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Tax planning, Sales Tax = sales tax x sales tax rate (10% / 5%),…
Tax planning
Investment in Assets Vs Equity
Equity
No disposal of assets took place
Co A nly has change in s/holders
Assets
Co B buys BIZ ASSETS frm Co A
Co A
Disposal of Biz assets
CT
No b/c or b/a
DV = RE on FDDFP
X CT
DV - RE = B/C or B/A
DV = higher of MV or Net proceeds
Co B
Purchase of biz assets
CT
1) AA - originl QE of disposer but restricted to RE of disposer
2) Claim CA for YA
__
onwards
X CT
Claims CA on purchase cost
Co B buys stocks from Co A
Co B
Loss + CA b/f
SP = Cost
To avoid high profit, lower purch cost for B give rise to lower ded, leading to higher profit, profit is set off by loss+ CA b/f IN B
Co A
S35(5) Disposal of stocks
Gross taxable Y = SP
If has loss + CA b/f, SP = MV
Conditions for 35(5)
Co A cease biz permanently
Co A sell the stock for consderation
Co B uses the stk in biz, and claim ded
Higher profit is set off by loss + CA, higher purch cost for Co B give rise to higher ded
Co B buys TR from Co A
Co B
Purchase of TR is purch of asset = not ded
Co A
Sale of TR is sale of an asset = not taxable
Trsf good debt to Co B, retain bad debt and write off
Acquirer bought biz A from disposer to carry out new biz
Acquirer
old biz + new biz (similar)
Gross Y + exp forms combined adj Y
CA from old biz can set off from combined adj Y
loss b/f can reduce Y regardless
old biz + new biz (diff)
CA from old biz can set off against adj Y of old biz only
Disposer
Ceased biz
1) CA b/f = permanent loss
2) unutilised losses can c/f for max 7 subs YAs
Dormant + sh/holding change >50%
CA + loss = permanent loss
Investment in a Co' thru
debt vs eq
Co A invest in eq in Co B
Co A
Divd received = exempt
int exp is X ded against STD (para 12B)
Co B
S/cap will increase, tax rate may change to 24%
Co B pays divd = X deductible cos its appropriation of profits
Co A invest in debt in Co B
Co B
S/cap x increase
Co B pays int exp to Co A
mkt
rate to avoid TP prob
int exp is ded if loan used for prod of Y
need to deduct WHT if Co A is NR
Co A
int Y taxable S4(c) Y
Int exp is ded
Financing of QE (Biz Asset)
HP
Owner
QE = depo + cap portion of instlmt paid
IA = depo + new cap paymt
AA - accumulated cap instlmt paid
HP paid is ded (int)
N/A
Lease
X OWNER
X CLAIM CA
Lease rental is ded
ITR
Borrowings
Owner
QE = full purch
claim CA
Interest is ded
DTR for purch cost, ITR for int payment
Lease -> deemed sale
Lessee
QE = full purch cost
Lease int is ded
DTR for purch cost, ITR for int payment
Own Cash
Owner
QE = full purch
claim CA
excess CA c/f
N/A
DTR
Sales Tax
=
sales tax
x
sales tax rate (10% / 5%)
Scope of charge
Importer
Imported into Msia by any person
Sales value
=
CVA/CIF + Custom duties
CVA > CIF
Manufacturer
Taxable goods manufacture + sold/used/disposed in Msia by registered manufacturer
exclude special area + designated area
Free trade zone
Joint Devlpmt Area
LMW
sales value
= transaction value
transaction value = goods sold to non-connected purchaser
Sale to connected purchaser
trans value for identical goods
trans value for similar goods
Registration
Voluntary
Manufacturer who sold taxable goods but below threshold :check:
A class of person exempted from reg include manufacturers of RM, packaging etc :check:
Not available to manufacturer of non-taxable goods :forbidden:
Single taxable person
:check: artificial separation of biz
i) manufacture taxable goods
ii) manufacturing actvt is deliberately seperated into a few parts and the fragmented biz is concurrently carried out by >=2 person
iii) the t/over threshold achieved based on aggregated sales of all persons involved
Tax implication
i) All involved persons taxed as single taxable person
ii) Name jointly nominated must be submitted and reg within 14 days after last person being served the direction to be included
iii) All member is jointly and severally liable, and should any failure by the single taxable person shall be deemed as non-compliance made by each constituent member
Mandatory
Earlier of
Historical method
not later than
last day of month following end of month where
total t/over + 11 immediate preceeding years > RM500,000
Manufacturer and sub-contractor
Future method
not later than
the last day of month following the end of month where
total t/over + 11 immediate succeeding years > RM500,000
Credit note
Overpayment of sales tax
issue credit note
if ded for taxable period > the amt of ST payable, the excess is to be c/f until the whole balance is fully deducted
Tax admin
Effective date of reg
first day of following month of app for reg
Taxable period
period of 2 months commencing from date of registrtion
Reg period
not later than last day of the month following the end of the month where TTO >RM500,000
Submission of return
SST (Form SST-02) + pay sales tax
not later than last day of the month following the end of each taxable period
Penalty
90days = Prosecution
61 to 90 days = 10% + 15% + 15%
31 to 60 days = 10% + 15%
1 to 30 days = 10%
Single stage tax
To qualify
1) supplier not connected to reg manufacturer
2) suppliers have paid ST on goods sold
3) invoice as evidence
4) taxable goods purch is used in manufacturer of taxable goods of the regd manufacturer
IF ST rate is 5% -> DED 2%
IF ST rate is 10% -> DED 4%
Drawback
ST not applicable on manufactured goods that are exported (o/side of scope)
Conditions
i) goods exported within 6 months from date ST paid
ii) app made within 3 months from date of export
iii) proven by senior custom officer of such export
iv) goods are not prohibited by reg
v) taxable goods not used after import / payment of ST
Sales tax exemption
Non-reg manufacturer
(1)Regd manufacturer
(2) Reg manufacturer
:check: ST
Shops
ST :red_cross:
debit note
issued when amt prev invoiced is increased due to addition of sales tax
occur due to price adjustment
Bad debt
Refund
Conditions
i) sales tax paid on an invoice issued by regd manufacturer
ii) unpaid ST has been written off due to insolvency
iii) no payment was received for 6 months
iv) reasonable efforts made to recover
Sales tax - A / B X C
A = payment reecived
ST payable
B = Sales value + ST payable
Ownership
CA
Deductions
Tax relief
DTR - deferred tax relief,
ITR = immediate tax relief
Co B buys shares from Co A
this is better bcs CA b/f frm old biz can set off Y from BOTH biz
tto = total turnover
Record kept for 7 years