2000 BUDGET ISSUE


 
3. Return of Income [Sections 77(1A), (1B) & 112(2A)]

A new subsection 77(1A) has been introduced specifically requiring every company to furnish to the DG a return in the prescribed form for each year of assessment within 6 months from the date following the close of the accounting period which constitutes the basis period for the year of assessment.

Example:
A company's financial year end 31st December 2001
Return of income due by 30th June 2002


Where there is a change in the accounting period of a company such that the accounts are not closed on any date in a particular year, resulting in the company being unable to comply with the above requirement, the new subsection 77(1B) provides for the return to be furnished by the company together with the return for the year of assessment in which the accounts are closed, within 6 months from the date of the close of the accounting period.

The company is required to specify in the return, the chargeable income and the amount of tax payable (if any) on that chargeable income for that year and any information as may be required of it by the DG.

The DG may allow a return to be furnished electronically. The electronic medium to be used and the software and hardware requirements for the electronic transmission of returns shall be as may be determined by the DG.

In line with the existing provision on penalty for failure to furnish a return, Section 112 will be amended to include failure to furnish a return as required under the new subsection 77(1A). The company in default without reasonable excuse is guilty of an offence and shall, on conviction, be liable to a fine of between RM200 to RM2,000 or to imprisonment for up to 6 months or both. In the absence of prosecution, the DG may require the company in default to pay a penalty equal to thrice the amount of tax chargeable.

A new subsection 112(2A) is also introduced to empower the court to further order a person convicted of an offence under subsection 112(1) to comply with the relevant provision of the Income Tax Act that has been contravened within 30 days or such other period as the court deems fit, from the date the order is made.

The above proposed amendments are to have effect from year of assessment 2001.


4. Deemed Assessments for Companies [Section 90(1A) & (1B)]

New subsections (1A) and (1B) have been introduced under which the DG shall be deemed to have made an assessment in respect of a company on the day the return under the new section 77(1A) is furnished. The tax and the chargeable income shall be the respective amounts as specified in the said return furnished by the company. The return shall be deemed to be a notice of assessment and which shall be deemed to have been served on the company on the day on which the DG is deemed to have made the assessment.

The proposed amendment is to be effective from year of assessment 2001.


5. Payment of Balance of Tax by Companies [New Section 103A]

A new Section 103A has been introduced to deal specifically with payment of tax by companies. It is proposed that a company with a balance of tax payable for a year of assessment (after deducting the monthly instalments paid under the new Section 107C) must settle such balance on the due date which is defined as "the last day of the sixth month from the date following the close of the accounting period". This date coincides with the last day for submission of a company's return of income which is a deemed assessment.

Where any tax is not paid by the due date, a penalty of 10% is imposed on the unpaid tax and if any balance of the tax so increased by the penalty remains unpaid upon expiration of 60 days from the due date, an additional penalty of 5% is imposed on the balance unpaid [Section 103A(4) & (5)].

Assessments and additional, advance and composite assessments may continue to be issued to companies. The present due date of payment and penalty for late payment provisions continue to apply.

The DG may continue in his discretion and for any good cause shown to remit penalties wholly or partially.

These proposals are to be effective from year of assessment 2001.


6. Power of Access to Buildings and Documents, etc [Section 80(1A)]

Where the DG exercises his above power under Section 80 of the Income Tax Act, the occupiers of such lands, buildings and places are required to provide him or his authorised officer with all reasonable facilities and assistance under the new subsection 80(1A).

The proposed amendment is to be effective from year of assessment 2001.


7. Obstruction of Officers [Section 116]

Any person who fails to provide reasonable facilities or assistance or both to the DG or an authorised officer in the exercise of his power under the Income Tax Act shall be guilty of an offence punishable under Section 116. The person, on conviction, shall be liable to a fine ranging from RM1,000 to RM10,000 or to imprisonment for a term not exceeding one year or to both.

The above amendment shall be effective when the Bill becomes law.


8. Offences [Section 120]

Currently, a person who fails to comply with the various offences under Section 120 would be guilty of an offence and shall on conviction be liable to a fine ranging from RM200 to RM2,000 or to imprisonment for a term not exceeding 6 months or to both. It is proposed that the offences be expanded to include failure to furnish an estimate of tax payable or providing an estimate lower than the revised estimate of the immediately preceding year of assessment.

It is also proposed that any person who has been convicted of any offence as specified under Section 120, may be ordered by the court to comply with the relevant provisions of the Income Tax Act within 30 days or such period as determined by the court. This is in addition to the fine or imprisonment or to both mentioned in the preceding paragraph.

This amendment shall have effect upon the coming into operation of this Bill.



9. Wilful Evasion [Section 114(1A)]

The above section of the Bill seeks to expand the scope of offences falling under the existing Section 114 of the Income Tax Act. It is proposed that any person who assists or advises a taxpayer in the preparation of any return resulting in the understatement of tax liability, unless he satisfies the court that the assistance or advice was given with reasonable care, is guilty of an offence.

Upon conviction, the offender is liable to a fine ranging from RM2,000 to RM20,000 or to imprisonment for a term not exceeding 3 years or to both.

The proposal is effective when the Bill becomes law.



10. Income Tax (Amendment) Act 1999

The legislation for the change of basis of assessment from the preceding year to the current year basis and to introduce provisions for the waiver of tax on 1999 income as announced in the 1999 Budget was gazetted on 8th July, 1999 within the Income Tax (Amendment) Act 1999.




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