Section 77A(1) is read as follows;- Every company, limited liability partnership, trust body or co-operative society shall for each year of assessment furnish to the Director General a return in the prescribed form within seven months from the date following the close of the accounting period which constitutes the basis period for the year of assessment.
Section 77A(1A) is read as follows;-
For the purposes of this section, a company, limited liability partnership, trust body and co-operative society shall furnish to the Director General a return in the prescribed form on an electronic medium or by way of electronic transmission in accordance with section 152A.
Finance (No. 2) Bill 2023 proposes Amendment of section 77A. Section 77A of the principal Act is amended by inserting after subsection (1A) the following subsection:
“(1B) Notwithstanding subsections (1), (3) and (4), every company, limited liability partnership, trust body or cooperative society who disposes of capital asset shall, within sixty days (or such other period the Director General may allow on a written request being made to him) of the date of disposal of that asset, furnish to the Director General a return in the prescribed form on an electronic medium or by way of electronic transmission in accordance with section 152A—
- specifying the chargeable income and the amount of tax payable (if any) on that chargeable income;
- specifying in respect of the capital asset disposed of the acquisition price, the disposal price and the gain or loss on the disposal;
- specifying all information necessary to determine the acquisition price and disposal price of the asset disposed of;
- where the market value of the asset is to be taken for the purposes of this Act, containing the market value based on a valuation made by a valuer; and
- containing such particulars as may be required by the Director General.
Overview
The proposed amendment to Section 77A in the Finance (No. 2) Bill 2023 introduces a new subsection, Section 77A(1B), which imposes an additional requirement on companies, limited liability partnerships, trust bodies, or cooperative societies involved in the disposal of capital assets.
This amendment comes into operation on 1 January 2024, and it aims to enhance tax compliance and reporting related to the disposal of such assets.
Explanation:
Section 77A(1B) mandates that entities disposing of capital assets must submit a return to the Director General within sixty days of the disposal date.
The return should include essential information such as chargeable income, tax payable (if any), details of the disposed capital asset (including acquisition price, disposal price, and gain or loss on disposal), and any relevant information needed to determine the asset’s acquisition and disposal prices.
If the market value is applicable, it should be supported by a valuation from a qualified valuer.
The return must also contain any particulars required by the Director General.
Rationale:
This amendment aligns with the authorities’ efforts to improve transparency and accuracy in reporting capital asset transactions.
It allows tax authorities to have timely and comprehensive information on capital asset disposals, ensuring proper assessment of tax liabilities related to such transactions.
Tax Impact:
The tax impact of Section 77A(1B) is primarily procedural.
Entities engaging in the disposal of capital assets must adhere to the new reporting requirements.
Failure to comply within the stipulated timeframe may result in penalties or other consequences as determined by tax authorities.
Related-Article:
Finance (No.2) Bill 2023 – https://www.ccs-co.com/post/finance-no-2-bill-2023
Finance (No. 2) Bill 2023: Amendment of section 2 – https://www.ccs-co.com/post/finance-no-2-bill-2023-amendment-of-section-2
Budget 2024: Further Tax Deduction For Voluntary Carbon Market (VCM) – https://www.ccs-co.com/post/budget-2024-further-tax-deduction-for-voluntary-carbon-market-vcm
Amendment to Section 4 of the ITA 1967 – Gains from the Disposal of Capital Asset – https://www.ccs-co.com/post/amendment-to-section-4-of-the-ita-1967-gains-from-the-disposal-of-capital-asset
Amendment to Section 4B of the ITA 1967 – Extension of the Scope of the Non-Business Income – https://www.ccs-co.com/post/____a
Amendment to Section 6: Income Tax Rates on Capital Asset Disposals – https://www.ccs-co.com/post/amendment-to-section-6-income-tax-rates-on-capital-asset-disposals
New Section 15C of ITA: Tax of Disposal Gains from Foreign Companies with Malaysian Real Property – https://www.ccs-co.com/post/new-section-15c-of-ita-tax-of-disposal-gains-from-foreign-companies-with-malaysian-real-property Amendment to Section 44(7A): Expanded Business Allocation for Charitable Entities – https://www.ccs-co.com/post/amendment-to-section-44-7a-expanded-business-allocation-for-charitable-entities
Evaluating the Impact: Section 61 Amendment on Trust Taxation – https://www.ccs-co.com/post/evaluating-the-impact-section-61-amendment-on-trust-taxation
Amendment to S 77A: New Reporting Rules on Capital Asset Disposal – The Impact of Section 77A(1B) – https://www.ccs-co.com/post/amendment-to-s-77a-new-reporting-rules-on-capital-asset-disposal-the-impact-of-section-77a-1b
Amendment to S 77B: Understanding Section 77B’s Latest Facets – Impact on Amendment of Tax Return – https://www.ccs-co.com/post/amendment-to-s-77b-understanding-section-77b-s-latest-facets-impact-on-amendment-of-tax-return
Evolution of Record-Keeping: Amendments to Section 82 – https://www.ccs-co.com/post/evolution-of-record-keeping-amendments-to-section-82
Transformative Tax Compliance in the Digital Era: Insights into Malaysia’s New Sections 82B and 82C – https://www.ccs-co.com/post/transformative-tax-compliance-in-the-digital-era-insights-into-malaysia-s-new-sections-82b-and-82c
