INCOME TAX ACT 1967 (ACT 53) PART III - ASCERTAINMENT OF CHARGEABLE INCOME Chapter 8 - Special cases
Section 54. Sea and air transport undertakings.
(1) Where the business of a person consists partly of transporting passengers or cargo by sea or air and partly of other activities-
[Am. Act A226:s.20]
(a) the transport activities of that kind shall be deemed to constitute one business and source of that person and the other activities shall be deemed to constitute a separate and distinct business and source of that person; and
(b) the gross income and adjusted income or adjusted loss for the basis period for a year of assessment from the business consisting of those other activities, and the statutory income for that year of assessment from the business so consisting shall be ascertained in accordance with the provisions of the foregoing Chapters without modification by this section.
(2) (a) Subject to section 54A, where that person is resident for the basis year for a year of assessment, his gross income and adjusted income or adjusted loss for the basis period for that year of assessment from the business of transporting passengers or cargo by sea or air his statutory income for that year of assessment from that business shall be ascertained by reference to his income therefrom wherever accruing or derived;
[Am. Act 293:s.12; Am. Act A451:s.8]
(b) Where that person is not resident for the basis year for a year of assessment, his gross income derived from Malaysia from the business of transporting passengers or cargo by sea or air for the basis period for that year of assessment and his statutory income from that business for that year of assessment shall be ascertained in accordance with the following subsections (that business, person, basis period and year of assessment being referred to in those subsections as the business, the operator, the relevant period and the relevant year respectively).
(3) Subject to subsection (4), the statutory income of the operator from the business for the relevant year shall be deemed to be five per cent of the gross income derived from Malaysia for the relevant period.
(4) Where within three years (or such further period as the Director General may allow) after the commencement of the relevant year the operator produces a certificate which is an acceptable certificate, then-
(a) if there is world income, the operator's statutory income from the business for the relevant year shall be deemed to be a sum bearing the same proportion to the world income as the gross income derived from Malaysia for the relevant period bears to the gross income shown by the certificate, less the amount of any loss from the business computed in accordance with paragraph (b) for a year of assessment preceding the relevant year (to the extent that the loss has not been allowed as a deduction in computing the statutory income from the business for any year of assessment following that preceding year of assessment and ending prior to the relevant year);
(b) if there is a world loss, the operator's net statutory loss from the business for the relevant year shall be deemed to be a sum bearing the same proportion to the world loss as the gross income derived from Malaysia for the relevant period bears to the gross income shown by the certificate;
(c) if by the time the certificate becomes an acceptable certificate no assessment for the relevant year has been made on the operator by reference to subsection (3), that subsection shall cease to have effect in relation to the business for the relevant year; and
(d) if by that time an assessment for the relevant year has been made on the operator by reference to subsection (3), the Director General shall make such additional assessment or such repayment of tax as may be necessary in consequence of the application of this subsection for the relevant year.
(5) In this section, in relation to the business, the operator, the relevant period and the relevant year-
"acceptable certificate" means a certificate produced to the Director General with respect to which he is satisfied that the amounts specified in the certificate have been computed by methods not substantially different from those provided by this Act for the computation of analogous figures for a similar business carried on by a person who is resident;
[Am. Act A226:s.20]
"certificate" means a certificate which-
[Am. Act A226:s.20]
(a) is issued by the authority responsible for the administration of the tax laws of any country (other than Malaysia) in which the operator is resident for the purposes of those laws; and
(b) specifies in respect of the business for the relevant period the amount of-
(i) the gross income from wherever derived;
(ii) the income or the loss computed for the purpose of foreign tax by that authority without making any allowance for depreciation; and
(iii) the total depreciation allowances given by that authority (excluding any allowance or part thereof brought forward from a previous period);
"gross income derived from Malaysia for the relevant period" means the total of all sums first receivable by the operator in the relevant period in respect of transporting by sea or air (whether before, in or after the relevant period) passengers or cargo embarked or loaded in Malaysia into ships or aircraft owned or chartered by the operator, except sums so receivable in respect of passengers or cargo-
(a) brought to Malaysia, whether by the operator or otherwise, solely for transfer-
(i) from one ship or aircraft to another;
(ii) from a ship to an aircraft; or
(iii) from an aircraft to a ship; or
(b) so embarked or loaded into such a ship or aircraft if the call of that ship or aircraft at a port, aerodrome or airport in Malaysia for that embarkation or loading was a casual call within the meaning of subsection (6),
less any sums received in the relevant period or prior thereto which are refunded in the relevant period and any sums first receivable in the relevant period or prior thereto which in the relevant period cease, otherwise than on the receipt thereof, to be receivable;
"gross income from wherever derived" means the total of all sums first receivable by the operator in the relevant period in respect of transporting by sea or air (whether before, in or after the relevant period) passengers or cargo in ships or aircraft owned or chartered by the operator;
"world income", in relation to a certificate which is an acceptable certificate, means the amount of any income specified in that certificate in accordance with subparagraph (b) (ii) of the definition of "certificate" in this subsection, as reduced by the amount of the depreciation allowances specified in that certificate, less any sums received in the relevant period or prior thereto which are refunded in the relevant period and any sums first, receivable in the relevant period or prior thereto which in the relevant period cease, otherwise than on the receipt thereof, to be receivable;
"world loss", in relation to a certificate which is an acceptable certificate, means-
(a) the amount of any loss specified in that certificate together with the amount of the depreciation allowances specified in that certificate; or
(b) where the amount of those allowances exceeds the amount of the income specified in that certificate in accordance with subparagraph (b) (ii) of the definition of "certificate" in this subsection, the amount of the excess.
(6) A call at a port, aerodrome or airport in Malaysia (in this subsection referred to as a Malaysian call) by a ship or aircraft owned or chartered by the operator (in this subsection referred to as a relevant craft) is a casual call for the purposes of subsection (5) only if-
(a) apart from that particular Malaysian call there were no other Malaysian calls by that or any other relevant craft in the period of twenty-four consecutive months immediately prior to that particular Malaysian call; and
(b) the Director General is satisfied that the intention of the operator is that for the period of twenty-four consecutive months immediately following that particular Malaysian call-
(i) that relevant craft will not be making another Malaysian call (except a call made in the course of the voyage or flight from the place where that particular Malaysian call was made); and
(ii) no other relevant craft will be making a Malaysian call:
Provided that, if within the period mentioned in paragraph (b) that or any other relevant craft makes another Malaysian call (except, in the case of that relevant craft, a call made in the course of the voyage or flight from the place where that particular Malaysian call was made), that particular Malaysian call shall be treated as never having been a casual call.
