Taxation Chapter Two

CHAPTER 2:
RESIDENCE STATUS OF
INDIVIDUALS
TAXATION ONE – TAXATION FRAMEWORK 1– 1

Introduction to Residence
Introduction to Residence Status
Status
The residence status of individuals is determined under
section 7, ITA 1967. In general, residence status is
determined by the number of days an individual is
present in Malaysia.
The concept of residence status is important in

determining the chargeability of a person on the income
earned and received by him. It is an important factor
because income received by a Malaysian resident
individual from Malaysia and outside Malaysia
(remitted) will be taxed.
1– 2
Introduction
Introduction to Residence
to Residence Status
Status
ADVANTAGES OF BEING RESIDENT

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 0-30%. As
for non-resident individuals they are subject to a flat rate of
30%, or 15%, or 10%.
3. Resident individuals are entitled to individual tax relief (section
46 to 50) such as self, wife, child and etc. Non-resident are not
entitled to such relief.
4. Resident individuals are entitled to a rebate if their chargeable
income is less than RM 35,000. Non-resident are not entitled to
the rebate.
1– 3
Introduction to Residence Status
RESIDENCE STATUS OF AN INDIVIDUAL BASED ON SECTION 7 ITA 1967

 The ascertainment of an individual’s resident status is purely a
quantitative test. It is determined by reference to the number of
days an individual person is present in Malaysia during a particular
calendar year.
 It is computed by reference to the number of days such an individual
was present in Malaysia as provided under Section 7 (1), ITA 1967.
 There are section 7(1)(a), section 7(1)(b), section 7(1)(c) and section 7
(1)(d) . Compulsory to follow the sequence starting section 7(1)(a),
section 7(1)(b), section7(1)(c) and section 7 (1)(d). If not qualifying for
all those sections, then the individual entitled as a non-resident.
 Part of a day will considered as a full day in Malaysia.
 The individual will regarded as a resident in Malaysia for the basis year
for a year of assessment under section 7(1).
1– 4
Residence: Individuals
S. 7(1)(a)
• In Malaysia for a period or periods amounting in total to

182 days or more
• The period of stay need not be consecutive
1– 5
Example:
S. 7(1)(a) - Example
1– 6
S. 7(1)(b)
• In Malaysia for a period of less than 182 days and that period is
linked by or to another period of 182 or more consecutive days
1– 7
Residence:Individuals
Residence: individuals
S.S.7(1)(b)
7(1)(b)
In Malaysia for less than 182 days in a basis year and conditions
below
If an individual cannot be resident under section 7(1)(a), then he/ she
may qualify under section 7(1)(b), which provides that:
 the basis year for a period of less than 182 days AND
 that period is linked by or to another period of 182 days or
more consecutive days for the year of assessment immediately
preceding or immediately following that particular year of
assessment.
1– 8
S. 7(1)(b)
Temporary absence means the individual is not in Malaysia but
he/she can considered in Malaysia.
Temporary absence from Malaysia of the following nature regarded as

forming part of the “period of 182 or more consecutive days for
the year of assessment immediately preceding or immediately
following that particular year of assessment”.
i) The absence is connected with the employee’s 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
Immediate family (spouse, children and parents: brothers and sisters
not included).
iii)The absence is in respect of social visits not exceeding 14 days in
the aggregate
1– 9
S.Example:
7(1)(b) - Example
1– 10
Residence:
Residence: individuals
Individuals
S.S. 7(1)(c)
7(1)(c)
• In Malaysia for a period or periods amounting in total to 90 days
or more and in 3 out of the 4 immediately preceding years, the
individual is either:
• Resident; or
• In Malaysia for a period or periods amounting in total to 90
days or more.
1– 11
Example:
S. 7(1)(c) - Example
1– 12
Residence:
individuals
S. S.
7(1)(d)
7(1)(d)
• May not be in Malaysia at in the year in question but:
• Resident for the 3 immediately preceding basis years and for the
immediately following basis year.
• Based on the above said circumstance, an individual may be found to be

a resident for a particular basis year even though he or she might not
have been in Malaysia at all in that basis year.
1– 13
Example:
S. 7(1)(d) - Example
1– 14
Individual Residence Status
• An individual is deemed to be present in Malaysia for a day if he is

present in Malaysia for part or parts of that day.
• Significance of being a tax resident in Malaysia for an individual:
• Tax rates
• Personal relief
• Taxability of employment income
• Tax rebate
• Withholding tax
• Exemption on specific income
1– 15
Let’s Do It
Question One
Mr. Aryan was in Malaysia for the following periods:
1/1/2019 – 31/10/2019 (304 days)

1/1/2020 – 28/2/2020 (59 days)
1/4/2020 – 31/5/2020 (61 days)
1/8/2020 – 30/9/2020 (61 days)
Determine the residence status of Mr. Aryan for the years of

assessment 2019 and 2020.
1– 16
Question Two
Mr. Badrul was in Malaysia for the following periods:

01/12/2019 – 31/12/2019 (31 days)
02/01/2020 – 31/03/2020 (89 days)
01/04/2020 – 30/07/2020 (121 days)
01/11/2020 – 15/12/2020 (45 days)
Determine the residence status of Mr. Badrul for years of

assessment 2019 and 2020.
1– 17
Question Three
Mr. Jeya was in Malaysia for the following periods:

1/1/2017 – 31/12/2017 - 366 days
1/1/2018– 31/1/2018 - 31 days
1/1/2019 – 31/8/2019 - 243 days
1/2/2020 – 31/5/2020 - 120 days
Determine the residence status of Mr. Jeya for years of assessment
2017 until 2020.
1– 18
Question Four
Mr. Raziq was in Malaysia for the following periods

1/1/2016 – 31/12/2016 - 365 days
1/1/2017 – 31/1/2017 - 31 days
1/1/2018 – 30/11/2018 - 334 days
1/3/2020 – 31/12/2020 - 306 days
Determine the residence status of Mr. Raziq for years of

assessment 2016 until 2020.
1– 19
Question Five
Miss Zara was an Indonesian citizen. She works for Syarikat
Kontena Nasional Berhad at Pelabuhan Tanjung Pelepas since year
2014. She was in Malaysian for the following periods:
21/6/2015 - 20/9/2015 (92 days)

7/3/2016 - 30/12/2016 (300 days)
1/1/2017 - 5/1/2017 (5 days)
6/6/2018 - 7/9/2018 (94 days)
11/5/2020 - 9/11/2020 (183 days)
Determine the residence status for years of assessment 2015 until

2020 and give reason for your answer.
1– 20
Thank You
1– 21

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CHAPTER 2:

TAXATION ONE – TAXATION FRAMEWORK 1– 1

The concept of residence status is important in

ADVANTAGES OF BEING RESIDENT

RESIDENCE STATUS OF AN INDIVIDUAL BASED ON SECTION 7 ITA 1967

• In Malaysia for a period or periods amounting in total to

Temporary absence from Malaysia of the following nature regarded as

• Based on the above said circumstance, an individual may be found to be

• An individual is deemed to be present in Malaysia for a day if he is

Mr. Aryan was in Malaysia for the following periods:

1/1/2019 – 31/10/2019 (304 days)

Determine the residence status of Mr. Aryan for the years of

Mr. Badrul was in Malaysia for the following periods:

Determine the residence status of Mr. Badrul for years of

Mr. Jeya was in Malaysia for the following periods:

Mr. Raziq was in Malaysia for the following periods

Determine the residence status of Mr. Raziq for years of

21/6/2015 - 20/9/2015 (92 days)

Determine the residence status for years of assessment 2015 until

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