SCHEDULE 6 - Exemptions From Tax (INCOME TAX ACT 1967

INCOME TAX ACT 1967 (ACT 53)

SCHEDULE 6 - Exemptions From Tax

PART I
INCOME WHICH IS EXEMPT

1. The official emoluments of a Ruler or Ruling Chief as defined in section 76.

1A. The official emoluments of the Consort of a Ruler of a State having the title of Raja Perempuan, Sultanah, Tengku Ampuan, Raja Permaisuri, Tengku Permaisuri, or Permaisuri:

[Subs. Act 591: s.11]

Provided that where there are two or more consorts of a Ruler of a State having the above titles, the exemption shall be given only to the one recognized to be the official Consort.

[Ins. Act 309: s.19]

1B. The official income of a former Ruler or Ruling Chief as defined in section 76 (excluding a former Governor or Yang di-Pertua Negara of a State) or a Consort of a former Ruler of a State previously having the title of Raja Perempuan, Sultanah,Tengku Ampuan, Raja Permaisuri, Tengku Permaisuri, or Permaisuri:

[Ins. Act A451: s.17; Am. Act 309: s.19;
Subs. Act 591: s.11]

Provided that where a person is paid more than one pension, this paragraph shall apply to the higher or the highest pension paid, as the case may be.

2. The official emoluments received by any person in respect of the exercise by him of the functions of a State Authority in a temporary or acting capacity.

3. Any income which is exempt by virtue of the Diplomatic Privileges (Vienna Convention) Act 1966 [Act 24 of 1966], or by virtue of an order made under Part III of the Diplomatic and Consular Privileges Ordinance 1957 [Ord. 53 of 1957] or under the Foreign Representatives (Privileges and Immunities) Act 1967 [Act 541].

4. The official emoluments of consular officers and consular employees (as defined in the Diplomatic and Consular Privileges Ordinance 1957) in the service of a country to which Part IV of that Ordinance applies, to the extent provided by any consular convention between Malaysia and that country or, in the absence of a consular convention, to the extent that reciprocal treatment is accorded by that country to persons exercising corresponding functions in the service of Malaysia.

5. The income of the Government or a State Government.

6. The income of a local authority.

7. Wound and disability pensions granted to persons in respect of-

(a)

service in the armed forces of Malaysia or a Commonwealth country;

(b)

service on and after Merdeka Day in the armed forces;

(c)

service before Merdeka Day in the Malay Regiment, the Federation Regiment, the Johore Military Forces, any volunteer force or local defence corps within the meaning of the Volunteer Forces and Local Defence Corps (Demobilisation) Ordinance 1946 [

Ord. 16 of 1946

], or any force raised or established by or under the Malayan Auxiliary Air Force Ordinance 1950 [

Ord. 1 of 1950

], the Volunteer Force Ordinance 1951 [

Ord. 5 of 1951

], the Malayan Royal Naval Volunteer Reserve Ordinance 1952 [

Ord. 3 of 1952

], or the Military Forces Ordinance 1952 [

Ord. 47 of 1952

]

; or

(d)

service in the Sarawak Volunteer Force or the Sarawak Rangers,

and pensions granted to wives or dependant relatives of members of any of those forces or local defence corps killed on war service.

8. Disability pensions granted in respect of war service injuries to members of civil defence organisations in any territory comprised in Malaysia on 1st January, 1968.

9. Sums payable out of moneys provided by Parliament by way of bounty to members of any of the following reserve forces, that is to say-

(a)

Royal Malaysian Naval Volunteer Reserve;

(b)

Malaysian Territorial Army;

(c)

Royal Malaysian Air Force Volunteer Reserve.

10. The emoluments of any person who is a member of the armed forces of a commonwealth country or in the service of the government of a Commonwealth country, if-

(a)

he is in Malaysia for the purpose of performing his duties as a member of those forces or as a person in that service, as the case may be; and

(b)

those emoluments are payable from the public funds of that country and subject to foreign tax of that country

11. (Deleted by Act 328: s.19).

12. (1) The income of any co-operative society-

(a)

in respect of a period of five years commencing from the date of registration of such co-operative society; and

(b)

thereafter where the members' funds of such co-operative society as at the first day of the basis period for the year of assessment is less than seven hundred and fifty thousand ringgit.

[Am. Act 557: s.23]

(2) For the purposes of this paragraph "members' funds" means the aggregate of the paid up in capital (in respect of shares and subscriptions and not including any amount in respect of bonus shares to the extent they were issued out of capital reserve created by revaluation of fixed assets) statutory reserve fund reserve (other than any capital reserve which was created by revaluation of fixed assets and provisions for depreciation, renewals or replacements and diminution in value of assets), balance of share premium account (not including any amount credited therein at the instance of issuing bonus shares at premium out of capital reserve created by revaluation of fixed assets), and balance of profit and loss appropriation account.

[Subs. Act A380: s.11; Am. Act A429: s.12]

12A. Any dividend paid, credited or distributed to any member by a co-operative society.

[Ins. Act A380: s.11]

13. The income, other than dividend income, of-

(a)

an institution or organisation approved for the purposes of section 44(6) so long as the approval remains in force; or

(b)

a religious institution or organisation which is not operated or conducted primarily for profit and which is established in Malaysia exclusively for the purposes of religious worship or the advancement of religion.

[Subs. Act 328: s.19; Subs. Act 608: s.26]

14. Sums received by way of death gratuities or as consolidated compensation for death or injuries.

15. (1) A payment (other than a payment by a controlled company to a director of the company who is not a whole-time service director) made by an employer to an employee of his as compensation for loss of employment or in consideration of any covenant entered into by the employee restricting his right to take up other employment of the same or similar kind-

(a)

if the Director General is satisfied that the payment is made on account of loss of employment due to ill-health; or

(b)

in the case of a payment made in connection with a period of employment with the same employer or with companies in the same group, in respect of so much of the payments as does not exceed an amount ascertained by multiplying the sum of four thousand ringgit by the number of completed years of service with that employer or those companies.

[Am. Act 328: s.19]

(2) For the purposes of this paragraph the Director General may direct that a period of employment in a business with different employers where the control any management of that business substantially remains with the same person or persons or where the employment is with different employers whose businesses are conducted by or through a central agency shall be treated as a period employment with the same employer.

16. Pensions granted to any person under any written law relating to widows and orphans' pensions (or under any approved scheme within the meaning of any such law) and pensions paid under an approved scheme to or for the benefit of the widow, child or children of a deceased contributor to the scheme.

17. The income of a trade union registered under any written law relating to trade unions, in so far as the income does not consist of the gains or profits from a business carried on by the union:

[Am. Act 328: s.19]

Provided that the exemption under this paragraph shall not apply to income consisting of a dividend.

[Ins. Act 328: s.19]

18. Any income for the basis period for a year of assessment derived by a person who was not resident for the basis year for that year of assessment from trading in Malaysia through consignees in any commodity of the following kind, that is to say, rubber, copra, pepper, tin, tin ore, gambier, sago flour or cloves being a commodity produced outside Malaysia.

19. Interest paid or credited to any person in respect of any savings certificates issued by the Government.

20. The income of any approved scheme.

21. Subject to paragraph 22, the income of individual from an employment exercised by him in Malaysia-

(a)

for a period or periods which together do not exceed sixty days in the basis year for a year of assessment; or

(b)

for a continuous period (not exceeding sixty days) which overlaps the basis years for two successive years of assessment); or

(c)

for a continuous period (not exceeding sixty days) which overlaps the basis years for two successive years of assessment and for a period or periods which together with the continuous period do not exceed sixty days,

if he is not a resident for that basis year or for each of those basis years, as the case may be.

[Subs. Act 451: s.28]

22. Paragraph 21 shall not apply to the income of an individual from an employment-

(a)

if that individual has income derived from Malaysia from that employment for a period or periods amounting in all to more than sixty days in the basis year referred to in that paragraph or in the period consisting of the basis years so referred to; or

(b)

if the income is income from an employment exercised by a public entertainer (that is to say, any professional entertainer, artiste, athlete or other individual who entertains whether in public or private for profit on stage, radio or television, at a stadium or sports ground, or otherwise) and no part of that income is paid out of the public funds of the government of a country outside Malaysia.

23. Education allowances paid to designated officers under the Overseas Service (North Borneo) Agreement 1961, or the Overseas Service (Sarawak) Agreement 1961.

24. Any sums paid by way or in the nature of a scholarship or other similar grant or allowance to an individual, whether or not in connection with an employment of that individual.

25. (1) Sums received by way of gratuity on retirement from an employment-

(a)

if the Director General is satisfied that the retirement was due to ill-health; or

(b)

if the retirement takes place on or after reaching of age of 55, or on reaching the compulsory age of retirement from employment specified under any written law and in either case from an employment which has lasted ten years with the same employer or with companies in the same group.

[Am. Act A471: s.14]

(2) For the purposes of this paragraph the Director General may direct that a period of employment in a business with different employers where the control and management of that business substantially remains with the same person or persons or where the employment is with different employers whose businesses are conducted by or through a central agency shall be treated as a period of employment with the same employer.

25A. Sums received by way of gratuity or by way of payment in lieu of leave paid out of public funds on retirement from an employment under any written law.

[Ins. Act A429: s.12; Am. Act 497: s.10;
Del. Act A471: s.14]

25B. Sums received by way of gratuity paid out of public funds on termination of a contract of employment (less the employer's contribution to the Employees Provident Fund, if any, and interest thereon)

[Ins. Act 241: s.18]

26. The income of-

(a)

any national amateur sports organisation certified by the President and Secretary of the Olympic Council of Malaysia to be affiliated to that Council during the basis year for any year of assessment; and

(b)

any State amateur sports organisation certified by the President (or corresponding officer) and Secretary of an organisation to which paragraph

(a)

applies to be affiliated to that organisation during the basis year for any year of assessment,

being in each case income for that year of assessment:

[Am. Act 328: s.19]

Provided that the exemption under this paragraph shall not apply to income consisting of a dividend.

[Ins. Act 328: s.19]

27. Income of any person not resident in Malaysia for the basis year for a year of assessment in respect of interest derived from Malaysia on an approved loan.

28. Without prejudice to the provisions of section 130, income arising from sources outside Malaysia and received in Malaysia by any person who is not resident in Malaysia.

[Ins. Act A226: s.35]

29. Notwithstanding the provisions of subsection 44 (6), the aggregate income of any person remaining after the reductions made pursuant to paragraph 44(1)(a), (b) and (c) to the extent of the amount of any contribution made by him during the basis period for a year of assessment to the National Monument Restoration Fund established for the purpose of restoring the National Monument in Kuala Lumpur.

30. Pensions derived from Malaysia and paid to a person on reaching the age of 55, or on reaching the compulsory age of retirement from employment specified under any written law or if the Director General is satisfied that the retirement was due to ill-health—

[Am. Act A471: s.14; Am. Act 591: s.11]

(a)

in respect of services rendered in exercising a former employment in Malaysia; and

[Am. Act 451: s.28]

(b)

where the pension is paid other than under any written law, from a pension or provident fund, scheme or society which is an approved scheme.

[Subs. Act 451: s.28]

Provided that where a person is paid more than one pension, this paragraph shall apply to the higher or highest pension paid, as the case may be.

[Ins. Act A380: s.11; Ins. Act 309: s.19]

30A. Gratuity or pension derived from Malaysia and paid to a person resident for the basis year for a year of assessment under any written law applicable to the President or Deputy President of the Senate, Speaker or Deputy Speaker of the House of Representatives, Speaker of the State Legislative Assembly, member of the Senate, member of the House of Representatives or member of the State Legislative Assembly:

Provided that-

(a)

the exemption in respect of pension shall apply only when the person has attained the age of 55 or if the Director General is satisfied that such person ceased to be President, Deputy President, Speaker, Deputy Speaker or member due to ill-health; and

(b)

where such person is eligible for exemption in respect of pension under this paragraph and also under paragraph 30 of this Schedule, exemption shall be applicable only to the higher or the highest pension payable, as the case may be.

[Ins. Act 323: s.24]

31. (Ins. Act A380: s.11; Deleted by Act 323: s.24).

32. Income of six thousand ringgit for the basis year for a year of assessment derived by an individual resident in Malaysia for that basis year from royalty or payment in respect of the publication of, or the use of or the right to use, any artistic work (other than any original painting), and from royalty in respect of recording discs or tapes.

[Ins. Act A429: s.12; Am. Act 309: s.19;
Am. Act 476: s.19; Am. Act 513: s.28]

32A. Income of twelve thousand ringgit for the basis year for a year of assessment, derived by an individual resident in Malaysia, being payment received in that year in respect of any translation of books or literary work at the specific request of any agency of the Ministry of Education or the Attorney General's Chambers:

[Am. Act 476: s.19; Am. Act 513: s.28;
Act 600:15]

Provided that the exemption shall not apply where the payment arises to the individual as part of his emoluments in the exercise of his official duties.

[Ins. Act 309: s.19]

32B. Income of twenty thousand ringgit for the basis year for a year of assessment derived by an individual resident in Malaysia for that basis year from royalty (other than royalty in respect of recording discs or tapes) or payment in respect of the publication of, or the use of or the right to use, any literary work or any original painting.

[Ins. Act 476: s.19; Am. Act 513: s.28]

32C. Income of an individual resident in Malaysia in that basis year in respect of his performances in cultural performances approved by the Minister:

Provided that the exemption shall not apply where the payment arises to the individual as part of his emoluments in the exercise of his official duties.

[Ins Act 557: s.23]

32D. Income of twenty thousand ringgit for the basis year for a year of assessment, derived by an individual resident in Malaysia, being payment in respect of any musical composition:

[Ins. Act 600:s.15]

Provided that the exemption shall not apply where the payment arises to the individual as part of his emoluments in the exercise of his official duties.

[Ins. Act 600:s.15]

33. Income of any person not resident in Malaysia for the basis year for a year of assessment, in respect of interest derived from Malaysia (other than such interest accruing to a place of business in Malaysia of such person) and paid or credited by any person (whether the same person or not) carrying on the business of banking or finance in Malaysia and licensed under the Banking and Financial Institutions Act 1989:

[Ins. Act A451: s.17; Am. Act 264: s.12;
Am. Act 451: s.28; Act 544: s.16]

Provided that the exemption under this paragraph shall not apply to interest paid or credited on funds required for the purposes of maintaining net working funds as prescribed by the Central Bank of Malaysia in pursuance of section 37 of the Banking and Financial Institutions Act 1989.

[Ins. Act 264: s.12, Am. Act 451: s.28]

34. (1) Income of an individual derived from exercising an employment on board a Malaysian ship.

(2) For the purposes of subparagraph (1), "Malaysian ship" has the same meaning as in subsection 54A(6).

[Ins Act 241: s.18; Subs. Act 309: s.19;
Subs. Act 591: s.11]

35. Interest paid or credited to any individual, unit trust and listed closed-end fund—

[Subs. Act 476: s.19; Act 544:s.16]

(a)

in respect of securities or bonds issued by the Government; or

(b)

in respect of bonds, other than convertible loan stock, issued by public companies listed on the Kuala Lumpur Stock Exchange; or

(c)

in respect of bonds, other than convertible loan stock, issued by a company rated by Rating Agency Malaysia Berhad

or Malaysian Rating Corporation Berhad

; or

[Am. Act 497: s.10; Am. Act 557: s.23]

(d)

in respect of Bon Simpanan Malaysia issued by the Central Bank of Malaysia.

[Ins. Act 513: s.28]

35A. Income of a unit trust in respect of interest derived from Malaysia and paid or credited by any bank or financial institution licensed under the Banking and Financial Institutions Act 1989 or the Islamic Banking Act 1983.

[Ins. Act 591: s.11]

36. Sums received by way of annuities granted under annuity contracts issued by Malaysian life insurers.

[Am. Act 531:s.21]

For the purposes of this paragraph "Malaysian life insurers" means life insurers and takaful operators whose ownership or membership are held in majority by Malaysian citizens.

[Ins Act 544:s.16]

PART II
[Deleted by Act 328: s.19]

____________________________________________
NOTES
Special provision relating to paragraph 13 .See [Act 608: s.27]

Related reading:
[Act A226: s.35; Act A380: s.11; Act A429: s.12; Act A451: s.17; Act 241: s.18; Act 264: s.12; Act 276, Act 323: s.24; Act 451: s.28; Act 476: s.19; Act 497: s.10, Act 513: s.28, Act 531:s.21, Act : s.16, Act 557: s.23; Act 591: s.11; Act 608: s.27]