Malaysia legislation
Section 28
Section 28
Schedule 7a to the principal Act is amended—
(a)
by inserting after paragraph 1c the following paragraph:
“1d. (1) For the purposes of paragraphs 1 and 1a, the capital expenditure incurred by a company shall not include any amount paid or to be paid in respect of goods and services tax as input tax by a company if the company is liable to be registered under the Goods and Services Tax Act 2014 and has failed to do so, or if the company is entitled under that Act to credit that amount as input tax.
(2)
Where in the basis period for a year of assessment a company has incurred capital expenditure under this Schedule in relation to an asset and the input tax on the asset is subject to any adjustment made under the Goods and Services Tax
Act 2014, the amount of such expenditure in relation to that asset shall be adjusted in the basis period for a year of assessment in which the period of adjustment relating to the asset as provided under the Goods and Services Tax Act 2014 ends.
(3)
In the event the adjustment of the amount of the capital expenditure made under subparagraph (2) results in—
(a)
an additional amount, such amount shall be deemed to be part of the capital expenditure incurred, and subject to paragraphs 1 and 1a, there shall be given to the company for a year of assessment an allowance in respect of such additional amount; or
(b)
a reduced amount, any amount of allowance that ought not to have been given under this Schedule in consequence of such reduction shall be part of the statutory income of that person from a source consisting of a business in the basis period the adjustment is made.
(4)
Notwithstanding subparagraph (2), where a person has incurred the capital expenditure in relation to an asset, and the asset is disposed of at any time during the period of adjustment specified under the Goods and Services Tax Act 2014, the adjustment to such expenditure shall be made in the basis period for the year of assessment in which the disposal is made.
(5)
Paragraph 1b shall apply for the purpose of the adjustment referred to in subparagraph (4).”;
Act 773
(b)
by inserting after paragraph 2a the following paragraph:
“2b.
Subject to this Schedule and notwithstanding paragraph 2, where a company has first made a claim for an allowance under this Schedule in the return of its income and the period for fifteen consecutive years of assessment referred to in paragraph 2—
(a)
ended in the year of assessment 2015 or in any other preceding year of assessment, an allowance under paragraph 1 or 1a shall be given in respect of capital expenditure incurred by the company in the basis period for the years of assessment 2016, 2017 and 2018;
(b)
ends in the year of assessment 2016, an allowance under paragraph 1 or 1a shall be given in respect of capital expenditure incurred by the company in the basis period for the years of assessment 2017 and 2018; or
(c)
ends in the year of assessment 2017, an allowance under paragraph 1 or 1a shall be given in respect of capital expenditure incurred by the company in the basis period for the year of assessment 2018.”; and
(c)
in paragraph 9—
(i)
by inserting before the definition of “capital expenditure” the following definition:
‘ “automating” refers to a process whereby manual operations are substituted by mechanical operations with minimal or reduced human intervention;’;
(ii)
by inserting after the definition of “capital expenditure” the following definition:
‘ “ceased to be used” in relation to an asset includes an asset classified as held for sale under paragraph 61a of Schedule 3;’;
(iii)
in the definition of “disposed of”, by inserting after the words “assigned,” the words “ceased to be used”;
Finance 25
(iv)
by inserting after the definition of “disposed of”
the following definitions:
‘ “diversifying” means to enlarge or vary the range of product of a company related to the same industry;
“expanding” refers to an increase of a product capacity or expansion of factory area;’;
(v)
in the definition of “manufacturing”, by deleting the words “size, shape,”;
(vi)
by inserting after the definition of “manufacturing”
the following definitions:
‘ “machinery” means a device or apparatus consisting of fixed and moving parts that work together to perform function in respect of a manufacturing activity, which is directly used in carrying out that activity in a factory;
“modernizing” means an upgrading of manufacturing equipment and process;’;
(vii)
by inserting after the definition of “operation”
the following definition:
‘ “plant” means an apparatus used in respect of a manufacturing activity, which is directly used in carrying out that activity in a factory;’; and
(viii)
by substituting for the definition of “simple” the following definition:
‘ “simple” generally describes an activity which does not need special skills, special machines, special apparatus or special equipments especially produced or installed for carrying out that activity.’.
Amendment of Schedule 7b