top of page
  • Writer's pictureCCS

Redefinition of 'Plant' for the Purpose of Capital Allowances

Updated: Jul 19, 2023


Plant is currently defined in Paragraph 70A, Schedule 3 of the Income Tax Act 1967 as follows:


An apparatus used by a person for carrying on his business but does not include a building, an intangible asset, or any asset used and that functions as a place within which a business is carried on.”


Finance Act 2023

However, Paragraph 70A, Schedule 3 of the Income Tax Act 1967 is amended by Finance Act 2023 (Act 845), s. 17(b), effective for the year of assessment 2023 and subsequent years of assessment, by deleting “, an intangible asset” after “a building”.

Therefore, plant is now redefined as follows:


An apparatus used by a person for carrying on his business but does not include a building, or any asset used and that functions as a place within which a business is carried on.”


The Minister is also empowered (via PU Order) to prescribe any other assets as assets excluded from the definition of “plant”.


You might be wondering now is there any asset that the Government plans to specifically exclude as ‘Plant’ by way of PU Order?

The Inland Revenue Board of Malaysia (LHDNM) has completed a study on intangible assets and has submitted it to the Ministry of Finance (MOF) on 2nd June 2023 for further action. The latest discussion between MOF and LHDNM was held on 4th July 2023.


Chartered Tax Institute Of Malaysia (CTIM) proposed to LHDNM that any asset to be gazetted via the PU Order should have a prospective effective date.


For example, any basis period which begins on or after the date of the coming into operation of the PU Order.


LHDNM takes note of it. However, the implementation is subject to policy decisions.


Conclusion The removal of the exclusion of intangible assets from the plant definition in the Income Tax Act 1967 would simplify the taxation of cases where courts have ruled that databases can be considered qualifying plant.


Malaysia – Landmark Tax Decision By Court Of Appeal Confirming That Databases Constitute “Plant” And Qualify For Capital Allowances.

176.1 KPHDN v CBB (Databases Qualified for CA)
.pdf
Download PDF • 337KB

However, there is a possibility that the range of assets eligible for classification as "plant" may become narrower because the Minister now has the power to specify which assets should be excluded from the plant definition.


Further studies regarding the treatment of capital allowance on intangible assets are still under review and study by the Ministry of Finance (MOF).


We will update you accordingly.



Reference:



178.1 Kompilasi Soalan Jawapan SPK 7 Mar 2023 - Budget 2023
.pdf
Download PDF • 564KB

178.2 Joint Memorandum on Issues from Budget 2023 Speech
.pdf
Download PDF • 3.61MB

178
.3 Kompilasi Soalan Jawapan SPK 7 Mar 2023 - Tadbir Urus Korporat Cukai perspektif HASi
Download 3 KOMPILASI SOALAN JAWAPAN SPK 7 MAR 2023 - TADBIR URUS KORPORAT CUKAI PERSPEKTIF HASI • 358KB

178
.4 Kompilasi Soalan Jawapan SPK 8 Mar 2023 - Tadbir Urus Korporat Cukai perspektif HASi
Download 4 KOMPILASI SOALAN JAWAPAN SPK 8 MAR 2023 - TADBIR URUS KORPORAT CUKAI PERSPEKTIF HASI • 524KB

Disclaimer:

The articles, templates, and other materials on our website are provided only for your reference.


While we strive to ensure that the information presented is current and accurate, we cannot guarantee the completeness, reliability, suitability, or availability of the website or its content, including any related graphics. Consequently, any reliance on this information is entirely at your own risk.


If you intend to use the content of our videos and publications as a reference, we recommend that you take the following steps:

  1. Verify that the information provided is current, accurate, and complete.

  2. Seek additional professional opinions, as the scope and extent of each issue, may be unique.

免责声明:

我们网站上的文章、模板和其他材料只供参考。


虽然我们努力确保所提供的信息是最新和准确的,但我们不能保证网站或其内容,包括任何相关图形的完整性、可靠性、适用性或可用性。因此,您需要承担使用这些信息所带来的风险。


如果你打算使用我们的视频和出版物的内容作为参考,我们建议你采取以下步骤:

  1. 核实所提供的信息是最新的、准确的和完整的。

  2. 寻求额外的专业意见,因为每个问题的范围和程度,可能是独特的。

Keep in touch with us so that you can receive timely updates

请与我们保持联系,以获得即时更新。

1. Website ✍️ https://www.ccs-co.com/ 2. Telegram ✍️ http://bit.ly/YourAuditor 3. Facebook ✍



448 views0 comments
bottom of page