INCOME TAX ACT 1967 (ACT 53) PART III - ASCERTAINMENT OF CHARGEABLE INCOME Chapter 8 - Special cases
Section 54A. Exemption of shipping profits.
(1) Subject to the following subsections, where a person who is resident for the basis year for a year of assessment carries on the business of-
(a) transporting passengers or cargo by sea on a Malaysian ship; or
(b) letting out on charter a Malaysian ship owned by him on a voyage or time charter basis,
the statutory income for that year of assessment from that business shall be exempt from tax.
[Subs. Act 591:s.7]
(2) In determining the income of a person under this section-
(a) the capital allowances claimed in respect of any Malaysian ship shall only be made against the income exempt under the provisions of this section, and the balance of such allowances shall not be available as a deduction against his other income;
(b) an adjusted loss incurred by that person in respect of the operation of a Malaysian ship for any year shall only be deducted against the income exempt under the provisions of this section, and the balance of such loss shall not be available as a deduction against his other income.
[Subs. Act 293:s.13]
(3) The following provisions shall apply to a person carrying on a business in respect of which his income is exempt under subsection (1)-
[Am. Act 591:s.7]
(a) he shall maintain a separate account for the income derived or deemed to be derived from each Malaysian ship from that business for the purpose of this section:
Provided that where expenses have been incurred by that person which are not directly attributable to a Malaysian ship, the Director General may allocate as expenses such amounts as might reasonably and properly have been incurred in the normal course of his business in respect of such ship;
(b) as soon as any amount of income of the Malaysian ship is exempted under this section, such amount shall be credited to an exempt account.
(c) where such exempt account is in credit at the date on which any dividends are paid by the person (out of income which has been exempted), an amount equal to such dividends or to such credit whichever is the lesser, shall be debited to such account;
(d) any dividend paid, credited or distributed in a basis period out of such exempt account shall be exempt from tax;
(e) where such dividend is received by a shareholder and that shareholder is a company, any dividend paid by that shareholding company to its shareholders shall, to the extent that the Director General is satisfied that the dividend so paid is paid out of such exempt dividend be exempt from tax in the hands of the shareholders; and
(f) section 108 shall not apply to such dividend.
[Ins. Act 293:s.13]
(4) That person shall deliver to the Director General a copy of the accounts referred to in subsection (3) made up to any date specified by him whenever called upon to do so by notice in writing.
[Ins. Act 293:s.13]
(5) Notwithstanding the foregoing provisions of this section, where it appears to the Director General that-
(a) any income of that person which has been exempt; or
(b) any dividend (including a dividend paid by a holding company to which paragraph(3)(e) applies) exempted in the hands of any shareholder,
ought not to have been so exempt, the Director General may at any time-
(i) make such assessment or additional assessment upon that person or any shareholder as may appear to be necessary in order to make good any loss of tax; or
(ii) direct that person to debit his account kept in accordance with subsection (3) with such amount as the circumstances may require:
Provided that the direction given under this paragraph shall be deemed to be a notice of assessment for the purposes of section 99.
[Ins. Act 293:s.13]
(6) For the purposes of this section-
"Malaysian ship" means a sea-going ship registered as such under the Merchant Shipping Ordinance 1952 [Ord. 70 of 1952], other than a ferry, barge, tug-boat, supply vessel, crew boat, lighter, dredger, fishing boat or other similar vessel;
