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The 2019 National Budget with the theme “A Resurgent Malaysia, A Dynamic Economy, A Prosperous Society” was tabled on 2 November 2018 by our Minister of Finance, YB Lim Guan Eng. Further to the Budget 2019 announced on 2 November 2018, Finance Bill 2018 was passed in the House of Representatives with amendment in Committee to the Finance Bill on 10 December 2018. Some of the important amendments are summarised below: 

Limitation on carry forward business losses & capital allowance

Currently, there is no time limit on carry forward of the business loss and various allowances. The Finance Bill 2018 and Amended Finance Bill 2018 proposed a 7-years’ time limit for utilisation of business losses and various allowances as follows:

Item

Current law

Finance Bill 2018

Amended Finance Bill 2018

Unabsorbed business losses

Can be carried forward indefinitely

Maximum 7 years from the year in which the loss is incurred.

No amendment

Unabsorbed capital allowance

 

Can be carried forward indefinitely

Maximum 7 years from the year in which the allowance is generated.

Can be carried forward indefinitely.

Unabsorbed Reinvestment allowance

Can be carried forward indefinitely

Maximum 7 years from expiry of the qualifying period.

No amendment

Unabsorbed investment allowance for service sector

Can be carried forward indefinitely

Maximum 7 years from expiry of the qualifying period.

No amendment

Unabsorbed pioneer losses

Can be carried forward indefinitely

Maximum 7 years from the end of the pioneer period.

No amendment

Unabsorbed investment tax allowance

Can be carried forward indefinitely

Maximum 7 years from the end of the ITA period.

Can be carried forward indefinitely

Scope of Special Classes of income

The scope of special classes of income is extended to include non-technical services and not limiting the scope of services to technical management or administration of an undertaking, venture, project or scheme.

Item

Current law

Finance Bill 2018

Amended Finance Bill 2018

Section 4A(ii) of Income Tax Act 1967

“amounts paid in consideration of technical advice, assistance or services rendered in connection with technical management or administration of any scientific, industrial or commercial undertaking, venture, project or scheme”

“amounts paid in consideration of advice, assistance or services rendered in connection with any scientific, industrial or commercial undertaking, venture, project or scheme”

“amounts paid in consideration of advice, assistance or services rendered in connection with management or administration of any scientific, industrial or commercial undertaking, venture, project or scheme”

Real Property Gains Tax (RPGT)

The rate of RPGT on gains from the disposal of real properties or shares in real property companies in the sixth and subsequent years of disposal are revised as follows:

Disposal

RPGT Rates

Company

Other than Company and other than non-citizen and non-permanent resident individual

Non-citizen and non-permanent resident individual

Within 3 years

30%

30%

30%

In the 4th year

20%

20%

30%

In the 5th year

15%

15%

30%

In the 6th and subsequent years (current law)

5%

0%

5%

In the 6th and subsequent years (Finance Bill 2018)

10%

5%

Note 1 – Finance Bill 2018

Note 2- Amended Finance Bill 2018

10%

Note 1 – Finance Bill 2018: The increased rate does not apply to the disposal of residential homes valued below RM200,000 by Malaysian citizens.

Note 2- Amended Finance Bill 2018: The acquisition price of real property acquired prior to 1 January 2000 shall be taken as its market value as at 1 January 2000.