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32 Investment Holding Co (IHC) - Coggle Diagram
32 Investment Holding Co (IHC)
Criteria
main activity:
holding of investments
Co gross Y
not less than 80% is derived from holding those investments
Y from holding of investment (DIR exclude S4(a) rental)
/
Gross Y [DIR both S4(a)+S4(d) + mgmt fee + royalty + other Y, exclude gain from realisation of investment(cap gain, X Y)]
>=80%
is a CO
unlisted: Sdn Bhd
listed: Bhd
not all Bhd are listed
, all listed Co are Bhd
Temporary cessation as IHC
IF a Co is
a non IHC in a YA
gross Y from S4(a) rental :arrow_down: in the subsequent year or YAs due to temporary cessation of tenancy bc
repair or renovation of building
absence of tenants for a period of 2 yrs after termination of tenancy
legal conjuction or other official sanction
other circumstances beyond control of the Co
Co is still
deemed as a non IHC
for the subsequent yr or YAs even though Y from holding of invst is not less than 80% of the gross Y of the Co
Continuance status of an IHC
any Co which has been determined to be IHC in the BP for a YA will
deemed to be an IHC in the subsequent YAs
Not applicable
if Co is
able to prove that it is no longer an IHC in the relevant YA
Tax treatment
Unlisted IHC
Permitted Exp
Amt of PE is deductible
restricted to 5% of gross Y from chargeable DIR
(Lower of)
Formula : A x B/4C
C=
Gains from realisation of investment
R
Interest (whether exempt or not)
Dividend (whether exempt or not)
B = chargeable DIR + exempt div + exempt int + gains from realization of investment
A = PE
consist of
rent and other exp incidental to maintenance of an office
secretarial, audit and accounting fees, telephone charges, printing and stationery costs and postage
exclude travelling exp
mgmt fees
wages, salaries and allowances
directors' fee
Special dedn
to get total Y of the unit trust
deduct from Agg Y
Tax rate
: Co tax rate (no scale rate)
All source of Y are non-biz source, no biz source at all
Sources of Y
Dividend: S4(c)Y
- passive source
Interest: S4(c)Y
- passive source
int from bank: taxable
Rental: S4(d)Y
- passive source
even if maintenance & support services are comprehensively & actively provided
Mgmt fee + other Y: S4(f) Y
- active source
Listed IHC
Each source of Y
assessed as a
separate biz source
,
NO non-biz source
Sources of Y
Dividend: S4(a)Y
Interest: S4(a)Y
int from bank: taxable
Rental: S4(a)Y
whether maintenance & support services are comprehensively & actively provided
Mgmt fee + other Y: S4(a) Y
Treatment for exp for DIR
(deemed biz Y)
No ded on exp is allowed
if that
source does X produce any Y
IF direct exp + common exp > gross Y, dedn is
restricted to gross Y for that YA
excess exp: disregarded, permanent loss
X ded for any other source of Y
X c/f to subsequent YAs, X CYBL
set off
gross Y
Treatment of CA for DIR
IF
no adj Y/ adj Y X sufficient to absorb CA
(CA> adj Y)
excess CA
X c/f
to subsequent YAs
set off
adj Y
Special treatment for mgmt fee
(genuine biz Y)
Allowable exp + common exp > gross Y from mgmt fee,
excess = CYBL
, set off agnst
agg Y
Excess loss c/f set off ASIB in subsequent 7 YAs until fully utilized
CA X fully absorbed by
adj Y
excess c/f set off adj Y in subsequent YAs until fully ultilised
Treatment for common exp and common CA
to be
apportioned
to each source of Y based on
gross Y derived from each source
Int exp
on specific loan
direct exp
on general borrowings
common exp
apportion based on
cost of each investment