Dialogue with Inland Revenue Board

March 17, 2000TEC/005/03/2000

DIALOGUE WITH INLAND REVENUE BOARD

YEAR 2000 PROGRAMME FOR

SUBMISSION OF RETURN FORMS

1. A dialogue between the Inland Revenue Board and representatives of MACPA, MIA, MIT, MAICSA and MATA was held on February 23, 2000 to discuss the programme for submission of return forms for year of assessment (YA) 2000 on the preceeding year and current year bases. The meeting also discussed the filing of Form CP 204 (estimate of tax payable) by companies for YA 2001 under the self assessment system and a number of related administrative matters.

2.FILING PROGRAMME FOR YA 2000

(PRECEDING YEAR BASIS)

2.1The filing programme for YA 2000 (preceding year basis) is essentially the same as that for 1999 except that more flexibility is granted for extension of time in respect company (C) cases with accounting years ending after September 30, 2000.

A copy of the filing programme issued by the IRB is attached as per Annexure I for members’ reference.

2.2Members are reminded that even though tax on income arising in 1999 is waived, the return forms for YA 2000 (preceding year basis) must be completed and submitted to the IRB according to the filing programme, failing which penalties are exigible. The return forms must be accompanied by audited/certified accounts, tax computations and all the required details as stipulated in the return form. In the case of companies, capital allowances are allowed in arriving at the statutory income of the company.

2.3Extension of Time for Filing Return Forms

2.3.1Applications for extension of time to file return forms after May 31, 2000 must be submitted on or before April 15, 2000.

2.3.2No extension of time beyond May 31, 2000 will be allowed for the following cases:

(a)All partnership (D) cases

(b)All salary (SG) cases

(c)All cases [including companies (C), individuals with business/non-employment income (OG), clubs and trade associations (F), co-operatives (CS), trusts (T) and other bodies of persons] where the accounting year ends on or before September 30, 1999.

2.3.3Except for the cases mentioned before, extension of time for submission of returns will be allowed as follows:

(a)For company (C) cases, extension of time will be allowed up to August 30, 2000 but the programme for submission should be such that 70% of the returns will be submitted by the end of July 2000 and the remaining 30% in August 2000.

(b)For all other cases (other than company cases), extension of time will be allowed up to July 31, 2000 but the programme for submission should be such that 50% of the returns will be submitted by end of June 2000 and extension of time up to July 2000 would be considered for the balance of the cases.

(c)No extension of time will be allowed beyond the above filing deadlines except in the following circumstances :

• In company (C) cases, where certain companies are required by law to have their accounts approved by the respective authorities.
• In all other cases, where the filing date could not be met due to genuine extenuating circumstances.

Separate applications for extension of time must be made for such cases and each case will be considered on its own merits.

(d)Extension of time to file Form E (CP 8 – Employer) will be allowed until April 30, 2000.

2.3.4The following conditions must be observed in applying for extension of time beyond May 31, 2000:

(a)One programme (master list) listing the cases and the dates of filing must be submitted in triplicate for approval. (Refer to paragraph 2.5 below for submission in diskette form to the IRB Branches in the Klang Valley.)

The programme should contain the names of the taxpayers, their tax file numbers and accounting year ends. Where it is a repayment case, loss case, exempt company or a case where tax has been deducted under section 107A, this fact should also be indicated.

The programme must also include a statement that all cases for which extension of time is applied:

(i)have financial/accounting years ending after September 30, 1999;

(ii)are under the instalment scheme (section 107B) for YA 2000 (current year basis) or are repayment/loss cases, exempt companies or cases where tax is deducted under section 107A.

(b)Separate lists, in numerical order of the tax file numbers, should be prepared for each category of cases (i.e. C, D, SG, OG, etc). These lists are to be sent to the respective IRB branches.

(c)Separate application for extension of time is not required except for cases where extension of time beyond the stipulated filing deadlines is requested, as set out in paragraph 2.3.3(c) above.

2.3.5No extension of time will be granted beyond May 31, 2000 where a notice of instalment payments (section 107B) has not been issued under the current year basis of assessment (STTS) or where tax has not been deducted under section 107A.

2.3.6Any return form to be filed within the extended time must comply with the following requirements:

(a)The return form must be complete in that it is supported by audited / certified accounts, tax computation and all the required details as stipulated in the return form. In particular, attention should be given to the additional information required in Form C. (Refer to paragraph 2.4 below on clarifications provided by the IRB on Form C via a circular letter issued to the professional bodies in February 2000.)

(b)There must be an indication on the front page of the return form (above the taxpayer’s address column) that extension of time has been approved, as follows:

“Lanjutan masa dibenarkan sehingga ……..”

2.4Form C

The IRB has clarified the following matters pertaining to Form C :

(a)Part A, item 4 – Business Code

This refers to the code allocated by the Registrar of Companies based on a company’s principal business activity. The space is to be left blank if the code is unknown. However, the Company Registration Number in item 5 must be filled.

(b)Part B, item 1 – Adjusted Income/Loss

The total adjusted income/loss for the basis period is to be stated in Form C. Where a company has more than one business, components of the adjusted income/loss arising from each business are to be shown in separated sheets to be attached to Form C.

(c)Part O – The following amendments are made:

R6“Amount due to Directors” is changed to “Amount owing by Directors”

R6A“Amount due to Related Company” is changed to “Amount owing by Related Company”

R11“Amount owing from Directors” is changed to “Amount due to Directors”

R11A“Amount owing from Related Company” is changed to “Amount due to Related Company”

R16“Other Reserve under Provisions” – this space need not be filled.

(d)Part G – Statement of Dividends Paid or Credited or Distributed during the Basis Year

Where there is a change in the amount of dividends paid, credited or distributed after the submission of the return form, a revised statement is required to be submitted to the DG.

(e)Part J to Part P may be submitted in computer generated form provided the format and content are the same as the original return form.

The IRB also indicated that taxpayers may be allowed to submit the whole Form C that is computer generated in future years.

(f)Where there is a change in company name, the new name should be indicated above the old name on the 1st page of Form C.

2.5Application for Extension of Time

to IRB Branches in Klang Valley

2.5.1The IRB has also clarified that the same procedure as for 1999 is to be followed for applications for extension of time to the IRB branches in the Klang Valley (i.e. Companies, Jalan Duta, Non-Resident, Kampung Attap, Cheras, Wangsa Maju, Petaling Jaya, Shah Alam and Klang Branches):

(a)The conditions set out in paragraphs 2.3.3 and 2.3.4 above are to be adhered to and the submission should include the following:

• one hard copy of the programme (master list);
• one copy of the programme in diskette form (1.44MB), in accordance with the data entry format prescribed by the IRB.

(b) The list of cases submitted (in hard copy and diskette form) should be arranged in numerical order of the tax file numbers and separated into the following categories:

i)SGv)CS

ii)OGvi)T

iii)Dvii)F

iv)Cviii)J

2.5.2Members are reminded that the following specifications should be observed in submitting applications for extension of time in diskette form:

(i)Application for extension of time in respect of IV cases (temporary file) should not be included in the diskette form.

(ii)No headings or notes such as “change of company name” should be included.

(iii)The names of the taxpayers/companies must be the same as that printed on the return form. Any change to the name of a taxpayer/company should be made when submitting the return form, not when applying for extension of time. However, the change could be indicated in the hard copy of the application (master list).

(iv)The alphabets such as OG, C, T, etc. signifying the category of tax files, should not be keyed-in. Only the tax file reference numbers should be entered.

(v)Where the application for extension of time involves 20 or more cases, a hard copy and diskette form of the application should be submitted together to the relevant IRB branch.

(vi)Where the application for extension of time involves less than 20 cases, it is not necessary to submit the application in diskette form. Only the hard copy of the application is required.

(vii)Applications in diskette form must use the data format prescribed by the IRB. Applications using other formats will not be accepted.

(viii)Application for extension of time in diskette form only applies to cases submitted to the IRB branches in the Klang Valley.

3.FILING PROGRAMME FOR YA 2000

(CURRENT YEAR BASIS) FOR COMPANIES

3.1Return Forms for Companies

3.1.1Commencing from YA 2000 (current year basis – STTS), return forms for companies (Form C) will be issued in quarterly batches as follows:

Date of issue of Form C / Accounting Year End
April 1, 2000 / 31/1 / 28//2 / 31/3
July 1, 2000 / 30/4 / 31/5 / 30/6
October 1, 2000 / 31/7 / 31/8 / 30/9
January 1, 2001 / 31/10 / 30/11 / 31/12

3.1.2The return forms (Form C) are required to be filed within 8 months from the date following the close of the accounting period. No extension of time beyond this filing deadline will be allowed.

Any return forms submitted after the time period allowed will be deemed as late submission and appropriate penalty will be imposed.

4.PAYMENT OF TAX FOR YEAR 2000

4.1The scheme of instalment payments under STTS and the self assessment system (STS) pursuant to section 107B and section 107C are as follows:

(a)Scheme of Instalment Payments under STTS

(i)For companies with financial years ending on a day other than December 31, the instalment payments will commence in January 2000.

For companies with financial years ending on December 31, the instalment payments will commence in February 2000.

(ii)Payment of tax under STTS is by 12 monthly instalments. The notice of instalment payments, CP 200 (in place of Form CP 38SA) will be issued together with 12 instalment payment slips, CP 203.

(iii)Application for a variation of the instalment payments must be made by April 15, 2000. A notice of variation of instalment payments, CP 202 will then be issued.

(iv)New taxpayers assessable to tax for YA 2000 (STTS) are required to apply to the Assessment Branch for registration of an income tax file if they do not have a tax file yet. They are given the following options for payment of tax:

• To inform the Collection Branch of the estimated tax payable for the issuance of a notice of instalment payments, CP 200; or
• If the taxpayer does not opt for the instalment scheme under section 107B, the taxpayer is required to pay the tax within 30 days after the notice of assessment has been issued. Penalty will be imposed if there is a delay in payment and no instalment payments will be considered.

(v)OG cases are required to make 6 bimonthly instalment payments, commencing from March 2000 to January 2001.

The IRB has clarified that other cases in respect of clubs, trade associations, co-operatives, trusts and other bodies of persons are subject to the same instalment scheme as for OG case.

(b)Scheme of Instalment Payments under STS

(Company Cases)

(i)The scheme of instalment payments under STS is based on the estimate of tax payable submitted in the prescribed form, CP 204. For YA 2001, the estimate of tax payable shall not be less than the amount of tax payable for YA 1999.

(ii)The instalment payments will commence from the second month of the basis period. The number of instalment payments is determined according to the number of month in the basis period for a year of assessment. A notice of instalment payments, CP 205 will be issued.

(iii)Where there is overlapping of tax payments under STTS and STS in the year 2000, the period for payment of tax for YA 2000 will be extended to the year 2001, determined as follows:

(No. of months with overlapping tax payments x 2) + 2 months

Any taxpayer who is not satisfied with the extension of time granted may submit an appeal to the Collection Branch. Further extension of time may be considered on the merits of each case.

A notice of instalment payments (CP 205) for YA 2001 under STS will be issued followed by a notice of variation of instalment payments (CP 201) for YA 2000 under STTS.

(iv)The estimate of tax payable under STS may be revised in the sixth month of the basis period.

(v)For a company which first commences operations and is assessable to tax for YA 2001 under STS, the estimate of tax payable is required to be submitted within 3 months from the date of commencement of operations (i.e. from the date income is produced).

4.2Any credit available to a taxpayer arising from prior years can be used to set-off the instalments due but prior arrangements must be made with the Collection Branch.

4.3When payment of tax is made at either Bumiputra Commerce Bank Berhad or the payment counters at the Collection Branch, the payment slip CP 203 (STTS) or CP 207 (STS) should be attached to the cheque or cash and it must be ensured that the payment made is in accordance with the year of assessment stated in the payment slip.

5.OTHER ADMINISTRATIVE ISSUES

5.1The IRB has also clarified the following matters:

(a)According to Note 4 in Form CP 200 (Notice of Instalment Payments), where there is a difference in the tax payable after the notice of assessment has been issued, the difference:

(i)can be paid in the month after the last instalment if the notice of assessment is issued before or in the month for the last instalment; or

(ii)within 30 days from the date of the notice of assessment if the notice is issued after the month for the last instalment.

The IRB has clarified that:

(i)The above provisions are also applicable where there is variation of instalment payments (i.e. where Form CP 201 or CP 202 is issued).

(ii)Where the notice of assessment is issued after the month for the last instalment, the period for payment of the difference in the tax payable will be extended to 44 days from the date of the notice of assessment.

(b)Estimate of Tax Payable Lower Than the Prescribed Limit

The Income Tax (Amendment) (No. 2) Act 1999 provides that the estimate of tax payable for YA 2001 shall not be less than the tax payable for YA 1999.

The Association has sought clarification on whether companies in the following situations can apply to the DG pursuant to section 107C(8) to submit a lower or nil estimate of tax payable:

(a)Where the company’s estimated tax liability for YA 2001 is less than the tax payable for YA 1999;

(b)Where the company has huge adjusted loss and capital allowances for YA 2000 (previous year/current year) and would, therefore, not be liable to tax for YA 2001.

The IRB has clarified that all taxpayers must submit the estimate of tax payable for YA 2001 (Form CP 204) in accordance with the special provision in the Income Tax (Amendment) Act 1999. Accordingly, if the estimate of tax payable for YA 2001 is less than the amount of tax payable for YA 1999, the latter amount is to be stated as the estimate of tax payable for YA 2001. The company may simultaneously submit a lower or nil estimate of tax payable to the DG for approval pursuant to section 107C(8), supported by reasons for the lower estimate.

(c)Dormant Companies/Cessation of Operations

The IRB has clarified that dormant companies and companies which have ceased operations are also required to submit Form CP 204. In the case of a company which has ceased operations, a Nil estimate may be submitted and it should be indicated in Form CP 204 that the company has ceased operations.

(d)Submission of Form CP 204 for YA 2001

Completed Form CP 204 are to be returned to :

Pusat Pemprosesan

Tingkat 2, Blok 8A

Kompleks Bangunan Kerajaan

Jalan Duta, 50600 Kuala Lumpur

5.2The Association is seeking future clarification from the IRB on a number of administrative and technical issues relating to the new tax system. Members will be informed of the clarifications provided by the IRB in due course.

TAN SHOOK KHENG (Ms)

Secretary

1/2000.CIR5.IRB

2.5Notice of Assessment (Form J)

2.5.1Notice of Assessment (Form J) will not be issued to taxpayers who enjoy complete waiver from tax. However, a notification letter will be issued to acknowledge the same.

2.5.2A new Notice of Assessment or Computation of Repayment (Form CP 63) will be issued in the following cases:

• there is tax payable (on incomes not waived from tax);
• there is tax payable arising from penalties due to late submission or non-submission of returns (Section 90(2));
• there is a section 110 credit to be refunded (branch repayment).

2.5.3The new Notice of Assessment will show the computation of tax on all incomes less tax on waived income. The computation of the tax waived is shown separately before it is taken in the main notice.

3.3Extension of Instalment Payments for YA 2000

3.3.1For companies with non December 31 year end (especially those with accounting years ending in January to March), the IRB is to issue CP 201 to extend the instalment payment schedule to the year 2001.

IRB has clarified that the affected companies can make instalment payments of the tax for YA 2000 in accordance with the schedule for extension of instalment payments provided by the IRB (which is attached to Circular to Members No. TEC/001/01/2000), without having to wait for the issuance of CP 201.

3.3.2The IRB has also clarified that the extended instalment payment schedule will apply to other taxpayers such as associations, clubs, co-operatives, trusts and individuals with business source of income if they suffer two years’ tax in the year 2000.

(b)Claims for Approved Donations under Section 44(6)

Claims for deduction of donations against aggregate income under section 44(6) is to be made in the basis year for a year of assessment. Under the current year basis of assessment, where the accounting year of a company ends on a day other than December 31 and donations were made in a period after an accounting year but within the basis year, the company when submitting its tax return within six months of the close of the accounting year would not be able to make a claim for the donations.