What income is subject to tax

Related Topics: | Tax Advice | Income Tax |

What income is subject to tax?

The legislation governing income tax in Malaysia is the Income Tax Act 1967 (Act 53).

Section 3 of the Act provided: “ Subject to and in accordance with this Act, a tax to be known as income tax shall be charged for each year of assessment upon the income of any person accruing in or derived from Malaysia or received in Malaysia from outside Malaysia.”

All income is subject to tax. The meaning of “income” is important as the Act only imposes tax on gains or profits that are “income” in nature. Gross income can broadly include:

(a) Employment income;
(b) Business income;
(c) Dividends, interest and discounts;
(d) Rents, royalties and premiums;
(e) Pension, annuities and other periodical payments; and
(f) Other income not falling under any of the above.
Even income derived from illegal activities is subject to tax.

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