2. TOPIC 1: BASIS PERIOD

3. Lesson Outcomes: Students are able to: i. Determine the basis period for commencement of business. ii. Determine the basis period for changes in accounting date. iii. Compute the adjusted income.

4. Introduction BASIS PERIOD FOR BUSINESS & NON-BUSINESS SOURCES (COMPANIES) The term “business commencement” is not sufficiently dealt with in the Income Tax Act 1967 (the Act) and there is lack of clarity on the “actual date” on which a person commences operations or business. For this purpose, one has to distinguish the activities undertaken which are merely pre-operating preparation and do not constitute commencement of business.

5. Relevance of Commencement & Year End Date 1. CA would be available beginning from 1 st basis period (commencement date) 2. Revenue expenses incurred before commencement date are not deductible 3. It results in the determination of the 1 st Year of Assessment

6. Introduction BASIS PERIOD FOR BUSINESS & NON-BUSINESS SOURCES (COMPANIES) Operations in accordance to Section 21A (8) of the Income Tax Act, 1967 refers to: a) an activity which consists of the carrying on of a business; b) an activity which consists wholly in the making of investments; c) an activity which consists of both the carrying on of a business and the making of investments; or d) an activity which consists of the making of investment prior to the commencement of a business or after the cessation of a business.

7. Introduction BASIS PERIOD FOR BUSINESS & NON-BUSINESS SOURCES (COMPANIES) A limited company is not deemed to have commenced business until it is incorporated. In practice, the business of trading and distribution of goods would deem to have commenced when the business first opens its doors to the public, regardless whether the first sale has been made. The same principles apply to business whether as service provider or in marketing, business is deemed to have commenced when the key personnel have been employed and the company is ready to render services to its clients.

8. DETERMINATION OF BASIS PERIODS Basis period refers to the period of income received relative to a year of assessment. It is important to note that a Company’s basis period upon commencement of business operations may not coincide with the accounting period of a Company. Basis period determines the filing period for tax returns submission which is due within seven (7) months from the close of its financial year/period end as prescribed under Section 77A of the Act. The IRBM has issued PR No. 8/2014 that complements Section 21A of the Act. Except where provided for under Section 21A of the Act, the basis year for a YA generally shall constitute the basis period for that YA in relation to all sources of income of a company.

9. Terminologies Overlapping period The period of time (months) where 2 basis periods overlapped each other due to a revision made to the basis periods by the DG of IRB; Income in the overlapping period would be assessed once only, in the earlier revised basis period (rather than the latter). Failure year “Failure year” means the year in which there is failure to close the accounts to the normal accounting date.

10. Terminologies Accepting a financial year as the basis period A situation when the Director General (DG) agrees to use the period of a financial statement as the basis period for tax purposes ie. no adjustment in the “basis period” needs to be done. Directing a basis period When the DG of IRB does NOT agree to use the period of a financial statement as the basis period for the company and hence will adjust/revise the basis period for a given year of assessment. Therefore, an adjustment in the basis period needs to be done resulting in adjustment to adjusted income to correlate with a revised basis period.

11. DETERMINATION OF BASIS PERIODS The IRBM has issued PR No. 8/2014 to explain: i. The determination of basis period for a company, a limited liability partnership (LLP), a trust body and a co-operative society on commencement of operations; and ii. The determination of basis period for the above mentioned entities which have been in operations and change of the accounting period.

12. BUSINESS COMMENCEMENT Under the Self-Assessment System (SAS), it is a statutory requirement for companies, trust bodies and co-operative societies to furnish their estimates of tax payable for a year of assessment (YA) to the IRBM, thirty (30) days before the commencement of the new basis period. For companies that first commence business operations, the companies are required to submit the estimated tax payable within three (3) months from the date of commencement.

13. Public Ruling No. 8/2014: BASIS PERIOD FOR BUSINESS & NON-BUSINESS SOURCES (COMPANIES) Effective from the year of assessment 2014, the basis period for a company, an LLP, a trust body and a co-operative society on commencement of its operations is determined as follows: If the accounts are prepared for- a) a period of less than 12 months ending on a day in the same year, that period is the basis period for the first year of assessment; b) any period ending on a day in the second year, that period is the basis period for the second year of assessment and there is no basis period for the first year of assessment; c) a period of more than 12 months ending on a day in the third year, that period is the basis period for the third year of assessment and there are no basis periods for the first year of assessment and the second year of assessment.

14. Public Ruling No. 8/2014: First Accounts Closed In The Same Year If the accounts are prepared for a period of less than 12 months ending on a day in the same year, that period is the basis period for the first year of assessment. Example: Riang Segar Sdn. Bhd. submitted its accounts as follows: - Accounts Accounting PeriodPeriod First1.02.2014 - 30.9.20148 months Second1.10.2014 - 30.9.201512 months

15. Public Ruling No. 8/2014: First Accounts Closed In The Same Year Example: Riang Segar Sdn. Bhd. submitted its accounts as follows: The basis periods for the company are: - Accounts Accounting PeriodPeriod First1.02.2014 - 30.9.20148 months Second1.10.2014 - 30.9.201512 months YABasis PeriodPeriod 20141.02.2014 - 30.9.20148 months 20151.10.2014 - 30.9.201512 months

16. Public Ruling No. 8/2014: First Accounts Closed In The Same Year The basis periods for the company are: Note: 1. The first accounts closed in 2014. 2. The first accounting period of 8 months is accepted as the basis period for the first year of assessment although the period is less than 12 months or closed on a date other than 31 December. - YABasis PeriodPeriod 20141.02.2014 - 30.9.20148 months 20151.10.2014 - 30.9.201512 months

17. Public Ruling No. 8/2014: First Accounts Closed In The Following Year If the accounts are prepared for any period ending on a day in the second year, that period is the basis period for the second year of assessment and there is no basis period for the first year of assessment; Example: Amanah ABC submitted its accounts as follows: - Accounts Accounting PeriodPeriod First 1.5.2013 - 31.3.201411 months Second 1.4.2014 - 31.3.201512 months

18. Public Ruling No. 8/2014: First Accounts Closed In The Following Year Example: Amanah ABC submitted its accounts as follows: The basis periods are as follows: - Accounts Accounting PeriodPeriod First 1.5.2013 - 31.3.201411 months Second 1.4.2014 - 31.3.201512 months Accounts Accounting PeriodPeriod 2014 1.5.2013 - 31.3.201411 months 2015 1.4.2014 - 31.3.201512 months

19. Public Ruling No. 8/2014: First Accounts Closed In The Following Year The basis periods are as follows: Note: 1. There is no basis period for the year of assessment 2013. 2. Although the operations started in 2013 but the first accounts closed in 2014, thus the new provision of subsection 21A(4) of the ITA applies. The first set of accounts for 11 months ending in 2014 is the basis period for the year of assessment 2014 - Accounts Accounting PeriodPeriod 2014 1.5.2013 - 31.3.201411 months 2015 1.4.2014 - 31.3.201512 months

20. Public Ruling No. 8/2014: First Accounts Closed In The Following Year If the accounts are prepared for any period ending on a day in the second year, that period is the basis period for the second year of assessment and there is no basis period for the first year of assessment; Example: Koperasi Bukit Saujana submitted its accounts as follows: - Accounts Accounting PeriodPeriod First 1.2.2013 - 30.4.201415 months Second 1.5.2014 - 30.4.201512 months

21. Public Ruling No. 8/2014: First Accounts Closed In The Following Year Example: Koperasi Bukit Saujana submitted its accounts as follows: The basis periods are as follows: - Accounts Accounting PeriodPeriod First 1.2.2013 – 30.4.201415 months Second 1.5.2014 – 30.4.201512 months Accounts Accounting PeriodPeriod 2014 1.2.2013 – 30.4.201415 months 2015 1.5.2014 – 30.4.201512 months

22. Public Ruling No. 8/2014: First Accounts Closed In The Following Year The basis periods are as follows: Note: 1. There is no basis period for the year of assessment 2013. 2. Although operations began in 2013, the first accounts closed in 2014. The first set of accounts which consists of 15 months period ending in 2014 is taken as the basis period for the year of assessment 2014. - Accounts Accounting PeriodPeriod 2014 1.2.2013 – 30.4.201415 months 2015 1.5.2014 – 30.4.201512 months

23. Public Ruling No. 8/2014: Accounts Made Up For More Than 12 Months And Ending In The Third Year If the accounts are prepared for a period of more than 12 months ending on a day in the third year, that period is the basis period for the third year of assessment and there are no basis periods for the first year of assessment and the second year of assessment. Example: Teraju Gemilang PLT submitted its accounts as follows: - Accounts Accounting PeriodPeriod First 1.11.2013 - 30.4.201518 months Second 1.05.2015 - 30.4.201612 months

24. Public Ruling No. 8/2014: Accounts Made Up For More Than 12 Months And Ending In The Third Year Example: Teraju Gemilang PLT submitted its accounts as follows: The basis periods are as follows: - Accounts Accounting PeriodPeriod First 1.11.2013 - 30.4.201518 months Second 1.05.2015 - 30.4.201612 months Accounts Accounting PeriodPeriod First 1.11.2013 - 30.4.201518 months Second 1.05.2015 - 30.4.201612 months

25. Public Ruling No. 8/2014: Accounts Made Up For More Than 12 Months And Ending In The Third Year The basis periods are as follows: Note: 1. There are no basis period for the years of assessment 2013 and 2014. 2. The first set of accounts involved 3 calendar years (2013 to 2015) and closed in 2015. The first accounting period of 18 months is accepted as the basis period for the first year of assessment that is the year of assessment 2015. - Accounts Accounting PeriodPeriod First 1.11.2013 - 30.4.201518 months Second 1.05.2015 - 30.4.201612 months

26. Public Ruling No. 8/2014: EXAMPLE – PRE 2014 Example: Indah Permai Sdn. Bhd. submitted its accounts as follows: : - Accounts Accounting PeriodPeriod First 3.4.2013 - 30.6.20133 months Second 1.7.2013 - 30.6.201412 months Third 1.7.2014 - 30.6.201512 months

27. Public Ruling No. 8/2014: EXAMPLE – PRE 2014 Example: Indah Permai Sdn. Bhd. submitted its accounts as follows: The basis periods for the company are: - Accounts Accounting PeriodPeriod First 3.4.2013 - 30.6.20133 months Second 1.7.2013 - 30.6.201412 months Third 1.7.2014 - 30.6.201512 months Accounts Accounting PeriodPeriod 2013 3.4.2013 – 31.12.20139 months 2014 1.7.2013 - 30.6.201412 months 2015 1.7.2014 - 30.6.201512 months

28. Public Ruling No. 8/2014: EXAMPLE – PRE 2014 The basis periods for the company are: Note: 1. As the first set of accounts closed in 2013 (prior to the effective date of subsection 21A(4) of the ITA), the provision before the amendment applies. 2. The overlapping period is 1.7.2013 to 31.12.2013 (6 months) and the adjusted income is to be calculated in accordance with subsection 42(2) of the ITA. Accounts Accounting PeriodPeriod 2013 3.4.2013 – 31.12.20139 months 2014 1.7.2013 - 30.6.201412 months 2015 1.7.2014 - 30.6.201512 months

29. Public Ruling No. 8/2014: Determination Of Basis Period For An Entity Which Is In Operations And Changes Its Accounting Period Commencing from the year of assessment 2014, an entity which is in operations fails to close its accounts on the same date in the following year (failure year), the Director General of Inland Revenue (DGIR) will determine the basis periods for the failure year and the year following the failure year. In determining the basis period for the failure year and the following year, the accounting period made up by the taxpayer in the failure year would generally be accepted by the DGIR provided that - (a) there is no missing year of assessment; (b) there shall not be two or more accounts closed in the same year of assessment. “Failure year” means the year in which there is failure to close the accounts to the normal accounting date.

30. Public Ruling No. 8/2014: Changing Accounting Period For Less Than 12 Months And Ending In The Same Year Bumi Senang Sdn. Bhd. normally closes its accounts on 28 February every year and changes the accounting period to 31 December (less than 12 months) in the same year. Accounts Accounting PeriodPeriod 2014 1.3.2013 - 28.02.201412 months Failure Year 1.3.2014 - 31.12.201410 months 1.1.2015 - 31.12.201512 months 1.1.2016 - 31.12.201612 months

31. Public Ruling No. 8/2014: Changing Accounting Period For Less Than 12 Months And Ending In The Same Year The basis periods for the company are: Note: 1. The failure year is 2015. The DGIR will determine the basis periods for the years of assessment 2015 and 2016. 2. The accounts for the entire period from 1.3.2014 to 31.12.2014 and 1.1.2015 to 31.12.2015 will be combined and taken as the basis period for the year of assessment 2015. Accounts Accounting PeriodPeriod 2014 1.3.2013 - 28.02.201412 months 2015 1.3.2014 - 31.12.201522 months 2016 1.1.2016 - 31.12.201612 months

32. Public Ruling No. 8/2014: Changing Accounting Period For Less Than 12 Months And Ending In The Following Year Ahmad Albab PLT normally closes its accounts on 31 December each year and changes the accounting period to 30 April (less than 12 months) in the following year. Accounts Accounting PeriodPeriod 2013 1.1.2013 - 31.12.201312 months Failure Year 1.1.2014 - 30.04.20144 months 1.5.2014 - 30.04.201512 months

33. Public Ruling No. 8/2014: Changing Accounting Period For Less Than 12 Months And Ending In The Following Year The basis period for the PLT are: Note: 1. The failure year is 2014. The DGIR will determine the basis periods for the years of assessment 2014 and 2015. 2. Although the accounting period for the failure year is less than 12 months, that period would be accepted as the basis period for the year of assessment 2014 as the accounts in the failure year are closed in 2014. Accounts Accounting PeriodPeriod 2013 1.1.2013 - 31.12.201312 months 2014 1.1.2014 - 30.04.20144 months 2015 1.5.2014 - 30.04.201512 months

34. Public Ruling No. 8/2014: Changing Accounting Period For More Than 12 Months And Ending In The Following Year Aizah Wahab Sdn. Bhd. normally closes its accounts on 31 July each year and changes the accounting period to 31 October (more than 12 months) in the following year. Accounts Accounting PeriodPeriod 2013 1.08.2012 - 1.07.201312 months Failure Year 1.08.2013 - 31.10.201415 months 1.11.2014 - 31.10.201512 months

35. Public Ruling No. 8/2014: Changing Accounting Period For More Than 12 Months And Ending In The Following Year The basis periods for the company are: Note: 1. The failure year is 2014. The DGIR will determine the basis periods for the years of assessment 2014 and 2015. 2. Although the accounting period for the failure year is more than 12 months, that period would be accepted as the basis period for the year of assessment 2014. Accounts Accounting PeriodPeriod 2013 1.08.2012 - 31.07.201312 months 2014 1.08.2013 - 31.10.201415 months 2015 1.11.2014 - 31.10.201512 months

36. Public Ruling No. 8/2014: Changing Accounting Period For More Than 12 Months And Ending In The Third Year Koperasi Rania Emas normally closes its accounts on 31 December each year and changes the accounting period to 31 January (more than 12 months) in the third year. Accounts Accounting PeriodPeriod 2013 1.1.2013 - 31.12.201312 months Failure Year 1.1.2014 - 31.01.201513 months 1.2.2015 - 31.01.201612 months

37. Public Ruling No. 8/2014: Changing Accounting Period For More Than 12 Months And Ending In The Third Year The basis periods are: Accounts Accounting PeriodPeriod 2013 1.1.2013 - 31.12.201312 months 2014 1.1.2014 - 31.07.20147 months 20151.8.2014 - 31.01.20156 months 2016 1.2.2015 - 31.01.201612 months

38. Public Ruling No. 8/2014: Changing Accounting Period For More Than 12 Months And Ending In The Third Year Note: 1. The accounts are prepared beyond one year of assessment that is year of asssessment 2014. Therefore the DGIR will determine the basis periods for the years of asssessment 2014 and 2015. 2. The accounting period 1.1.2014 to 31.1.2015 involved two years of assessment. The basis periods for the years of assessment 2014 and 2015 are determined by dividing that accounting period into two periods, 7 months for the year of assessment 2014 and 6 months for the year of assessment 2015. 3. When there is an uneven division of the basis periods for the two years of assessment, any fraction of a month should be treated as falling in the first basis period.

39. Public Ruling No. 8/2014: Company With Existing Operations Commencing New Operations Where a company which is already carrying on one or more operations commences a new operation, the basis period for the new operations is the same as the basis period of the existing operation. Example A company has been in operation for several years and makes up its accounts ending on 30 September each year. The company starts a new operation on 1.6.2014. The basis period for the new operations is the same as the accounting period of the existing operation i.e. year ending 30 September. The basis period for the new operation for the year of assessment 2014 is therefore 1.6.2014 to 30.9.2014.

40. AP = BP Commencement of Business i.Accounts prepared > 12 months ii.Accounts prepared < 12 months Change of Accounting Date

41. Public Ruling No. 7/2001: BASIS PERIOD FOR BUSINESS & NON-BUSINESS SOURCES (COMPANIES) This Ruling applies in respect of section 21A of the Income Tax Act 1967. It is effective for the year of assessment 2001 and subsequent years of assessment until YA 2013 ONLY. W.e.f. YA 2014 – PR 8/2014 This Ruling supersedes Public Ruling No. 2/2000 dated 1 March 2000 where it relates to companies. THE APPLICATION OF THIS RULING This Ruling considers the determination of the basis period for a company: 1. commencing its operations; 2. changing the accounting date of its existing operations; and 3. joining a partnership.

42. Public Ruling No. 7/2001 & Section 21A BASIS PERIOD FOR BUSINESS & NON-BUSINESS SOURCES (COMPANIES) Basis period (BP)-Section 20 For the purposes of this Act,, the calendar year coinciding with a year of assessment shall constitute the basis year for that year of assessment. Impact = Malaysia moves into current YA (w.e.f 1 January 2000) Example A company which has a business source and a dividend source commenced its business on 1.1.2014. The basis year ending 31.12.2014 is the basis period for the Y/A 2014 for all of the company's sources.

43. Public Ruling No. 7/2001 & Section 21A BASIS PERIOD FOR BUSINESS & NON-BUSINESS SOURCES (COMPANIES) Basis period (BP)-Section 21A(1) The basis year for a YA constitute the basis period for that YA Applies to all sources of income, but not necessarily to business income i.e. YA2013 –calendar year 2013-BY2013-BP1.1-31.12 Example A company which has a business source and a dividend source prepares its accounts from 01.01.2013 to 31.12.2013. (12 months and ending on 31/12) The basis year ending 31.12.2013 is the basis period for the Y/A 2013 for all of the company's sources.

44. Public Ruling No. 7/2001 & Section 21A BASIS PERIOD FOR BUSINESS & NON-BUSINESS SOURCES (COMPANIES) Section 21A (2): Subject to subsections (5) and (6), where a company has made up the accounts of its operations for a period of twelve months ending on a day other than 31 December in the basis year, that period shall constitute the basis period for that year of assessment for any of its sources of income. Example A company makes up its accounts from 01.07.2012 to 30.06.2013. Its sources of income are business, rental and interest. The period from 01.07.2012 to 30.06.2013 is the basis period for the Y/A 2013 for all its sources of income.

45. Public Ruling No. 7/2001 & Section 21A BASIS PERIOD FOR BUSINESS & NON-BUSINESS SOURCES (COMPANIES) Section 21A (3): Where a company has made up the accounts of its operations for a period of twelve months ending on a day other than 31 December and there is a failure to make up the accounts of the company ending on the corresponding day in the following basis year, the Director General may direct that the basis period for the year of assessment in which the failure occurs, or the basis periods for that year and the following year of assessment, shall consist of a period or periods (which may be of any length) as specified in the direction.

46. Public Ruling No. 7/2001 & Section 21A BASIS PERIOD FOR BUSINESS & NON-BUSINESS SOURCES (COMPANIES) Section 21A (4): Subject to subsections (5) and (6), where a company commences operations on a day in a basis year and makes up its accounts for a period of twelve months ending on a day other than 31 December, there shall be no basis period in relation to any of its sources of income for the first year.

47. Public Ruling No. 7/2001 & Section 21A BASIS PERIOD FOR BUSINESS & NON-BUSINESS SOURCES (COMPANIES) Section 21A (4): Subject to subsections (5) and (6), where a company, limited liability partnership, trust body or co-operative society commences operation on a day in a basis year for a year of assessment (hereinafter referred to as the "first year of assessment") and makes up its account— (a) for a period of less than twelve months ending on a day in that basis year, that period shall constitute the basis period for the first year of assessment;

48. Public Ruling No. 7/2001 & Section 21A BASIS PERIOD FOR BUSINESS & NON-BUSINESS SOURCES (COMPANIES) Section 21A (4): Subject to subsections (5) and (6), where a company, limited liability partnership, trust body or co-operative society commences operation on a day in a basis year for a year of assessment (hereinafter referred to as the "first year of assessment") and makes up its account— (b) for any period of months ending on a day in the immediately following basis year (hereinafter referred to as the "second basis year"), that period shall constitute the basis period for the year of assessment (hereinafter referred to as the "second year of assessment") immediately following the first year of assessment, there shall be no basis period in relation to any of its sources of income for the first year of assessment; or

49. Public Ruling No. 7/2001 & Section 21A BASIS PERIOD FOR BUSINESS & NON-BUSINESS SOURCES (COMPANIES) Section 21A (4): Subject to subsections (5) and (6), where a company, limited liability partnership, trust body or co-operative society commences operation on a day in a basis year for a year of assessment (hereinafter referred to as the "first year of assessment") and makes up its account— (c) for a period of more than twelve months ending on a day in the basis year immediately following the second basis year, that period shall constitute the basis period for the year of assessment immediately following the second year of assessment and there shall be no basis period in relation to any of its sources of income for the first year of assessment and the second year of assessment.

50. Public Ruling No. 7/2001 & Section 21A BASIS PERIOD FOR BUSINESS & NON-BUSINESS SOURCES (COMPANIES) Section 21A(5) :Where a company commences operations and- (a) is required under any law of the place of incorporation to make up its accounts ending on a specified day; or (b) being a company within a group of companies makes up its accounts ending on the same day as that of all other companies in that group, the period which begins from the day the company commences operations until the end of the accounting period of the company shall constitute, for those operations of that company, the basis period for a year of assessment.

51. Public Ruling No. 7/2001 & Section 21A BASIS PERIOD FOR BUSINESS & NON-BUSINESS SOURCES (COMPANIES) Section 21A (6): Where a company on the day on which it commences a new operation is already carrying on one or more operations, the basis period of the existing operation or operations for a year of assessment in which that day falls shall constitute for the new operation the basis period for that year of assessment and there shall be no basis period for the new operation for the year of assessment preceding that year.

52. Public Ruling No. 7/2001 & Section 21A Illustrations Note: The adjusted income of the overlapping period would be taxed in the first YA pursuant to Section 42(2) of the Act. The adjusted income of the following YA would be reduced accordingly by the adjusted income of the overlapping period. The formula: RM of Adj. income/(loss) x The period length of overlapping period The period length of basis period

53. BUSINESS COMMENCEMENT With effect from YA2011, following the 2010 Budget announcement, with regard to companies other than small-and-medium enterprises (SMEs) that commence business operations in a YA where the basis period for that YA is less than six (6) months, the companies are exempted from the requirement of furnishing an estimate of tax payable for that particular YA.

54. Treatment of adjusted income / adjusted loss in overlapping periods Where the application results in an overlapping of two basis periods the adjusted income or adjusted loss common to both basis periods is ignored in the second basis period.

55. Treatment of adjusted income / adjusted loss in overlapping periods Example A company commences a business on 01.07.2011 and accounts are prepared as follows: 01.07.2011 to 31.03.2012, 01.04.2012 to 31.03.2013, and subsequently to 31 March. The adjusted income of the company's business is as follows: Accounting period ------------------------- Adjusted income 01.07.2011 to 31.03.2012 [A] ------------ RM15,000 01.04.2012 to 31.03.2013 [B] ------------ RM24,000

56. Treatment of adjusted income / adjusted loss in overlapping periods Example Applying the relevant Act, the basis periods for the company are: Y/A ------------------ Basis periods 2011 ----------------- 01.07.2011 - 31.12.2011 (6 months) 2012 ----------------- 01.01.2012 - 31.12.2012 (12 months)* 2013 ----------------- 01.04.2012 - 31.03.2013 (12 months)* [*Overlapping period: 01.04.2012 - 31.12.2012]

57. Treatment of adjusted income / adjusted loss in overlapping periods Y/A & Basis periodApportionmentAdjusted income 2011 [01.07.2011 - 31.12.2011] 01.07 - 31.12.2011: 6 / 9 x [A] ( 6 / 9 x RM15,000) 10,000 2012 [01.01.2012 - 31.12.2012] 01.01 - 31.03.2012: 3 / 9 x [A] = ( 3 / 9 x RM15,000) 01.04 - 31.12.2012: 9 / 12 x [B] = ( 9 / 12 x RM24,000) 5,000 18,000 = 23,000

58. Treatment of adjusted income / adjusted loss in overlapping periods Y/A & Basis periodApportionmentAdjusted income 2012 [01.01.2012 - 31.12.2012] 01.01 - 31.03.2012: 3 / 9 x [A] = ( 3 / 9 x RM15,000) 01.04 - 31.12.2012: 9 / 12 x [B] = ( 9 / 12 x RM24,000) 5,000 18,000 = 23,000 2013 [01.04.2012 -31.03.2013] Adjusted income of overlapping period (01.04.2012 - 31.12.2012) ignored in second basis period: (RM24,000 - RM18,000)6,000

59. Public Ruling No. 8/2014: Company Joining A Partnership If a company joins a partnership, the partnership will be regarded as a new operation. The basis period for its existing operations is, therefore, also the basis period for the partnership source. Example A company (whose accounts are closed on 30 June) joins a new partnership which commences business on 18.2.2014. The first accounts of the partnership are prepared to 30.9.2014 and accounts are subsequently prepared to 30 September each year. Notwithstanding the accounting period of the partnership, the basis periods for the company in respect of its partnership source are: Year of Assessment 2014 : 18.2.2014 to 30.6.2014 Year of Assessment 2015 : 1.07.2014 to 30.6.2015

60. Public Ruling No. 7/2011: Notification of Changes in Basis Period Changes in accounting period of a company, trust body or co-operative society will result in changes in basis period. The company, trust body or co-operative society should notify the DGIRM on the change in its accounting period by way of Form CP204B: (a) one month before the beginning of a new accounting period if the accounting period is shortened; (b) one month before the end of the original accounting period if the accounting period is extended. If the company fails to do so the company, trust body or co-operative society shall furnish the tax estimate (CP204) not later than 30 days before the beginning of the new accounting period.

61. Public Ruling No. 7/2011: Notification of Changes in Basis Period Changes in the accounting period would result in one of the following conditions: The accounting period is shortened a) If the change in accounting period is notified other than in the 6th or 9th month but within the new basis period, the revised estimate would be acceptable on condition that: i. the new revised estimate is higher than revised estimate or original estimate (if there is no revised estimate furnished) ii. the new revised instalments are higher than the revised instalments or original instalments (if there is no revised instalments)

62. Thank You!

63. TUTORIAL QUESTIONS