Thursday, 15 October 2015

Concept of exemptions


Do you know the expressions “not liable to tax” and “exempt from tax” are not synonymous? The first refers to receipt that does not have the quality of income and thus not assessable, for example a capital receipt. The second expression refers to income that can have the character of income but is specifically excluded from assessable income.

The case of Australian Mutual Provident Fund Society v I.R. Commrs (1961) 3 All E.R. 1,051 referred to these two categories. In deciding in favour of the Commissioners, Lord Devlin at page 1,057 -1,058 said:

“What the Commissioner contends, and what the stipendiary magistrate and the Supreme Court have held, is that the words ‘exempt from taxation’ do not cover income which is not within the reach of the New Zealand tax laws. The point is succinctly put by the stipendiary magistrate when he says: ‘A company cannot be exempt, unless, but for the exemption, it would have been liable.’

The concept of exemptions and information on exempted income are discussed in the Malaysian Tax Reporter and the Malaysian Master Tax Guide Manual. If you wish to out find more, please contact 1800-181-151(Toll Free line ) or email us at mktg@cch.com.my.

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