Income tax

When tax is levied on the income of a person, it is called income tax. If there is no income, there is no income tax. There are different types of income types of income upon which tax is imposed such as business income, employment income, rental income, dividends, interest, royalties. In Malaysia, income tax is imposed, assessed and collected under the Income Tax Act (ITA) 1967. Under section 3 of ITA 1967, a tax known as income tax shall be charged foe each year of assessment upon the income of any person accruing in or derived from Malaysia or received in Malaysia from outside Malaysia. What does it mean "income"? In the Webster Dictionary, income has been defined as "a gain or recurrent benefit that is measured in money and for a given period of time derived from capital, labour, or combination of both. Furthermore, in the absence of statutory definition meaning. In the oxford advanced Learer's Dictionary, income means " money which comes in as the periodical produce of one;s work, business, land or investments" Next, the characteristic of "income", going to repetitive from sources of income and received in the ordinary course of business. Periodical return "coming in" with some sort of regularity or expected regularity from defined sources. Nature of gains or profis has to fall into any of the sub-paragraphs under section 4 and 4A of ITA 1967.

Different Classes of Income Subjected to Income Tax

Sec 4 of ITA 1967:

- Profits or gains of a trade, business, profession or vocation

-Profits or gains from personal services - employment

- Dividends, interest and discounts

- Rents, royalties or premiums

- Pension, charges or annuity or other periodical payment

- Gains or profits not falling under any of the foregoing paragraphs