Chap 2 - Residence Status

CHAPTER 2
RESIDENCE STATUS FOR

INDIVIDUALS
Learning objective:
Understand The Concept Of Residence Status For
Individuals.
Residence Status Applied Under Section 7 (1) Of Ita
1967.
Able To Differentiate Four (4) Sets Of Circumstances To
Be A Resident Under Section 7 (1) Of ITA 1967.
Benefits Of Having A Residence Status.
1.0 INTRODUCTION
The concept of resident status is important determine
chargeability of a person on income earned and received.
The scope of charge for both resident and non-resident
individuals is the same from YA 2004 - both are taxed only
upon Malaysian derived and accrued income.
Resident individuals are subject to a scaled rate from 025%. As for non-resident individuals they are subject to a
flat rate of 25%.
2.0 DETERMINATION OF
RESIDENCE STATUS
The ITA 1967 uses a quantitative test in
determining the residence of an individual taxpayer
computed number of days present in Malaysia.
Ascertained by reference to the number of days
an individual was in Malaysia by virtue of Section
7(1) ITA 1967.
There are 4 sets of circumstances by which
an individual is deemed to be a resident in Malaysia.
In the event that an individual does not fall
under any of these circumstances in a particular
basis year, he or she is therefore not resident for
that basis year.
2.0 DETERMINATION OF
RESIDENCE STATUS
2.1 SECTION 7(1)(A) OF ITA

1967
Section 7(1)(a) In Malaysia for 182 days or more
in a Basis Year
Example 2.1.1
Haris was in Malaysia for the following periods:
1/1/2014 to 31/10/2014 = 304 days 182 days
1/1/2015 to 31/5/2015 = 151 days 242 days 182 days
1/9/2015 to 30/11/2015 = 91 days
Haris qualifies as a tax resident for the Year of
Assessment 2014 and 2015 as the number of days
in Malaysia amounted to 182 days or more in each
basis year.

1967
Example 2.1.2
Aaron was in Malaysia for the following periods:
1/7/2013 to 31/12/2013 = 184 days 182 days
1/2/2014 to 28/7/2014 = 178 days 182 days
1/3/2015 to 31/10/2015 = 245 days 182 days
Aaron qualifies as a tax resident for the Year of

Assessment 2013 and 2015 but not for YA 2014
because total number of days he was in Malaysia
less than 182 day.

1967
Exercise 2.1.a
Mr. Don recorded the following periods of stay in
Malaysia:
1.4.2015 - 30.6.2015
91 days
In Malaysia
1.7.2015 31.7.2015
31 days
Seminar in Hong Kong
1.8.2015 30.9.2015 In Malaysia

61 days
Determine the resident status of Mr. Don for the

YA 2015.

1967
Exercise 2.1.a
Mr. Don recorded the following periods of stay in
Malaysia:
1.4.2015 - 30.6.2015
In Malaysia
91 days
1.7.2015 31.7.2015
31 days
Seminar in Hong Kong
1.8.2015 30.9.2015 In Malaysia

61 days
Determine the resident status of Mr. Don for the

YA 2015.
Solution: Non Resident <182 days

1967
Table for number of days in a month:
MONTH
DAYS
January
31
February
28/29
March
31
April
30
May
31
June
30
July
31
August
31
September
30
October
31
November
30
December
31
TOTAL IN A YEAR
365/366
2.2 SECTION 7(1)(B) OF ITA

1967
Section 7(1)(b) In Malaysia for less than 182 days
in a
Basis Year
If an individual cant be resident in Sec 7(1)(a), then he

may qualify under Sec 7(1) (b).
There are 2 circumstances where an individual can be
regarded as tax resident:
i. In Malaysia for less than 182 days and that period is
linked by a period of 182 consecutive days or more
(immediate preceding year).
Residence status in question
1/1/2015
Jan1
182 days
Year 2014
Year 2015

ii. in Malaysia for less than 182 days and that1967
period is
linked to a period of 182 consecutive days or more

(immediate following year).
182 days
Jan1
Year 2014
Dec 31
Year 2015
31/12/2015

1967
Temporary absence would constitute part of the
182 consecutive days but it cannot form the link
period. There must be a physical present in two days
in order to establish the link requirement. These
temporary absence are:
i.the absence is connected with the employees service in

Malaysia and owing to service matter or attending
conferences or seminars or study abroad.
ii.the absence is owing to ill-health involving himself or a
member of his immediately family; or
iii.the absence is in respect of social visits not exceeding
14 days in the aggregate

1967
2.2 SECTION 7(1)(B) OF ITA 1967

Example 2.2.1
Mathan was in Malaysia for the following periods:

1/10/1999 to 31/12/1999 = 92 days 182 days
1/1/2000 to 31/8/2000
= 243 days 182 days
1/1/2001 to 28/2/2001
1/1/2002 to 31/5/2002
= 59 days 182 days

= 151 days 182 days
1/9/2002 to 31/12/2002 = 122 days 182 days

1/8/2003 to 31/8/2003
= 31 days 182 days

Solution :
YA
Basis Year
No. of
Days
Status and
Section
2000(PYA)
1999
92
R Sec 7(1)(b)
2000 (CYA)
2000
243
R Sec 7(1)(a)
2001
2001
59
NR
2002
2002
273
R Sec 7(1)(a)
2003
2003
31
NR

Example 2.2.2
Habib was in Malaysia for the following periods:
1/6/2014 to 31/10/2014
= 153 days 182 days
11/11/2014 to 31/12/2014 = 51 days 182 days

1/1/2015 to 28/2/2015
= 59 days 182 days
From 1 November to 10 November 2014, he was

away for social visits.

Example 2.2.2
Habib was in Malaysia for the following periods:
1/6/2014 to 31/10/2014
= 153 days 182 days
11/11/2014 to 31/12/2014 = 51 days 182 days

1/1/2015 to 28/2/2015
= 59 days 182 days
From 1 November to 10 November 2014, he was

away for social visits.
YA
No. of Days
Status and Section
2014
204
R Sec 7(1)(a)
2015
59
R Sec 7(1)(b)

Exercise 2.2.a
YA
Period of Stay in Malaysia
2014
1/2/2014 to 31/3/2015 =59 days

1/6/2014 to 30/12/2015 = 213 days
31/12/2015 social visit in Singapore
2015
1/1/2011 to 31/1/2011 = 30 days

Exercise 2.2.a
YA
2014
1/2/2014 to 31/3/2014 =59 days

1/6/2014 to 30/12/2014 = 213 days
31/12/2014 social visit in Singapore
2015
1/1/2015 to 31/1/2015 = 30 days
Solution: YA 2014 Resident Sec 7(1) (a)

YA 2015 Resident Sec 7(1) (b) linked by

1967
Exercise 2.2.b
YA
2014 1/2/2014 to 30/4/2014 = 89 days

1/7/2014 to 30/12/2014= 184 days
2015 1/1/2015 to 3/1/2015 = social visit in Hong Kong
4/1/2015 to 31/1/2015 = 28 days

1967
Exercise 2.2.b
YA
2014 1/2/2014 to 30/4/2014 = 89 days

1/7/2014 to 30/12/2014= 184 days
2015 1/1/2015 to 3/1/2015 = social visit in Hong Kong
4/1/2015 to 31/1/2015 = 28 days
Solution: YA 2014 Resident Sec 7(1) (a)

YA 2015 Resident Sec 7(1) (b) linked by
2.3 SECTION 7(1)(C) OF ITA

1967
Section 7(1)(c) In Malaysia for 90 days or more in a
Basis Year
To qualify as a resident under Sec 7(1)(c):

i.he must be in Malaysia for a period or periods
amounting to 90 days or more; AND
ii.3 out of 4 immediately preceding basis year is
EITHER;
(a) a resident; or
(b) in Malaysia for a period or periods of 90 days or
more

1967
Example 2.3.1
Chua was in Malaysia for the following periods:
YA
2011
2012
2013
2014
2015

1/4/2011 to 30/9/2011
1/1/2012 to 30/3/2012
1/2/2013 to 31/12/2013
1/4/2014 to 30/10/2014
1/8/2015 to 31/10/2015

1967
Solution:
Resident status of Chua will be as follows:
YA
No. of Days
Status and Section
2011
183
R Sec 7(1)(a)
2012
89
NR
2013
334
R Sec 7(1)(a)
2014
214
R Sec 7(1)(a)
2015
92
R Sec 7(1)(c)

1967
Example 2.3.2
Maria was in Malaysia for the following number of days:
YA
2012
2013
2014
2015
No. of days
91
90
92
91

Example 2.3.2
1967
Maria was in Malaysia for the following number of days:
YA
2012
2013
2014
2015
No. of days
91
90
92
91
YA
No. of days
2012
2013
2014
2015
91
90
92
91
Status and Sections

NR
NR
NR
R Sec 7(1)(c)

1967
Example 2.3.3
Michelle has the following record of stay in Malaysia:
YA
2011
2012
2013
2014
2015

1/6/2011 to 31/12/2011
1/1/2012 to 25/2/2012
29/1/2013 to 30/4/2013
1/3/2014 to 31/5/2014
1/1/2015 to 31/8/2015

Solution:
1967
Resident status of Michelle will be as follows:
YA
No. of Days
Status and Section
2011
214
R Sec 7(1)(a)
2012
56
R Sec 7(1)(b)
2013
92
NR
2014
92
R Sec 7(1)(c)
2015
243
R Sec 7(1)(a)

1967
Exercise 2.3.a
Jannah has the following residence
1.3.2011 20.3.2011
1.5.2012 15.8.2012
1.1.2013 30.9.2013
1.3.2014 31.10.2014
1.1.2015 20.4.2015
history in Malaysia:
20 days
107 days
273 days
245 days
110 days
You are required to determine his residence status

for the YA 2011, 20012, 2013, 2014 and 2015.
2.4 SECTION 7(1)(D) OF ITA

1967
Section 7(1)(d) Not in Malaysia
To qualify as a resident under Sec 7(1)(d):
i.he must be resident in the following year from that YA;
AND
ii.3 immediately preceding years from that YA must also
be resident.
2007
2008
2009
2010
2011
R

1967
Example 2.4.1
Tai has the following record of stay in Malaysia:
YA
2011
2012
2013
2015

1/5/2011 to 31/12/2011
1/1/2012 to 10/2/2012
2/2/2013 to 31/10/2013
1/1/2015 to 31/8/2015

1967
Solution:
Resident status of Tai will be as follows:
YA
No. of Days
Status and Section
2011
245
R Sec 7(1)(a)
2012
41
R Sec 7(1)(b)
2013
272
R Sec 7(1)(a)
2014
Nil
R Sec 7(1)(d)
2015
243
R Sec 7(1)(a)

1967
Example 2.4.2
Soopana has the following record of stay in Malaysia:
YA
2010
2011
2012
2013
2015

1/1/2010 to 15/7/2010
16/12/2011 to 31/12/2011
1/1/2012 to 15/7/2012
1/4/2013 to 15/7/2013
1/5/2015 to 31/12/2015
She went back to Brunei on 31/12/2015 and has no intention

of returning to Malaysia

1967
Solution:
Resident status of Soopana will be as follows:
YA
No. of Days
Status and Section
2010
196
R Sec 7(1)(a)
2011
16
R Sec 7(1)(b)
2012
196
R Sec 7(1)(a)
2013
106
R Sec 7(1)(c)
2014
Nil
R Sec 7(1)(d)
2015
245
R Sec 7(1)(a)

1967
Exercise 2.4.a
Abdul Hamid has the following residence history in
Malaysia.
11.10.2011 31.12.2011 82 days
2012
Whole year
1.1.2013 30.9.2013
More than 182 days
1.4.2014 4.4.2014 4 days
1.4.2015 31.12.2015
More than 182 days
Advise Abdul Hamid on his residence status for the YA
2011, 2012, 2013, 2014 and 2015.
3.0 CHART OF TAX

RESIDENCE OF INDIVIDUAL
Stay in Malaysia for 182 days or more
No
In Malaysia for less than 182 days but is linked by or to a

period of 182 consecutive days
Yes
Yes
No
Tax resident
Stay in Malaysia for 90 days or more but less than 182 days
under
No
In Malaysia for 90 days or more or resident for 3 out of 4

immediate preceding years of assessment
Yes
of the
No
Resident in 3 immediately preceding years of assessment and

resident in the immediate following year of assessment
No
Not Resident
Section 7(1)
Yes
Income tax
Act 1967
4.0 BENEFITS OF
RESIDENCE STATUS
1. The scope of charge for both resident and
non-resident individuals is the same from YA
2004 --- Both are taxed only upon Malaysian
derived and accrued income.
2. Resident individuals are subject to a scaled
rate from 0-25%. As for non-resident
individuals they are subject to a flat rate of
25%.
3. Resident individuals are entitled to individual
tax relief (sections 46 to 50) such as self,
wife, child and etc. Non-residents are not
entitled to such relief.
4.0 BENEFITS OF
RESIDENCE STATUS
4. Resident individuals are entitled to a rebate if
their chargeable income is less than RM35,000.
Non-residents are not entitled to the rebate.
5. Numerous types of income are exempted from
tax only in the hands of resident individuals:
a) Royalties from literary or artistic work.
b) Income from cultural performance approved by
Minister.
c) Income from musical composition.
4.0 BENEFITS OF
RESIDENCE STATUS
6. Numerous types of income are exempted from
tax both in the hands of residents and nonresidents:
a) Pension income derived from Malaysian
employment paid by approved scheme.
b) Interest income from financial institution.
7. Withholding tax is applicable upon contract
payment, interest, royalty, and section 4A
income payments made to non-residents only.
THANK YOU.

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Chap 2 - Residence Status

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CHAPTER 2

RESIDENCE STATUS FOR

2.1 SECTION 7(1)(A) OF ITA

2.1 SECTION 7(1)(A) OF ITA

Aaron qualifies as a tax resident for the Year of

2.1 SECTION 7(1)(A) OF ITA

Seminar in Hong Kong

1.8.2015 30.9.2015 In Malaysia

Determine the resident status of Mr. Don for the

2.1 SECTION 7(1)(A) OF ITA

Seminar in Hong Kong

1.8.2015 30.9.2015 In Malaysia

Determine the resident status of Mr. Don for the

2.1 SECTION 7(1)(A) OF ITA

2.2 SECTION 7(1)(B) OF ITA

If an individual cant be resident in Sec 7(1)(a), then he

2.2 SECTION 7(1)(B) OF ITA

linked to a period of 182 consecutive days or more

Residence status in question

2.2 SECTION 7(1)(B) OF ITA

i.the absence is connected with the employees service in

2.2 SECTION 7(1)(B) OF ITA

2.2 SECTION 7(1)(B) OF ITA 1967

Mathan was in Malaysia for the following periods:

= 243 days 182 days

= 59 days 182 days

1/9/2002 to 31/12/2002 = 122 days 182 days

= 31 days 182 days

2.2 SECTION 7(1)(B) OF ITA 1967

2.2 SECTION 7(1)(B) OF ITA 1967

= 153 days 182 days

11/11/2014 to 31/12/2014 = 51 days 182 days

= 59 days 182 days

From 1 November to 10 November 2014, he was

2.2 SECTION 7(1)(B) OF ITA 1967

= 153 days 182 days

11/11/2014 to 31/12/2014 = 51 days 182 days

= 59 days 182 days

From 1 November to 10 November 2014, he was

Status and Section

2.2 SECTION 7(1)(B) OF ITA 1967

Period of Stay in Malaysia

1/2/2014 to 31/3/2015 =59 days

1/1/2011 to 31/1/2011 = 30 days

2.2 SECTION 7(1)(B) OF ITA 1967

Period of Stay in Malaysia

1/2/2014 to 31/3/2014 =59 days

1/1/2015 to 31/1/2015 = 30 days

Solution: YA 2014 Resident Sec 7(1) (a)

2.2 SECTION 7(1)(B) OF ITA

Period of Stay in Malaysia

2014 1/2/2014 to 30/4/2014 = 89 days

2.2 SECTION 7(1)(B) OF ITA

Period of Stay in Malaysia

2014 1/2/2014 to 30/4/2014 = 89 days

Solution: YA 2014 Resident Sec 7(1) (a)

2.3 SECTION 7(1)(C) OF ITA

To qualify as a resident under Sec 7(1)(c):

2.3 SECTION 7(1)(C) OF ITA

Period of Stay in Malaysia

2.3 SECTION 7(1)(C) OF ITA

Status and Section

2.3 SECTION 7(1)(C) OF ITA