Currently, the receipt of employment income, interest, discount, rent, royalty etc which becomes known to the Director General (DG) more than 11 years after the end of the relevant year to which it relates would be treated as gross income of the 11th year prior to the year of discovery. As a consequential amendment to the time frame for the raising of assessments, it is proposed that the year to which the DG can relate the gross income be reduced to 5 years when the income first becomes known to him more than 5 years after the end of the year concerned. Similarly, where an employee receives a lump sum by way of gratuity or deferred pay upon cessation of employment, that payment is spread back evenly over his period of employment up to a maximum of 10 years. It is proposed that the maximum number of years of spreading back be reduced to 6 years. The above amendments will have effect from January 1, 1999.       Currently, the Director General (DG) may under the Income Tax Act 1967, raise an assessment or additional assessment within 12 years after the end of the year of assessment concerned, where it appears to the DG that no or no sufficient assessment has been made. It is proposed in the Finance Bill, that the time limit to raise an assessment or additional assessment be reduced to 6 years after the end of the year of assessment concerned. The reduced time frame is also applicable to the raising of an additional assessment on an approved operational headquarters (OHQ) company following the withdrawal of its approved OHQ status. The proposed amendments are to have effect from January 1, 1999.       Pursuant to Section 83(5) of the Income Tax Act, 1967, an employer is required to withhold any money due to departing employees until 90 days after the date of receipt by the Director General (DG) of the notice given by the employer under Sections 83(3) and (4), unless the DG permits otherwise. The employer is required to pay the said amount in full or a portion thereof to the DG towards payment of the employee's tax if so directed by the DG. It is proposed that from the date the Finance Bill when enacted comes into force, non-compliance of the above provision will be an offence punishable under Section 120 of the Income Tax Act, 1967 which entails liability to a fine of not less than RM 200 and not more than RM2,000 or to imprisonment for a term not exceeding 6 months or to both upon conviction.

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