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INLAND REVENUE BOARD OF MALAYSIAINVESTMENT HOLDING COMPANYPUBLIC RULING NO. 10/2015Translation from the original Bahasa Malaysia textDATE OF PUBLICATION: 16 DECEMBER 2015
INVESTMENTHOLDING COMPANYINLAND REVENUE BOARD OF MALAYSIAPublished byInland Revenue Board of MalaysiaSecond editionFirst edition on 10 March 2011 2015 by Inland Revenue Board of MalaysiaAll rights reserved on this Public Ruling areowned by Inland Revenue Board ofMalaysia. One print or electronic copy maybe made for personal use. Professionalfirms and associations are permitted to usethe Public Ruling for training purposesonly. Systemic or multiple reproduction,distribution to multiple location viaelectronic or other means, duplication ofany material in this Public Ruling for a feeor commercial purposes, or modification ofthe content of the Public Ruling areprohibited.Public Ruling No. 10/2015Date Of Publication: 16 December 2015
INVESTMENTHOLDING COMPANYINLAND REVENUE BOARD OF MALAYSIAPublic Ruling No. 10/2015Date Of Publication: 16 December 2015CONTENTSPage1.Objective12.Relevant Provisions of the Law13.Interpretation14.Definition of an Investment Holding Company15.Definition of Business of Holding of an Investment16.Determination of an Investment Holding Company27.Tax Treatment88.Tax Treatment for Investment Holding Company Not Listed on theBursa MalaysiaTax Treatment for Investment Holding Company Listed on the BursaMalaysia89.1510.Capital Allowance / Industrial Building Allowance2111.Updates and Amendments22DIRECTOR GENERAL'S PUBLIC RULINGSection 138A of the Income Tax Act 1967 [ITA] provides that the Director General isempowered to make a Public Ruling in relation to the application of any provisions ofthe ITA.A Public Ruling is published as a guide for the public and officers of the InlandRevenue Board of Malaysia. It sets out the interpretation of the Director General inrespect of the particular tax law and the policy as well as the procedure applicable toit.The Director General may withdraw this Public Ruling either wholly or in part, bynotice of withdrawal or by publication of a new Public Ruling.Director General of Inland Revenue,Inland Revenue Board of Malaysia.
INVESTMENTHOLDING COMPANYINLAND REVENUE BOARD OF MALAYSIA1.Public Ruling No. 10/2015Date Of Publication: 16 December 2015ObjectiveThe objective of this Public Ruling (PR) is to explain the tax treatment in respect of aninvestment holding company resident in Malaysia.2.3.Relevant Provisions of the Law2.1This PR takes into account laws which are in force as at the date this PR ispublished.2.2The provisions of the Income Tax Act 1967 (ITA) related to this PR areparagraphs 4(a), 4(d), 4(f), 8(1)(b) and 8(1)(c), sections 43, 44, 60F and 60FAas well as paragraph 75 of Schedule 3 and paragraph 12B of Schedule 6.InterpretationThe words used in this PR have the following meaning:4.3.1“Resident” means resident in Malaysia as determined under paragraphs 8(1)(b)and 8(1)(c) of the ITA.3.2"Real property" includes any land and any interest, option or other rights in orover such land and includes any building on land.Definition of an Investment Holding CompanyAn investment holding company (IHC) means a company whose activities consistmainly in the holding of investments and not less than 80% of its gross income otherthan gross income from a source consisting of a business of holding of an investment(whether exempt or not) is derived from the holding of those investments.5.Definition of Business of Holding of an Investment5.1A “business of holding of an investment” means a business of letting of realproperty where a company in any year of assessment provides maintenanceservices or support services in respect of the real property.5.2"Letting of real property” means granting the use of a real property oroccupation of a real property under an agreement or a term of contract andincludes the letting out of part of the real property that is owned or rented.5.3“Maintenance services or support services” should be comprehensively andactively provided.Page 1 of 23
INVESTMENTHOLDING COMPANYINLAND REVENUE BOARD OF MALAYSIAPublic Ruling No. 10/2015Date Of Publication: 16 December 20155.3.1 Maintenance services or support services comprehensively providedmeans services which include–(a)doing generally all things necessary (eg. cleaning services orrepairs) for the maintenance and management of the real propertysuch as the structural elements of the building, stairways, fireescapes, entrances and exits, lobbies, corridors, lifts/escalators,compounds, drains, water tanks, sewers, pipes, wires, cables orother fixtures and fittings; and(b) doing generally all things necessary for the maintenance andmanagement of the exterior parts of the real property such asplaying fields, recreational areas, driveways, car parks, openspaces, landscape areas, walls and fences, exterior lighting orother external fixtures and fittings.If a person only provides security control services or other facilities, thatperson is not providing maintenance services or support servicescomprehensively.5.3.2 Maintenance services or support services actively provided means theperson who owns or lets out the real property–(a)provides himself; or(b) hires another person or another firm to providethe maintenance services or support services as mentioned underparagraph 5.3.1 of this PR.5.46.From the year of assessment 2011, the determination of whether income fromthe letting of real property is a business source or a non-business source isexplained in detail in the PR No. 4/2011 entitled ”Income From Letting Of RealProperty”. For years of assessment prior to the year of assessment 2011, PRNo. 1/2004 has to be referred to.Determination of an Investment Holding Company6.1Generally, the determination of whether a company is an IHC depends on two(2) criteria:(a)its main activity is the holding of investments; and(b)not less than 80% of the company’s gross income other than grossincome from a source consisting of a business of holding of aninvestment (whether exempt or not) is derived from the holding of thoseinvestments.Page 2 of 23
INVESTMENTHOLDING COMPANYINLAND REVENUE BOARD OF MALAYSIAPublic Ruling No. 10/2015Date Of Publication: 16 December 2015Example 1Jordan Lee Investment Sdn Bhd (JLISB) started business in year 2012 and itsmain activity is investment in several companies and fixed deposit. For the year2014, JLISB only receives dividend income from the investment in thosecompanies and fixed deposit interest. JLISB closes its account on 31December every year.JLISB is an IHC for the year of assessment 2014 since its main activity is theholding of investments and not less than 80% of its gross income (only dividendand interest) is derived from the holding of those investments.Example 2Sawit Sdn Bhd started business in year 2011 and its main activity is oil palmplantation. Apart from that, Sawit Sdn Bhd also invests in several companiesand fixed deposit in several banks. In year 2014, the company receives interestamounting to RM10,000 from the fixed deposit. The company has notgenerated any income from the plantation activity. The company closes itsaccount on 31 December every year.Even though the income of Sawit Sdn Bhd is 100% derived from the saving infixed deposit, Sawit Sdn Bhd is not an IHC for the year of assessment 2014since its main activity is not the holding of investments but oil palm plantation.Example 3Pelaburan Mekar Sdn Bhd (PMSB) started business in year 2013 and its mainactivity is the holding of investments in 10 related companies. PMSB receivesdividend income amounting to RM10,000 from those investments in year 2014.Apart from dividend income, PMSB also receives management fees fromrelated companies amounting to RM20,000 in year 2014. The company closesits account on 31 December every year.Even though the main activity of PMSB is the holding of investments, PMSB isnot an IHC for the year of assessment 2014 since income from the holding ofinvestments is less than 80% of its gross income.6.2An additional criteria in determining whether a company is an IHC is that anyamount of gross income from a business of holding of an investment is notcomputed as gross income from the holding of investments. Therefore onlyincome from interest and dividend under paragraph 4(c) of the ITA and rentalunder paragraph 4(d) of the ITA are computed as gross income from theholding of investments. An example of the computation for percentage ofincome from the holding of investments is as follows:Page 3 of 23
INVESTMENTHOLDING COMPANYPublic Ruling No. 10/2015Date Of Publication: 16 December 2015INLAND REVENUE BOARD OF MALAYSIAExample 4Source -50,00020,000Rent anagementservices feesTotal grossincomePercentage ofincome fromholding ofinvestmentIHC or not6.3Company Company CompanyABC(a)Companies A, D and E are not IHCs since income from the holding ofinvestments is less than 80% of gross income of those companies.(b)Companies B and C are IHCs since income from the holding ofinvestments is not less than 80% of gross income of those companies.If a company is a non-IHC in a year of assessment but gross income from rental(business of holding of investment) decreases in the subsequent year or yearsof assessment due to temporary cessation of tenancy because of the followingcicumstances:(a)repair or renovation of the building;(b)absence of tenants for a period of 2 years after termination of tenancy;(c)legal injunction or other official sanction; orPage 4 of 23
INVESTMENTHOLDING COMPANYPublic Ruling No. 10/2015Date Of Publication: 16 December 2015INLAND REVENUE BOARD OF MALAYSIA(d)other circumstances beyond the control of the company;the company is still deemed as a non-IHC for the subsequent year or years ofassessment even though income from the holding of investment is not less than80% of the gross income of the company.Example 5Income of Mega Central Sdn Bhd for the years of assessment 2010 to 2014are as follows. Rental income (business) decreases in the year of assessment2013 since the premises is not let out for a few months while repair is beingdone to the premises.Source ofincomeYear ofassessment2010Year ofassessment2011Year ofassessment2012Year ofassessment2013Year al iness)Total grossincomePercentageof incomefrom holdingofinvestmentIHC or notIn the year of assessment 2013, due to the decrease of income from rental(business), income from the holding of investment is more than 80% of thegross income of the company. However, the company is still deemed as a nonIHC since the decrease of income from rental (business) is due to thetemporary cessation of tenancy because of repair works.Page 5 of 23
INVESTMENTHOLDING COMPANYPublic Ruling No. 10/2015Date Of Publication: 16 December 2015INLAND REVENUE BOARD OF MALAYSIAExample 6:Nova Sdn Bhd closes its account on 31 December every year. Rental income(business) is derived from the letting out of office lot in a 4-storey building. On1.5.2012, the tenancy of a major portion of the office lot ends and the companyonly manages to get new tenants on 1.5.2014 (absence of tenants for a periodof 24 months). As a consequence, rental income (business) decreases in theyears of assessment 2012, 2013 and 2014. The income of Nova Sdn Bhd forthe years of assessment 2010 to 2014 are as follows:Source ofincomeYear ofassessment2010Year ofassessment2011Year ofassessment2012Year ofassessment2013Year 0030,00050,000Rental 050,00030,00040,000Total 81%NoNoNoNoNoPercentageof incomefrom holdingofinvestmentIHC or not190,000220,000210,000260,000In the years of assessment 2012, 2013 and 2014, income from the holding ofinvestments is more than 80% of the company’s gross income due to thedecrease of income from rental (business) because a major portion of the officelot is not tenanted. Since the absence of tenants is for a period of 24 months,the tenancy is deemed temporarily ceased and therefore the company is stilltreated as a non-IHC for the years of assesssment 2012, 2013 and 2014.Example 7Same facts as in Example 6 except that Nova Sdn Bhd only manages to getnew tenants on 1.7.2014 (absence of tenants for a period of 26 months).Page 6 of 23
INVESTMENTHOLDING COMPANYINLAND REVENUE BOARD OF MALAYSIAPublic Ruling No. 10/2015Date Of Publication: 16 December 2015Nova Sdn Bhd is treated as a non-IHC for the years of assessment 2012 and2013 as the absence of tenants in the 2 years of assessment (20 months) isstill within the 24-month period. Whereas the remaining 6 months that resultsin the period of absence of tenants to be more than 24 months falls in the yearof assessment 2014. As income from the holding of investments is more than80% of gross income, Nova Sdn Bhd is an IHC for the year of assessment2014.6.4Any company which has been determined to be an IHC in the basis period fora year of assessment will be deemed to be an IHC in the subsequent years ofassessment. However, this treatment is not applicable if the company is ableto prove that it is no longer an IHC in the relevant year of assessment.Example 8Syarikat Nassa Sdn Bhd (SNSB) commenced operation in year 2011 and itsmain activity is the holding of investments. In November 2012, SNSB sold allits investments except fixed deposit to be used as a capital to start a businessof selling hand phones in 2013 as its main activity. In October 2013, SNSBinvested again in several companies. SNSB’s income for the years ofassessment 2011, 2012, 2013 and 2014 are as follows:Source ofincomeYear ofassessment2011Year ofassessment2012Year ofassessment2013Year ofassessment2014--30,00010,000Rent ny’smainactivity –selling handphonesCompany’smainactivity –selling handphonesIHCIHCNoNoBusinessTotal grossincomePercentage ofincome fromholding ofinvestmentIHC or notPage 7 of 23
INVESTMENTHOLDING COMPANYINLAND REVENUE BOARD OF MALAYSIAPublic Ruling No. 10/2015Date Of Publication: 16 December 2015SNSB is an IHC for the years of assessment 2011 and 2012 since its mainactivity is the holding of investments and not less than 80% of SNSB’s grossincome is from the holding of those investments. However, SNSB is not anIHC for the year of assessment 2013 as its main activity is not the holding ofinvestments but has changed to a business of selling hand phones. SNSBremains as a non-IHC in the year of assessment 2014 (even though incomefrom the holding of investments is more than 80% of its gross income) as SNSBis still carrying on the business of selling hand phones as its main activity.Note: If the business of selling hand phones is not the main activity of thecompany but merely a sideline activity that is not carried out actively,the company is an IHC in the years of assessment 2013 and 2014 if notless than 80% of its gross income is derived from the holding ofinvestments.7.Tax TreatmentThe tax treatment for an IHC depends on whether the IHC is or is not listed on theBursa Malaysia. The special tax treatment for an IHC is provided under:8.(a)section 60F of the ITA for an IHC not listed on the Bursa Malaysia; and(b)section 60FA of the ITA for an IHC listed on the Bursa Malaysia.Tax Treatment for Investment Holding Company Not Listed on the BursaMalaysia – Section 60F of the ITA8.1Any income derived from the holding of investments [interest, dividend, rental(non-business) and rental (business of holding of an investment)] is treated asa non-business source. Whereas income other than income from the holdingof investments is treated as a source of income under paragraph 4(f) of the ITA.Example 9Same facts as in Example 4. Assuming all the companies A to E are not listedon the Bursa Malaysia.Based on the determination of an IHC, companies B and C are IHCs. Sinceboth companies are not listed on the Bursa Malaysia, the provision of section60F of the ITA applies.For companies B and C, dividend and interest are assessed as income underparagraph 4(c) of the ITA whereas rental (non-business) and rental (businessof holding of an investment) are assessed as income under paragraph 4(d) ofthe ITA. Management services fees will be assessed as income underparagraph 4(f) of the ITA.Page 8 of 23
INVESTMENTHOLDING COMPANYINLAND REVENUE BOARD OF MALAYSIA8.2Public Ruling No. 10/2015Date Of Publication: 16 December 2015Permitted expenses8.2.1 In ascertaining the total income of an IHC for a year of assessment, anamount of permitted expenses determined in accordance with theprescribed formula is allowable as a deduction from the aggregateincome of the IHC.8.2.2 Permitted expenses incurred by an IHC consist of–(a)directors’ fees;(b)wages, salaries and allowances;(c)management fees;(d)secretarial, audit and accounting fees, telephone charges, printingand stationery costs and postage; and(e)rent and other expenses incidental to the maintenance of an office,which are not deductible under subsection 33(1) of the ITA.8.2.3 The prescribed formula to determine the amount of permitted expenseswhich is allowable as a deduction is as follows:AXB4Cwhere:Ais the total of the permitted expenses incurred for a basisperiod reduced by any receipts of a similar kind;Bis the gross income consisting of dividend, interest and rentchargeable to tax for a basis period;Cis the aggregate of the gross income consisting of dividend andinterest (whether such dividend or interest is exempt or not) andrent, and gains from realisation of investments for a basisperiod.[Prior to the year of assessment 2014, C is the aggregate of thegross income consisting of dividend (whether exempt or not),interest and rent, and gains from realisation of investments for abasis period].Page 9 of 23
INVESTMENTHOLDING COMPANYINLAND REVENUE BOARD OF MALAYSIA8.2.4Public Ruling No. 10/2015Date Of Publication: 16 December 2015The amount allowable as a deduction should not exceed 5% of thegross income consisting of dividend, interest and rent for that basisperiod.Note: “Dividend” includes income distributed by a unit trust.Example 10Gross income of Suria Property Sdn Bhd for the year of assessment 2014 isas follows:IncomeRMDividend (tax exempt)35,000Interest30,000Interest (tax exempt)8,000Rental50,000Management service fees35,000Distribution of income from real estateinvestment trust (REIT)20,000Distribution of income from unit trust15,000Gains from realisation of investments100,000Suria Property Sdn Bhd is an IHC based on its main activity and the incomefrom holding of investment that exceeds 80% of the company’s income.Expenses claimed are as follows:Expenses claimedRMDirector’s fees24,000Salaries and allowances16,000Management fees5,000Audit fees4,000Page 10 of 23
INVESTMENTHOLDING COMPANYINLAND REVENUE BOARD OF MALAYSIAi.Public Ruling No. 10/2015Date Of Publication: 16 December 2015The amount of A, B dan C are as follows:(a)The amount of permitted expenses:Director’s feesSalaries and allowancesManagement feesAudit fees24,00016,0005,0004,00049,000 (A)Gross income from investment chargeable to tax:InterestRentalDistribution of income from REITDistribution of income from unit trust30,00050,00020,00015,000115,000(B)Aggregate of gross income from investment (whether exempt ornot), rental and gains from realisation of investment:Dividend (tax exempt)InterestInterest (tax exempt)RentalDistribution of income from REITDistribution of income from unit trustGains from realisation of 00,000258,000 (C)The amount of permitted expenses determined in accordance withthe formula is:A XB4C RM49,000XRM115,000 RM5,4604 X RM258,000compared with 5% of gross investment income chargeable to tax:(5% X RM115,000) RM5,750; whichever is lower.Page 11 of 23
INVESTMENTHOLDING COMPANYPublic Ruling No. 10/2015Date Of Publication: 16 December 2015INLAND REVENUE BOARD OF MALAYSIATherefore, the amount of permitted expenses allowable asdeduction is RM5,460.ii.The total income of Suria Property Sdn Bhd for the year of assessment2014 is computed as follows:I.II.III.IV.V.InterestDistribution of income from (REIT)Distribution of income from unit trustRentalManagement service fees[income under paragraph 4(f)of the itted expensesTotal Income8.35,460144,540Single-tier dividend incomeFrom the year of assessment 2008, single-tier dividend income is exemptedfrom tax and any expenses related to the derivation of the dividend are to bedisregarded. This also applies to an IHC.Example 11Gross income of Muhibbah Sdn Bhd (an IHC) for the year of assessment 2014is as follows:InvestmentSharesCost ofInvestment600,000Income(RM)Dividend (single-tier)100,000Fixed Deposit100,000Interest15,000Investment inBintang REIT500,000Distribution of incomefrom Bintang REIT90,00035,000--Management servicefees--Gains from realisation ofinvestments150,000Total390,000Total1,200,000Page 12 of 23
INVESTMENTHOLDING COMPANYINLAND REVENUE BOARD OF MALAYSIAPublic Ruling No. 10/2015Date Of Publication: 16 December 2015Muhibbah Sdn Bhd has taken a loan to finance the shares, fixed deposit andinvestment in Bintang REIT. In the year of assessment 2014, the total interestpaid in respect of the loan is RM50,000.Expenses claimed are as follows:Expenses claimedi.(RM)Director’s fees20,000Salaries and allowances15,000Management fees7,000Audit fees5,000Maintenance of motor vehicle2,000Depreciation1,000Total50,000The amount of A, B dan C are as follows:(a)The amount of permitted expenses:(RM)Director’s fees20,000Salaries and allowances15,000Management fees7,000Audit fees5,00047,000 (A)Gross income from investment chargeable to tax:Interest from fixed depositDistribution of income from REIT15,00090,000105,000(B)Aggregate of gross income from investment (whether exempt ornot), rental and gains from realisation of investment:Dividend (single-tier)100,000Interest from fixed deposit15,000Distribution of income from REIT90,000Gains from realisation of investments 150,000355,000(C)Page 13 of 23
INVESTMENTHOLDING COMPANYPublic Ruling No. 10/2015Date Of Publication: 16 December 2015INLAND REVENUE BOARD OF MALAYSIA(b)The amount of permitted expenses determined in accordance withthe formula is:AXB4C RM47,000 XRM105,0004X RM355,000 RM3,475compared with 5% of gross investment income chargeable to tax:(5% X RM105,000) RM5,250; whichever is lower.Therefore, the amount of permitted expenses allowable asdeduction is RM3,475.ii.The total income of Muhibbah Sdn Bhd for the year assessment 2014 iscomputed as follows:(RM)I.Gross interest15,000Less:Interest expenses100,000 X 50,0001,200,000II.III.Distribution of income from REITLess:Interest expense500,000 X 50,0001,200,0004,16710,83390,00020,833Management service fees[income under paragraph 4(f) of the ITA]Less:Permitted expenses:Total income(RM)69,16735,000115,0003,475111,525Page 14 of 23
INVESTMENTHOLDING COMPANYINLAND REVENUE BOARD OF MALAYSIANote:Gross dividend (single tier)Interest expense600,000 X 50,0001,200,0008.49.Public Ruling No. 10/2015Date Of Publication: 16 December 2015100,000 (exempted)25,000 (disregarded)If there is no aggregate income or the aggregate income is not sufficient toabsorb the permitted expenses for a year of assessment, any excess of thepermitted expenses cannot be carried forward to subsequent years ofassessment.Tax Treatment for Investment Holding Company Listed on the Bursa Malaysia –Section 60FA of the ITA9.1In order to determine whether a company is an IHC, paragraphs 4, 5 and 6 ofthis PR have to be referred to. Once a company is determined to be an IHCand that company is listed on the Bursa Malaysia, the tax treatment explainedin this paragraph should be applied.9.2Any income derived from the holding of investments [interest, dividend, rental(non business and business of holding of an investment)] is treated as abusiness source under paragraph 4(a) of the ITA. Each source of income hasto be assessed as a separate business source.9.3Even though those sources of income are treated as business sources, inascertaining the adjusted income and statutory income of an IHC, the specialtreatment provided under section 60FA of the ITA has to be complied with.9.3.1 In ascertaining the adjusted income of each business source for a yearof assessment:(a)no deduction on expenses is allowed if that source does notproduce any income;(b)the amount of allowable deduction for direct expenses is restrictedto the amount of gross income from that source for that year ofassessment. Any excess of that expenses is to be disregarded(cannot be absorbed by any other source of income or carriedforward to subsequent years of assessment); and(c)the amount of allowable deduction for common expenses which isdetermined based on the gross income is restricted to the amountof gross income from that source for that year of assessment. Anyexcess of that expenses is also to be disregarded.Page 15 of 23
INVESTMENTHOLDING COMPANYINLAND REVENUE BOARD OF MALAYSIAPublic Ruling No. 10/2015Date Of Publication: 16 December 20159.3.2 In ascertaining the statutory income from each business source for ayear of assessment, the allowances under Schedule 3 of the ITA can beallowed but restricted to the amount of adjusted income from that source.If there is no adjusted income or the adjusted income is not sufficient toabsorb those allowances, any excess of allowances cannot be carriedforward to subsequent years of assessment.Example 12Era Baru Bhd is an IHC listed on the Bursa Malaysia. The income and expensesfor the year of assessment 2014 are as follows:Source of incomeGross income(RM)Interest expense(RM)Dividend entalNil70,000Interest expense is a direct expense and not a common expense.Total gross incomeRM600,000Common expensesRM150,000Common capital allowancesRM80,000The total income of Era Baru Bhd for the year of assessment 2014 is computedas follows:(RM)I.Gross interest(RM)(RM)200,000Less:Interest expenseCommon expenses200,000 X 150,000600,000160,00050,000210,000restricted to 200,00010,000(disregarded)200,000NilPage 16 of 23
INVESTMENTHOLDING COMPANYINLAND REVENUE BOARD OF MALAYSIACommon capital allowances200,000 X 80,000600,000II.III.Gross rentalLess:Interest expense26,667 (disregarded)Nil70,000 (disregarded)Gross dividend (single tier)400,000 (exempted)Interest expenseCommon expenses400,000 X 150,000600,000250,000Common capital allowances400,000 X 80,000600,000Total income(a)Public Ruling No. 10/2015Date Of Publication: 16 December 2015Nil100,000350,000 (disregarded)53,333 (disregarded)NilThe excess of interest expense and common expenses amounting toRM10,000 for interest source and interest expense amounting toRM70,000 for rental source which cannot be absorbed are to bedisregarded and cannot be absorbed by any other source of income or becarried forward to subsequent years of assessment.(b) Capital allowances of RM26,667 which cannot be absorbed by interestsource and RM53,333 which cannot be absorbed by dividend sourcecannot be carried forward to subsequent years of assessment.9.4If in a year of assessment, an IHC listed on the Bursa Malaysia also carries ona business activity (not as the main activity), any adjusted loss from thatbusiness source will be given the normal treatment in accordance with theprovision of subsections 43(2) and 44(2) of the ITA. Therefore, the adjustedloss from that business source for a year of assessment can be deductedagainst the aggregate income for that year of assessment. Any excess of theadjusted loss that cannot be absorbed can be carried forward and deductedagainst the aggregate of statutory income from business sources forsubsequent years of assessment.Page 17 of 23
INVESTMENTHOLDING COMPANYPublic Ruling No. 10/2015Date Of Publication: 16 December 2015INLAND REVENUE BOARD OF MALAYSIAExample 13Investment Link Bhd is an IHC listed on the Bursa Malaysia. For the year ofassessment 2014, the gross income received and expenses incurred are asfollows:Source of incomeGross income(RM)Direct expenses(RM)200,000350,000Dividend 0Management feesTotal gross incomeRM1,500,000Common expensesRM250,000Common capital allowancesRM200,000The total income of Investment Link Bhd for the year of assessment 2014 iscomputed as follows:(RM)(RM)(RM)I.Gross management feesLess:Direct expensesCommon expenses200,000 X 250,0001,500,000Restricted toCurrent year business lossCommon capital allowancescarried forward200,000 X 200,000Nil183,33326,667Page 18 of 23
INVESTMENTHOLDING COMPANYINLAND REVENUE BOARD OF MALAYSIAII.Public Ruling No. 10/2015Date Of Publication: 16 December 2015300,000Gross interestLess:Direct expensesCommon expenses300,000 X 250,0001,500,000150,00050,000Adjusted income from interest100,000Less:Common capital allowances300,000 X 200,0001,500,000III.40,000Gross dividendDirect expensesCommon expenses1,000,000 X 250,0001,500,000Common capital allowances1,000,000 X 66,667766,6
Public Ruling No. INLAND REVENUE BOARD OF MALAYSIA INVESTMENT HOLDING COMPANY 10/2015 Date Of Publication: 16 December 2015 Page 3 of 23
