
or
• Attending any course of study in any institution or
professional body outside Malaysia which fully
sponsored by the employer
 Importance and advantages of resident status of
an individual
Important to get special treatment on tax as compared to non-
resident.
Residence status will influence a person’s tax liability in
terms of :
 Tax rate
 Personal reliefs
 Employment income derived from Malaysia
 Rebate of chargeable income
 Royalties from literary or artistic work
 Income from cultural performance approved by minister
 Dividend income from approve unit trust
 Interest from financial institutions and banks
 Withholding tax on contract payment, interest royalty and Sec. 4A
payment

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 RESIDENCE STATUS FOR
COMPANY AND BODY OF
PERSON

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 S. 8 ITA 1967
• S. 8(1)b
– A company or a body of persons carrying on a business or
businesses is resident in Malaysia for the basis year for a
YA if at any time during that basis year the management
and control of its business or any one of its businesses are
exercised in Malaysia
• S. 8(1)c
– Any other company or a body of persons is resident in
Malaysia for the basis year for a YA if at any time during
that basis year the management and control of its affair is
exercised in Malaysia by its directors or other controlling
authority.

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 Basis year

• According to its financial year with effect from

YA 2001
• Prior to YA 2001 basis year for a company is
the calendar year

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 Continuance of Residence Status

• S. 8(2)
– For any tax purposes, when the company or body
of persons was given a resident status in one basis
year, that company or body of persons is
considered as tax resident for each subsequent
Y/A until the contrary is provided.

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 Determination of ‘management and
control’
• Factors not relevant;
– Location of business
– Place of incorporated
– Shareholder’s control
– Director residence status

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 IRB’s approach in ascertaining
residence status of Co.
• AA-provide the place of management and
control
• Memorandum of Association
• Place of AGM
• Place of Director’s meeting
• Company’s letter head

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 Importance and advantages of resident status of
a company
1. Scope of charge
2. Foreign source income receive in M’sia
3. Derivation of dividends from M’sia
4. Application of S. 108 account to frank taxable dividend
5. Business income
6. Incentives available under Income Tax Act 1967 and
Promotion of Investment act 1986
7. Withholding tax
8. Double taxation relief
9. Income tax rate

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