INCOME TAX ACT 1967 (ACT 53) PART III - ASCERTAINMENT OF CHARGEABLE INCOME Chapter 8-Special cases
Section 61. Trusts generally.
(1) So long as a trust subsists-
(a) the trustees for the time being shall be known as the trust body and the trust body shall be treated as a person for the purposes of all the provisions of this Act except Part VIII (other than section 122);
[Am. Act A226:s.21]
(b) for the purposes of this Act-
(i) any source forming part of the property of the trust;
(ii) any source of a trustee of the trust, being a source of his by virtue of sections 55 to 58; and
(iii) any income from any such source, shall be treated as the source and income of the trust body of the trust:
Provided that in the case of a unit trust, gains arising from the realisation of investments shall not be treated as income of the trust body of the trust;
[Ins. Act 420:s.10]
(c) subject to subsections (4) and (5), the entitlement of a beneficiary at any time and from time to time to any income from the trust shall be deemed to be a source (in this section and section 62 referred to as his ordinary source) of his in relation to the trust, and the amount, ascertained under this section, of any share of his of any total income of the trust body of the trust for a year of assessment shall be deemed to be his statutory income from his ordinary source for that year; and
(d) a beneficiary of the trust shall be assessed and charged to tax in respect of any income of his from his ordinary source or from his further source within the meaning of subsection (5) in relation to the trust:
Provided that paragraphs (c) and(d) and subsection (5) shall not apply to a person in respect of any amount which by virtue of paragraph (1) (d) falls to be included in the gross income of that person in respect of gains or profits from an employment.
(1A) Notwithstanding paragraph (1) (c) and (d), a unit holder of a unit trust shall be assessed and charged to tax in respect of income equivalent to an amount ascertained by reference to his share of the total income of the unit trust for a year of assessment, distributed to him by the unit trust in the basis year for that year of assessment:
[Ins. Act 420:s.10]
Provided that the unit holder shall not be assessed and charged to tax in respect of any amount distributed by the unit trust out of exempt income or the gains referred to in the proviso to paragraph 61 (1) (b).
[Ins. Act 420:s.10]
(2) The income of the trust body of a trust shall be assessed and charged to tax separately from the income of a beneficiary from any source of his in relation to the trust, whether or not that beneficiary is also a trustee member of that body, and in so assessing and charging that body by reference to its chargeable income for a year of assessment regard shall be had to the whole of its total income for that year, notwithstanding that the amount of a share thereof may be deemed under this section or section 62 to be statutory income of a beneficiary:
Provided that, where-
(a) the trust body of a trust is resident for the basis year for a year of assessment; and
(b) a beneficiary who has a share of the total income of the trust body for that year of assessment is resident for the basis year for that year of assessment,
the Director General may, in ascertaining the chargeable income of the trust body for that year of assessment, deduct from that total income that share of that beneficiary.
(3) Notwithstanding any other provision of this Act, a trust body shall be regarded as resident for the basis year for a year of assessment if, but only if, any trustee member of that body is resident for that basis year:
Provided that where-
(a) the trust was created outside Malaysia by a person or persons who were not citizens;
(b) the income of that trust body for that basis year is wholly derived from outside Malaysia;
(c) the trust is administered for the whole of that basis year outside Malaysia; and
(d) at least one-half of the number of the member trustees are not resident in Malaysia for that basis year,
that trust body shall not be regarded as resident in Malaysia for that basis year.
(4) Subject to sections 62 and 63, and whether or not the trust body of a trust is resident for the basis year for a year of assessment-
(a) where throughout the basis year a beneficiary of the trust was entitled to the whole of the distributable income from the trust for that basis year, the amount of the total income of the trust body for that year of assessment shall be deemed to be the amount of the beneficiary's share of that total income;
[Am. Act A226:s.21]
(b) where throughout that basis year a beneficiary of the trust was entitled to a particular fraction of that distributable income, an amount found by applying that fraction to that total income shall be deemed to be the amount of his share of that total income;
(c) where the trust subsists throughout that basis year and during that basis year a beneficiary of the trust is entitled to the whole or a fraction of the distributable income from the trust for any part of parts of that basis year-
(i) that total income, treated as if it had accrued evenly from day to day over that basis year, shall with respect to any such part be divided in the proportion which the length of that part bears to the length of that basis year and so much of the amount of that total income as is thus found to be apportioned to that part is referred to in this paragraph in relation to that part as the apportioned sum;
(ii) if the beneficiary was entitled to the whole of the distributable income from the trust for such a part, the apportioned sum, in relation to that part, shall be deemed to be the amount of his share (or the amount of part of his share, as the case may require) of that total income;
(iii) if the beneficiary was entitled to a particular fraction of the distributable income from the trust for such a part, an amount found by applying that fraction to the apportioned sum, in relation to that part, shall be deemed to be the amount of his share (or the amount of part of his share, as the case may require) of that total income; and
(iv) where two or more parts of his share of that total income have been so ascertained, the aggregate of the amounts of those parts shall be deemed to be the amount of this share of that total income;
(d) where the trust was not subsisting throughout that basis year, paragraphs (a), (b) and (c) (and subsection (7)) shall have effect as if references therein to that basis year were references to a period consisting of the whole of the time during which the trust was subsisting in that basis year; and
(e) any amount deemed by virtue of this subsection to be a beneficiary's share of that total income shall be deemed to be derived from Malaysia.
(5) Subject to sections 62 and 63, if the total of-
(a) all sums received in Malaysia from the trust body of a trust by a beneficiary (being sums of an income nature in his hands) in the basis year for a year of assessment, and
(b) all sums received by him outside Malaysia from the trust body of the trust in any year (being sums of an income nature in his hands) and remitted to Malaysia in the basis year for a year of assessment,
exceeds the amount of his statutory income from his ordinary source in relation to the trust for that year of assessment-
[Am. Act A226:s.21]
(i) he shall, in respect of that excess, be deemed to have a source (in this subsection referred to as his further source) in relation to the trust; and
(ii) the amount of that excess shall be deemed to be his statutory income from his further source for that particular year of assessment:
Provided that, if the Director General is satisfied that a sum equal to any part of that excess may, to the best of his judgment be regarded as an ingredient of the beneficiary's statutory income from his ordinary source in relation to the trust for any preceding year of assessment, the beneficiary's statutory income from his further source for that particular year of assessment shall be reduced by the amount of that sum.
(6) (Repealed by Act A226).
(7) Where any part of the income from a trust for the basis year for a year of assessment is subject to a trust for accumulation, any reference in this section to the total income of the trust body of that trust for that year of assessment (being a reference made in connection with a reference to the distributable income from the trust for that basis year) shall be construed as a reference to a sum which bears the same proportion to that total income as that distributable income bears to the aggregate of-
(a) that distributable income; and
(b) that part of the income from the trust which is subject to the trust for accumulation.
(8) Paragraph (1) (a) and subsection (3) shall apply where there is only one trustee as they apply where there are two or more trustees, and references to a trust body in this Act shall be construed accordingly.
(9) In this Act-
(a) a reference to income from a source of a trust includes a reference to any income subject to the trust; and
(b) a reference to sums received or to income received by a beneficiary of a trust includes a reference to sums or income disbursed by the trust body of the trust on his behalf or for his benefit.
