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Chapter 1 - Basis Period
Chapter 1 - Basis Period
Chapter 1 - Basis Period
BASIS PERIOD
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Learning Outcomes
• Theory of Company Taxation:
– Classical system
– Fiscal transparency system
– Two tier system
– Single tier
– Imputation system
• Basis Period
Commencement date
Changes in Accounting Date
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INTRODUCTION
MIGRATION TO SINGLE TIER TAX SYSTEM:
– Imputation system single tier system
– Wef. YA 2008
– Profits will be taxed at the company level
– Dividends received by shareholders would
be exempted
– Transitional period: up to 31 December 2013
(6 years)
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1. Single Tier System
Profits will be taxed at the company level
Dividends received by the shareholders being
exempted from tax
Income tax payable on the chargeable income
of a company is a final tax
Impact on share value
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3. Classical Theory
In this system, the company is different and
separate from s/holder.
The company is taxed on its profit based
on specific rate.
S/holder – received profit (dividend) and also will
be taxed at another rate.
S/holder will give a rebate for the tax suffered by
the company on the same income.
If no rebate given – contribute to double taxation
on the same income.
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4. Fiscal Transparency System
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BASIS PERIOD (PR7/2001)
Basis period means the period relative to a
year of assessment.
Before January 2001 (for buss. inc. of
company)
– states that the calendar year immediately
preceding a year of assessment would
constitute the basis year for YA.
Basis period is year 1998
YA is year 1999
After January 2001 – states that calendar year
coinciding with the YA shall constitute the basis
year for YA.
Basis Period is year 2001 9
YA is year 2001
Basis Period…cont’
Failure year concept:
year in which the business fails to prepare its
account for a financial year/ financial period/
accounting period ending on corresponding day
in the relevant YA.
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Commencement of Business
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Example 2
PQR Bhd commenced business on 26/6/10 and ended
it first account on 30/9/11 and subsequently on
30/9/12.The basis periods are as follow:
YEAR ASSESSMENT BASIS PERIOD
YA2010 26/06/10 – 31/12/2010
YA2011 01/01/10 – 31/12/2011
YA2012 01/10/11 – 30/09/2012
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Commencement of Business
C.Company with existing operation commencing
new operations
Where a company which is already carrying on one
operation commences a new operation, the basis
period for the existing operation is also the basis
period for the new operation.
Example 3
XYZ Bhd has been in operation for several year and
makes up its account ending on 30 Sept each year.
The company starts a new operation 1/6/12.
YA 2012 ; Basis period 1/6/2012 – 30/9/2012
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Commencement of Business
D. Requirement under law of place of incorporation
Where a company commences operations and the law
of the place where it is incorporated requires it to close
its account on a particular date, the period from the date
of commencement to that accounting date is the basis
period for the first YA.
Example 4
XYZ Bhd commences operation on 21/10/11 and and
makes up its account to 30/4/12 as required by the law
of the place of its incorporation.
YA 2012 ; Basis period 21/10/2011 – 30/4/2012
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Change of Accounting Date
i. Normal accounts ending on 31 December
ii. Normal accounts not ending on 31 Dec and the
new account prepared for period LESS than
12 months
a. New account end in following year
b. The new accounts and last accounts end in the
same year.
iii. Normal accounting period does not end on 31 Dec
and the new account are prepared for a period of
MORE than 12 months.
a. The new account end in the following year
b. The new account end in the third year
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Change of Accounting Date
I. Normal accounts ending on 31 December
Where normal accounts are normally prepared up to
31 Dec each year and there is a change of
accounting period to non 31 Dec, the basis period in
the year where changes are made shall end on 31
Dec.
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Example 5
Granite Bhd closes its accounts on 31 Dec each year.
On 1/1/12 the company decided to change its
accounting period to 31/10/12 and subsequently to 31
Oct each year.
Answer:
The BP before and after the changes will be as
follows:
YEAR ASSESSMENT BASIS PERIOD
YA2011 01/01/11 – 31/12/2011
YA2012 01/11/11 – 31/10/2012
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Change of Accounting Date
ii. Normal accounts not ending on 31 Dec and
the new account prepared for period less
than 12 months
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Change of Accounting Date
Example 6
Mesra Sdn Bhd closes its accounts on 30 September each
year. In the basis year 2008, the company changed its
accounting period to 30 June, 2008. The following are the
accounting periods before and after the changes.
1 October, 2006 to 30 September, 2007
1 October, 2007 to 30 June, 2008
1 July, 2008 to 30 June, 2009
Answer:
YEAR ASSESSMENT BASIS PERIOD
YA2007 01/10/06 – 30/9/2007
YA2008 01/10/07 – 30/6/2008 (9 months)
YA2009 1/7/2008- 30/6/2009 21
Change of Accounting Date
b. The new accounts and last accounts end in
the same year.
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Change of Accounting Date
Example 7
Cantik Bhd closes its accounts on 31 May each year.
In the basis year 2008, the company changed its
accounting period to 31 December, 2008. The
following are the accounting periods before and after
the changes.
1 June, 2007 to 31 May, 2008
1 June, 2008 to 31 December, 2008
1 January, 2009 to 31 December, 2009
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Change of Accounting Date
Example 7 (Answer)
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Change of Accounting Date
iii.Normal accounting period does not end on 31
Dec and the new account are prepared for a
period of more than 12 months.
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Change of Accounting Date
Example 8
Gemilang Bhd closes its accounts on 31 March
each year. In the basis year 2009, the company
changes its accounting periods to 30 June, 2009.
The following are the accounting periods before and
after changes.
1 April, 2007 to 31 March, 2008
1 April, 2008 to 30 June, 2009
1 July, 2009 to 30 June, 2010
The basis periods for the years of assessment are
as follows:
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Change of Accounting Date
Example 8 (Answer)
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Change of Accounting Date
b) The new account end in the third year
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Change of Accounting Date
Example 9
Paremba Bhd's accounting period ends on 31 May
each year. In the basis year 2007, the management of
the company changes its accounting period to 31
August, 2008. The following are the accounting periods
before and after the changes.
1 June, 2005 to 31 May, 2006
1 June, 2006 to 31 August, 2008 – 27 months
1 September, 2008 to 31 August, 2009
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THANK YOU
Q&A
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