1. Section 4(c)
1.1. Dividends
1.1.1. Definition: An amount distributed to shareholder by a company
1.1.2. Derived From Malaysia: Paid / Credited / Distributed by a Malaysian resident company
1.1.3. Tax deductible not applied to: - Any expenses in relation to dividends
1.1.4. Basis Period (When it is assessed for tax): When the dividend is ACTUALLY PAID, Date of declaration is not relevant
1.1.5. Foreign Dividend: Any person who received foreign-source income UNLESS carrying on a business in the banking, insurance, air transport, or shipping sectors, will be tax-exempt.
1.1.6. 1/1/2008: Imputation tax is replaced by Single Tier Tax (Where dividend only be taxed at the company level), 1/1/4014: Malaysia derived dividend will be TAX EXEMPT to SHAREHOLDERS.
1.2. Interest
1.2.1. Derivation from Malaysia:
1.2.1.1. a) If responsibility for payment of the interest lies with the government, a State Government or local authority. (Interest paid by government) OR
1.2.1.2. b) (i) If responsibility for the payment of the interest lies with a person who is resident for that basis year. (Interest paid by a person who is a resident for that basis year) AND (ii) if the money borrowed is used in the production of income or laid out on assets either used in the production of income or held for use in the production of gross income or secured by any property or asset situated in Malaysia. (Money borrowed for property/assets that used in production/held for use that situated in Malaysia)
1.2.1.3. c) If the interest is charged as an outgoing or expenses in the accounts of a business carried on in Malaysia.
1.2.2. Classification
1.2.2.1. Section 4(a) (Business) - Interest forms part of the stock in trade of the business, or in money lending business
1.2.2.2. Section 4(c) (Interest as investment income) - Interest received as investment (not part in stock in trade of business)
1.2.3. Tax Deductible: - Loan obtained to secure interest income, Interest expense incurred can be deduct.
1.2.4. Tax Exempt
1.2.4.1. Individual
1.2.4.1.1. Interest received by individuals on money deposited in approved institutions, which include all licensed banks and financial institutions, is tax exempt. Interest received from certain types of bonds or securities is also exempt from tax. Interest PAID TO A NON-RESIDENT individual by commercial banks, merchant banks, or finance companies operating in Malaysia is EXEMPT FROM TAX.
1.2.4.2. Corporate
1.2.5. Basis Period
1.2.5.1. Section 27(1) When Interest RECEIVED - The person ENTITLED TO/IS ABLE TO OBTAINED
1.2.5.2. Section 27(2) When the period OVERLAP over 2/MORE BASIS PERIOD - The interest will apportioned (DIVIDED) accordingly
1.2.5.3. Section 27(3) Interest RECEIVED IN ADVANCED - The interest will be treated as GROSS INCOME in the period in which it is RECEIVED.
1.3. Discounts
1.3.1. Tax Exempt
1.3.1.1. Bond & securities ISSUED BY PENGURUSAN DANAHARTA NASIONAL BERHAD and DANAHARTA URUS SENDIRIAN BERHAD
1.3.1.2. Discount income RECEIVED BY INDIVIDUAL, UNIT TRUST from securities/bonds ISSUED BY THE GOVERNMENT
1.3.1.3. ISLAMIC SECURITIES AND DEBENTURES other than convertible loan stock APPROVED BY THE SECURITIES COMMISSION
1.3.1.4. Malaysian saving bond ISSUED BY BNM
1.3.2. Derivation from Malaysia: - The bill of exchange IS TRANSACTED IN MALAYSIA
1.3.3. Basis Period: - When it is realized (DATE OF SALE/ MATURITY DATE)
1.3.4. Discounts: - That is received from the financial instrument that is purchased below its face value and income accrued from financial instrument would be assessable to tax when it is realized.
2. Section 4(d)
2.1. Rental
2.1.1. Rent - Sum received for the occupation of premises/part thereof, or hiring of assets
2.1.2. Classification
2.1.2.1. Section 4(a) - Rental arises from a BUSINESS ACTIVITY - The person, who let out the property give FULL MAINTAINED SERVICES PROVIDED.
2.1.2.2. Section 4(d) - Rental arises from an INVESTMENT INCOME - The person, who let out the property WITHOUT PROVIDE FULL MAINTAINED SERVICES
2.1.3. Derivation from Malaysia
2.1.3.1. Immovable Property - if Property located IN MALAYSIA. Then, Rental income = DEEMED DERIVED FROM MALAYSIA
2.1.3.2. Moveable Property - if lessors CARRIES ON BUSINESS IN MALAYSIA. Then, Rental income = DEEMED DERIVED FROM MALAYSIA
2.1.4. Basis