Malaysia legislation
Section 30
Section 30
The principal Act is amended by inserting after section 140a the following section:
“special provision applicable to loan or advances to director 140b. (1) Without prejudice to the generality of section 140a and subject to this section, where in a basis period for a year of assessment, a company makes any loan or advances of any money from the internal funds of the company to a person who is a director of that company, the company shall be deemed to have a gross income consisting of interest from such loan or advances for that basis period.
(2)
For the purposes of subsection (1), the interest for the basis period for that year of assessment shall be the aggregate sum of interest for all calendar months in the basis period and the sum of interest for each calendar month shall be determined in accordance with the following formula:
1 x A x B
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where
A is the total amount of loan or advances outstanding at the end of the calendar month;
and
B is the average lending rate of commercial banks published by the central Bank at the end of the calendar month or where there is no such average lending rate, such other reference lending rate as may be prescribed by the Director General.
Finance 21
(3)
Where in respect of a loan or advances referred to under subsection (1), interest is charged by the company and the total amount of interest charged and payable by the director to that company for the basis period for a year of assessment—
(a)
is more than the aggregate sum of interest under subsection (2) for that basis period, this section shall cease to apply; or
(b)
is less than the aggregate sum of interest under subsection (2) for that basis period, this section shall apply and the total amount of interest which is charged and payable to the company for that basis period shall be disregarded.
(4)
For the purposes of this Act, “director” has the same meaning assigned to it under subsection 75a(2).”.
amendment of schedule 1