Clarification Of Activities Which Are Eligible To Be Considered By The Director Of Inland Revenue (KPHDN) Under Subsection 44(6) Of The Income Tax Act 1967 (ACP 1967)
- This note aims to provide explanations and guidance regarding the activities that are eligible to be carried out by institutions/organizations/funds to obtain tax exemption due to the approval of KPHDN especially under subsection 44(6) of the Income Tax Act 1967. Hopefully this note can help provide understanding and explanation to taxpayers, tax agents, IRB officials and related members of the public.
- Approval granted by KPHDN under subsection 44(6) ITA 1967 must be used in conjunction with subsection 44(7) ITA 1967. Subsection 44(7) outlines the categories of institutions/organizations/funds and types of activities that are eligible for the purpose of consideration of the current approval process approval applications.
- The categories of institutions/organizations/funds that can be considered for KPHDN approval are as follows:
Allocation/ Category Definition/Practice Examples of Eligible Activities Subsection 44(7)
Established in Malaysia. Operating and running is not primarily for profit. The meaning of institution is specific and clear for health, education, religious, charity, research, and study institutions. Institutions must be registered either with SSM, ROS, BHEE or any Such as public hospitals, welfare/charity institutions, public universities/ institutions or other educational institutions, public authorities or associations that solely carry out research work for the prevention of serious human-related diseases, government aid bodies related to socio-economy or technical/vocational training institutions. Subsection 44(7)
Established in Malaysia. Operates and runs not primarily for profit Organizations are often controlled by a parent or centralized body. Having an established non-profit entity that helps and offers educational financial assistance, implements organizational objectives, reduces physical and needs to be registered with any body/agency under written law in Malaysia. Among them are SSM, ROS, BHEUU etc. Organizations need to have a clear constitution, objectives, and organizational structure. Organizations are governed through rules and laws Established as a non-profit that helps and offers scholarships, implements organizational objectives, reduces public distress, worship or development of religion and worship, management of houses of worship, management of zoos, museums, art galleries, animal conservation and protection, government assist organizations (public/private partnerships) related to industrial / commercialization issues, promoting national unity, environmental conservation, international organizations approved by the Minister, Projects towards the advancement and development of ICT, fundraising activities to help the people who lack of ability to finance serious illness medical treatment, Subsection 44(7)
Established by body of institutions/organizations to implement and achieve objectives. The fund is not established for profit. The objectives and mission of the fund must be specific and have a clear focus. This matter needs to be explained in the rules of the fund. The rules of the fund must be marked as a general marking category.
- Malaysian People's Humanitarian Aid Fund
- Malaysian People's Welfare and Education Fund
- Education Fund for Poor Students
- House of Worship Management/ Construction Fund
- Education Trust Fund
- School Public Fund
DISCLAIMER: This Practice Note is only intended to provide a general explanation of the questions that arise. It cannot be used for the purposes of case reference to questions of fact and legal cases. Treatment of questions of fact is in accordance with the provisions of the law and existing guidelines. This Practice Note only provides general guidance and explanations for understanding and awareness purposes only.