Income Tax (Deduction for Expenses Relating to Remuneration of Employee) Rules 2009

In exercise of the powers conferred by paragraph 154(1)(b) of the Income Tax Act 1967 [Act 53], the Minister makes the following rules:

Citation and commencement

1. (1) These rules may be cited as the Income Tax (Deduction for Expenses relating to Remuneration of Employee) Rules 2009.

(2) These Rules have effect for the year of assessment 2009 and subsequent years of assessment.


Interpretation

2. In these Rules—

“employee” means an employee as described in subrule 4(2);

“remuneration” means any wages, salary, or allowance in respect of having or exercising employment.


Application

3. These Rules shall apply to a person who is a resident in Malaysia who employs an employee on full-time basis between the period of 10 March 2009 until 31 December 2010.


Deduction

4. (1) Subject to these Rules, in ascertaining the adjusted income of a person who is a resident in Malaysia from its business in the basis period for a year of assessment, there shall be allowed to that person a further deduction equal to the amount of expenses incurred and allowable under section 33 of the Act in respect of the remuneration paid to his employee.

(2) The deduction under subrule (1) apply only in respect of an employee—

(a) who is a citizen and resident in Malaysia;

(b) whose employment with a previous employer has been terminated pursuant to a separation scheme or retrenchment, on or after 1 July 2008; and

(c) whose termination of employment has been registered with the Director General of Labour, the Ministry of Human Resources.

(3) For the purposes of subrule (1), the amount of the further deduction shall not exceed a maximum amount of ten thousand ringgit for each month in respect of each employee for a maximum period of twelve consecutive months commencing from the first month the employee is employed.


Non-application

5. (1) These Rules shall not apply where—

(a) the employee is employed by a person to replace a former employee of that person for the purpose of carrying out the same or similar function of that former employee;

(b) the former employer and the present employer are associates as defined in section 139 of the Act;

(c) the former employer and the present employer one of whom has control over the other; or

(d) the former employer and the present employer both of whom are controlled by another person.

(2) In this rule, a person has control—

(a) where the person has the power to exercise or is able to exercise or is entitled to acquire, control (whether direct or indirect) over the affairs of another;

(b) where the person has the power to possess or acquire the greater part of the share capital or voting power in another; or

(c) in relation to a partnership, where the person has the right to a share of more than one-half of the assets of the partnership, or to more than one-half of the divisible profits of the partnership.


Made 10 March 2009
[Perb.0.3865/410;LHDN 01/35/(S)/42/51/231-17.11;PN(PU2)80/LIV]

Tan Sri Nor Md bin Yakcop
Second Minister of Finance

[To be laid before the Dewan Rakyat pursuant to subsection 154(2) of the Income Tax Act 1967]