UNIVERSITI UTARA MALAYSIA

COLLEGE OF BUSINESS
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COURSE CODE
COURSE
PRE-REQUISITE

BKAT 2013
PRINCIPLES OF TAXATION
BKAF 1023 ACCOUNTING PRINCIPLES OR
BKAL1013 BUSINESS ACCOUNTING
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1.0

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SYNOPSIS

This course is designed specifically for students from accounting and non-accounting
disciplines. Students will be exposed to the Malaysian taxation system. This course
offers an insight on the taxation principles, tax administration and tax liability
computation for an individual taxpayer. The computation of tax liability covers
employment income, unearned income and business income. The syllabus also
includes determination of individual resident status and capital allowance.
2.0

OBJECTIVES

Upon completion of the course, students are expected to:

1. understand the Malaysian tax system including tax administration and its
principles.
2. compute the income tax liability for individual taxpayers from all sources of
income.
3.0

LEARNING OUTCOMES

Upon completion of the course, students are able to

1. explain the Malaysian tax system and its principles.
2. explain the tax administration system related to individual taxpayer.
3. prepare income tax liability computation for individual taxpayers from nonbusiness sources of income.
4. prepare income tax liability for individual taxpayers from business source of
income.

4.0

COURSE CONTENT

NO.
1.0

TOPICS

REFERENCE
(CHAPTER)

INTRODUCTION TO MALAYSIAN INCOME

TAX SYSTEM

HOURS
3

1.1 Definitions and Principles of Taxation

1.2 Objectives of Taxation and Contribution to
the Economy
1.3 Sources of Revenue
1.4 Types of Taxes and Tax Rates
1.5 Basis of Charge
1.6 Classes of Taxable Income
1.7 Taxable Person
1.8 The Concept of Basis Period, Basis Year,
Year of Assessment
1.9 Self-Assessment System
1.10 Discussion of Newly Released Budget
2.0

INDIVIDUAL RESIDENCE STATUS

[Section 7 ITA 1967]

C2

C5,C6,C7

2.1 The Importance of Residence Status for

Individual Taxpayers
2.2 Determination of Individual Residence
Status under Section 7 ITA 1967
3.0

EMPLOYMENT INCOME
[Section 4(b), ITA 1967]

3.1
3.2
3.3
3.4
3.5
3.6

Definition of Employment
The Concept of Employment and
Profession
Basis Period for Employment Income as per
Section 25 ITA 1967
Gross Income from Employment - Section
13(1)(a) (e), ITA 1967
Allowable Expenses and Exemptions
Adjusted and Statutory Income

4.0

UNEARNED INCOME
[Section 4(c) - (f), ITA 1967]

C8,C9,C10,
C11,C12

4.5

C19

7.5

4.1 Dividend
4.1.1 Gross Dividend Income
4.1.2 Dividend Derived from Malaysia and
Remitted from Outside Malaysia
4.1.3 Exempted Dividend Income
4.1.4 Basis Period
4.1.5 Allowable Expenses
4.1.6 Adjusted Dividend Income
4.2 Interest
4.2.1 Gross Interest Income
4.2.2 Interest Income Derived from Malaysia
4.2.3 Interest Income under Section 4(a) and
4(c), ITA 1967
4.2.4 Exempted Interest Income
4.2.5 Basis Period
4.2.6 Allowable Expenses
4.2.7 Adjusted Interest Income
4.3 Rental
4.3.1 Gross Rental Income
4.3.2 Rental Income Derived from Malaysia
4.3.3 Basis Period
4.3.4 Allowable Expenses
4.3.5 Adjusted Rental Income
4.4 Royalty
4.4.1 Basis Period
4.4.2 Allowable Expenses
4.4.3 Adjusted Royalty Income
4.5 Premium, Discount, Pension and Annuity
4.5.1 Gross Income
4.5.2 Exempted Income
4.5.3 Basis Period
4.5.4 Allowable Expenses
4.5.5 Adjusted Income
4.6 Other Incomes not listed under S4(a) (e)
5.0

DONATION, PERSONAL RELIEFS AND

REBATES
5.1 The Concept of Aggregate Income, Total
Income and Chargeable Income
5.2 Approved Donations Section 44(6), ITA
1967

5.3 Personal Reliefs

5.4 Personal Tax Rates
5.5 Computation of Tax Liability
5.6 Rebate - Section 6A, ITA 1967
5.7 Assessment
5.7.1 Joint Assessment
5.7.2 Separate Assessment
6.0

CAPITAL ALLOWANCES

C15

4.5

C13,C14

C18

4.5

6.1 Definition of Capital Allowance

6.2 Plant and Machinery
6.2.1 Qualifying Plant Expenditure
6.2.2 Eligibility of Capital
Allowances
6.2.3 Types of Capital Allowance
6.2.4 Computation of Capital Allowances
6.2.5 Sales of Assets - Balancing Charge and
Balancing Allowance
6.2.6 Hire Purchase Assets
6.2.7 Partial Use of Assets
6.2.8 Small Value Assets
7.0

BUSINESS INCOME
[Section 4(a), ITA 1967]
7.1 Definitions of Business, Trade, Profession
and Vocation
7.2 Scope of Business Income
7.3 Revenue Income and Capital Income
7.4 Business Income Derived from Malaysia
7.5 Basis Period
7.6 Gross Business Income
7.7 Qualification for Deductions of Expenses
7.8 Allowable Deductions, Special Deductions
and Double Deductions
7.9 Non-allowable Deductions
7.10 Computation of Tax Liability
7.11 Commencement of Business
7.12 Cessation of Business

8.0

PARTNERSHIP
Partnership Act 1961
8.1 Definition of Partnership
8.2 Types of Partners
8.3 Basis Period
4

8.4 Computation of Partnerships

Provisional Adjusted Income and Divisible
Income
8.5 Computation of Partners Adjusted Income
and Statutory Income
8.6 Capital Allowances
8.7 Computation of Tax Liability
8.8 Changes in Partnership
9.0

INCOME TAX ADMINISTRATION

C27,C28,C30,
C31,C32

9.1 Inland Revenue Board (IRB)

Assessment and Collection Branch and Its
Functions - Authority of Director General of
IRB
9.2 Objectives of Tax Administration
9.3 Tax Administration
9.3.1 Keeping Sufficient Records
9.3.2 Return Forms
9.3.3 Types of Assessment
9.3.4 Appeal
9.3.5 Collection and Recovery
9.3.6 Penalties and Offences
9.4 Tax Compliance SAS & Voluntary
Compliance
9.5 Taxpayers and Employers Responsibilities
9.6 Tax Audit and Investigation
9.7 Ethical issues involving tax avoidance and
tax evasion
9.8 Tax Audit Framework

5.0

REFERENCES
Main
Books/Acts/Rulings:
1. Choong, K.F. (2013). Malaysian Taxation: Principles and Practice (19th ed.).
Kuala Lumpur: Infoworld.
2. Income Tax Act 1967 (Regulation and Rules) (latest reprint).
3. Public Rulings Issued by Inland Revenue Board Malaysia (IRBM).
4. Partnership Act 1961.

Additional
Books
1. Singh, V. (2011). Veerinder on Taxation (2nd ed.). Kuala Lumpur: CCH.
2. Kasipillai, J. (2009). A Comprehensive Guide to Malaysian Taxation under
self assessmen (4th ed.). Kuala Lumpur: McGraw-Hill.
3. CCH Tax Editors (2012). Malaysian Master Tax Guide 2012 (29th ed.). Kuala
Lumpur: CCH.

6.0

TEACHING METHODS
This course will be conducted in the forms of lectures, tutorials and problembased learning. Students are required to make the necessary preparation by
reading through the chapters and the related readings prior to attending lectures.
Students are encouraged to actively participate in class activities. Discussion
questions and project guidelines will be given from time to time.

7.0

ASSESSMENT
Coursework
Comprehensive Final Examination
Total

8.0

40%
60%
100%

ATTENDANCE
Attendance for lectures and tutorials is compulsory. Students who do not fulfill
the 80% attendance requirement will be barred from taking the final examination
papers as stated in the Graduation Rules. The 20% absent from lectures and
tutorials will include all reasons including medical leave (MC), death and others.

9.0

ACADEMIC MISCONDUCT
Disciplinary action will be enforced to student caught for unethical behaviour
such as plagiarisms, cheating, copying, and sit exam for other student also other
academic misconducts.