CHAPTER 2 RESIDENCE STATUS OF INDIVIDUALS

CHAPTER 2: RESIDENCE STATUS
OF INDIVIDUALS

ROZANA BINTI CHE BIDI COMPILATION OF MALAYSIAN
SUHAILI BINTI YUSOF TAXATION – SMART REVISION MODULE

r YEAR ASSESSM ENT 2020
CHAPTER 2: RESIDENCE STATUS OF INDIVIDUAL

CHAPTER 2: RESIDENCE STATUS OF
INDIVIDUALS

INTRODUCTION OF RESIDENCE STATUS

The residence status of individuals is determined under section 7, ITA 1967. In general,
residence status is determined by the number of days an individual is present in
Malaysia.

The concept of residence status is important in determining the chargeability of a person
on the income earned and received by him. It is an important factor because income
received by a Malaysian resident individual from Malaysia and outside Malaysia
(remitted) will be taxed.

However, starting from 2004, income earned and remitted to Malaysia by Malaysian
resident is exempted from income tax. A non-resident individual will only be chargeable
to tax on income derived from Malaysia.

ADVANTAGES OF BEING RESIDENT

1. The scope of charge for both resident and non-resident individuals is the same from YA 2004
– both are taxed only upon Malaysian derived and accrued income.

2. Resident individuals are subject to a scaled rate from 0-30%. As for non-resident individuals
they are subject to a flat rate of 30%, or 15%, or 10%.

3. Resident individuals are entitled to individual tax relief (section 46 to 50) such as self, wife,
child and etc. Non-resident are not entitled to such relief.

4. Resident individuals are entitled to a rebate if their chargeable income is less than RM 35,000.
Non-resident are not entitled to the rebate.

RESIDENCE STATUS OF AN INDIVIDUAL BASED ON SECTION 7 ITA 1967

 The ascertainment of an individual’s resident status is purely a quantitative test. It is
determined by reference to the number of days an individual person is present in Malaysia
during a particular calendar year.

 It is computed by reference to the number of days such an individual was
present inMalaysia as provided under Section 7 (1), ITA 1967.

 There are section 7(1)(a), section 7(1)(b), section 7(1)(c) and section 7 (1)(d) .
Compulsory to follow the sequence starting section 7(1)(a), section 7(1)(b),
section7(1)(c) and section 7 (1)(d). If not qualifying for all those sections, then the
individual entitled as a non-resident.

 Part of a day will considered as a full day in Malaysia.
 The individual will regarded as a resident in Malaysia for the basis year for a year of

assessment under section 7(1).

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SECTION 7(1)(a)

 In Malaysia in that basis year for a period or periods amounting in all to 182 or more
 An individual must be in Malaysia during the basis year for a

period or periods amounting to total of 182 days or more.

EXAMPLE 1
Mr. Aryan was in Malaysia for the following

periods:

1/1/2019 – 31/10/2019 (304 days)
1/1/2020 – 28/2/2020 (59 days)
1/4/2020 – 31/5/2020 (61 days)
1/8/2020 – 30/9/2020 (61 days)

Determine the residence status of Mr. Aryan for the years of assessment 2019 and 2020.

SOLUTION: Date Day Status Section
Year of 304 days Resident 7(1)(a)
1/1/2019
Assessment – -
2019
31/10/2019
2020 1/1/2020
–
28/2/2020 181 days Non
1/4/2020
– Resident
31/5/2020
1/8/2020
–
30/9/2020

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EXERCISE 1
Mr. Raffies was in Malaysia for the following
periods:1/7/2018 – 31/12/2018 (184 days)
1/2/2019 – 28/7/2019 (178 days)
1/3/2020 – 31/10/2020 (245 days)

Determine the residence status of Mr. Raffies for years of assessment 2018 until 2020.

EXERCISE 2
Mr. Ghauf was in Malaysia for the following periods:

2/1/2018 – 30/3/2018 (87 days)
1/7/2018 – 5/8/2018 (36 days)
31/1/2019 – 28/2/2019 (29 days)

2/4/2019 – 31/5/2019 (60 days)

1/8/2019 – 1/10/2019 (62 days)

8/11/2019 – 18/12/2019 (41 days)
1/3/2020 – 5/4/2020 (36 days)

Determine the residence status of Mr. Ghauf for the year of assessment 2018 until 2020.

EXERCISE 3

Miss Julie is Australian citizen and work in Shah Alam. She was in Malaysia for the
following date:

6/7/2019 – 30/11/2019
1/1/2020 – 15/3/2020
18/4/2020 – 6/6/2020
1/10/2020 – 23/12/2020

Determine the number of days she was in Malaysia and the residence status of Miss
Julie for the year of assessment 2019 until 2020.

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SECTION 7(1)(b)

 In Malaysia for less than 182 days in a basis year and conditions below

 If an individual cannot be resident under section 7(1)(a), then he/ she may qualify

under section 7(1)(b), which provides that:
 the basis year for a period of less than 182 days AND
 that period is linked by or to another period of 182 days or more

consecutive days for the year of assessment immediately preceding or

immediately following that particular year of assessment.

 Temporary absence means the individual is not in Malaysia but he/she can
consideredin Malaysia.

 Temporary absence from Malaysia of the following nature regarded as forming part
of the “period of 182 or more consecutive days for the year of assessment

immediately preceding or immediately following that particular year of
assessment”.

i) The absence is connected with the employee’s service in Malaysia and

owing toservice matter or attending conferences or seminars or study

abroad.
ii) The absence is owing to ill health involving himself or a member of his

immediatefamily (spouse, children and parents: brothers and sisters not

included).

iii) The absence is in respect of social visits not exceeding 14 days in the aggregate.

 Relaxation is given where the period of temporary absence (period during which
anindividual is not in Malaysia) shall be taken to form part of that:
i) period of less than 182 days; and/or
ii) period of 182 days or more consecutively,
provided that the individual must be in Malaysia immediately prior to and after

that temporary absence.

 Starting 2003, an individual is qualified to be a resident even thought he was not in
Malaysia on 31 December and 1 January for the following year. Those 2 days
are consider as temporary absence.

 The temporary absence is considered under section 7(1)(b) only, not for
othersections.

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EXAMPLE 2

Mr. Badrul was in Malaysia for the following periods:

1/12/2019 – 31/12/2019 (31 days)
2/1/2020 – 31/3/2020 (89 days)
1/4/2020 – 30/7/2020 (121 days)
1/11/2020 – 15/12/2020 (45 days)

Determine the residence status of Mr. Badrul for years of assessment 2019 and 2020.
SOLUTION:

Year of Date Day Status Section
Assessment
1/12/2019 31 Resident 7(1)(b)
2019 –

31/12/2019

2020 2/1/2020
–
255 Resident 7(1)(a)
31/3/2020

1/4/2020
–

30/7/2020

1/11/2020
–

15/12/2020

EXERCISE 4

Mr. Rezuan was in Malaysia for the following periods:

1/7/2019 – 20/12/2019 (173 days)
24/12/2019 – 31/12/2019 (8 days)
1/1/2020 – 31/3/2020 (90 days)

For the period 21/12/2019 until 23/12/2019 he was in Egypt for visiting his ill father.
Determine the residence status of Mr. Rezuan for years of assessment 2019 and

2020.

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EXERCISE 5
Mr. Hilmi was in Malaysia for the following periods:

1/11/2019 – 31/12/2019 - 61 days
1/1/2020 – 10/1/2020 - 10 days (social visit – French)
11/1/2020 – 12/7/2020 - 183 days

Determine the residence status of Mr. Hilmi for years of assessment 2019 and 2020.

EXERCISE 6
Mr. Adam was in Malaysia for the following
periods:

1/11/2019 – 31/12/2019 (61 days)
2/1/2020 – 30/4/2020 (119 days)
1/5/2020 – 7/5/2020 (7 days) – (visiting his ill cousin)

8/5/2020 – 6/7/2020 (60 days)

Determine residence status for Mr. Adam for years of assessment 2019 and 2020.

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SECTION 7(1)(c)

In Malaysia for 90 days or more (not necessarily consecutive days) and was either resident
or in Malaysia for 90 days or more in 3 out of the 4 immediately preceding that particular years
assessment either:

a) Resident in Malaysia within the meaning of this Act for the basis year in question; or

b) In Malaysia for a period or periods amounting in all to 90 days or more in the basis year
in question

EXAMPLE 3

Mr. Jeya was in Malaysia for the following periods:

1/1/2017 – 31/12/2017 - 366 days

1/1/2018– 31/1/2018 - 31 days

1/1/2019 – 31/8/2019 - 243 days

1/2/2020 – 31/5/2020 - 120 days

Determine the residence status of Mr. Jeya for years of assessment 2017 until 2020.

SOLUTION:

Year of Date Day Status Section
Assessment
1/1/2017 – 31/12/2017 365 Resident 7(1)(a)
2017 1/1/2018 – 31/1/2018 31 Resident 7(1)(b)
2018 1/1/2019 – 31/8/2019 243 Resident 7(1)(a)
2019 1/2/2020 – 31/5/2020 120 Resident 7(1)(c)

2020

EXERCISE 7

Mr. John was in Malaysia for the following periods:

1/6/2017 – 30/8/2017 - 91 days

1/1/2018 – 3/4/2018 - 93 days

1/8/2019 – 29/10/2019 - 90 days

1/3/2020 – 30/6/2020 - 122 days

Determine the residence status of Mr. John for years of assessment 2017 until 2020.

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EXERCISE 8
Mr. Hussam had the following record of stay in
Malaysia:

1/6/2016 – 31/12/2016 - 214 days
4/1/2017 – 25/2/2017 - 53 days
29/1/2018 – 30/4/2018 - 93 days
1/3/2019 – 31/5/2019 - 92 days
1/1/2020 – 30/4/2020 - 120 days

From 1/1/2017 until 3/1/2017, Mr. Hussam went to holiday in Thailand.

Determine the residence status of Mr. Hussam for years of assessment 2016 until 2020.

EXERCISE 9
Mr. Idrus was in Malaysia for the following number of days:

Year of Date No. of
assessment days
1/10/2017 –
201 30/12/2017 91
7 1/1/2018 – 11/7/2018
192
201 1/2/2019 – 10/7/2018
8 160
1/1/2020 – 14/4/2020
201 104
9

202
0

Determine the residence status of Mr. Idrus for years of assessment 2017 until 2020.

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SECTION 7(1)(d)

Resident for the 3 immediately preceding basis years and for the immediately following
basis year.

Based on the above said circumstance, an individual may be found to be a resident for a
particular basis year even though he or she might not have been in Malaysia at all in that
basis year.

EXAMPLE 4

Mr. Raziq was in Malaysia for the following periods

1/1/2016 – 31/12/2016 - 365 days

1/1/2017 – 31/1/2017 - 31 days

1/1/2018 – 30/11/2018 - 334 days

1/3/2020 – 31/12/2020 - 306 days

Determine the residence status of Mr. Raziq for years of assessment 2016 until 220.

SOLUTION: Date Day Status Section

Year of 1/1/2016 – 31/12/2016 365 Resident 7(1)(a)
Assessment 1/1/2017 – 31/1/2017 31 Resident 7(1)(b)
1/1/2018 – 30/11/2018 334 Resident 7(1)(a)
2016 0 Resident 7(1)(d)
2017 - 306 Resident 7(1)(a)
2018 1/3/2020 – 31/12/2020
2019
2020

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EXAMPLE 5

Miss Zara was an Indonesian citizen. She works for Syarikat Kontena Nasional
Berhad atPelabuhan Tanjung Pelepas since year 2014. She was in Malaysian for the
following periods:

21/6/2015 - 20/9/2015 (92 days)
7/3/2016 - 30/12/2016 (300 days)
1/1/2017 - 5/1/2017 (5 days)
6/6/2018 - 7/9/2018 (94 days)

11/5/2020 - 9/11/2020 (183 days)

Determine the residence status for years of assessment 2015 until 2020 and give
reason for your answer.

SOLUTION:

Year of Day Statu Section Reason
Assessment s -

2015 21/6/2015 - 92 NR -
20/9/2015

2016 7/3/2016 - 300 R 7(1)(a) More than 182 days
30/12/2016

2017 1/1/2017 - 5R 7(1)(b) Less than 182 days and
5/1/2017 94 R 7(1)(c) linked with more than 182
7(1)(d) days in 2016
2018 6/6/2018 - 0R
7/9/2018 183 R Current year more than 90
days and 3 years before
2019 - resident or more than 90
days
Resident for 3 years before
and 1year after

2020 11/5/2020 - 7(1)(a) More than 182 days
9/11/2020

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EXERCISE 10
Mr. Amin was in Malaysia for the following
periods:

1/7/2016 – 31/12/2016 - 184 days
1/1/2017 – 10/2/2017 - 41 days
30/1/2018 – 31/7/2018 - 183 days

1/5/2019 – 10/5/2019 - 10 days
1/1/2020 – 31/8/2020 - 243 days

Determine the residence status of Mr. Amin for years of assessment 2016 until 2020.

EXERCISE 11
Miss Nina has the following record of stay in
Malaysia:

1/1/2015 – 15/7/2015 - 198 days
16 days
16/12/2016 – 31/12/2016 -

1/1/2017 – 15/7/2017 - 197 days

1/4/2018 – 15/7/2018 - 106 days
1/5/2020 – 31/12/2020 - 245 days

Miss Nina goes back to Brunei on 31/12/2020 and does not intend to return to

Malaysia. Determine the residence status of Miss Nina for years of assessment

2015 until 2020.

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PRACTICAL EXERCISE

QUESTION 1

a) Mr. Freedy from Sydney arrived in Malaysia on 10 May 2016 and left Malaysia
permanently on 31 July 2020. His pattern of stays in Malaysia was as follows:

Year of assessment Periods
2016
10 May – 16 June 2016
2017 1 December – 31 December 2016
2018 1 January – 31 December 2017
2019 1 January – 5 February 2018
4 January – 28 February 2019
2020 1 March – 15 May 2019

1 January – 31 July 2020

Determine the residence status of Mr. Freedy for the year of assessment 2016
until 2020 with the relevant sub-section of Income Tax Act 1967.

b) Propose the appropriate reasons for every sub-sections, ITA 1967 that
given for answer (a) for the year of assessment 2016 until 2020.

QUESTION 2
a) Ms. Suryati, an Indonesian citizen staying in Malaysia for the following date:

Periods No. Remark
of s
1/1/2015 – 31/3/2015 Day
1/7/2016 – 31/12/2016 s Travel to Melaka
1/1/2017 – 15/1/2017 90 Kuala Lumpur – business
1/6/2018 – 31/8/2018 Travel to Tioman Island
1/10/2019 – 30/11/2019 184 Business visit to Kuantan
1/1/2020 – 31/7/2020 Kedah-business
15 Selangor – business

92

61

213

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Required:

State the residence status of Ms. Suryati for each year, with the relevant sub - section
of the Income Tax Act 1967

a) Mr. Kim arrives in Malaysia on 30 Mei 2016. He was in Malaysia for the
following periods.

Periods No. of Days
30/5/2016 – 18/6/2016 20 (in Malaysia)
19/6/2016 – 3/7/2016 14 (holiday in Bali)
4/7/2016 – 31/8/2016 59 (in Malaysia)
1/9/2016 – 15/9/2016 15 (attend conference in Thailand)
16/9/2016 – 30/11/2016 76 (in Malaysia)
1/12/2016 – 11/12/2016 11 (visit ill’s father in Oman)
12/12/2016 – 31/1/2017 51 (in Malaysia)
1/3/2017 – 31/8/2017 184 (in Malaysia)
1/7/2018 – 28/9/2018 90 (in Malaysia)
1/3/2019 – 31/5/2019 92 (in Malaysia)

Required:

Determine the residence status of Mr. Kim for the years of assessment 2016 until
2019. Quote the relevant section to support your answer.

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QUESTION 3
Mr. Ghafur comes to Malaysia on 1/6/2014. Her pattern of stay in Malaysia was as
follows:

1/6/2014 – 30/9/2014 - 122 days
1/12/2015 – 31/12/2015 - 31 days
1/1/2016 – 31/3/2016 - 91 days
15/4/2016 – 15/7/2016 - 92 days
22/7/2016 – 31/12/2016 - 163 days
1/1/2017 – 28/2/2017 - 59 days
1/7/2017 – 31/8/2017 - 62 days
1/2/2018 – 28/2/2018 - 28 days
1/1/2019 – 31/3/2019 - 90 days
1/8/2019 – 31/8/2019 - 31 days
1/10/2019 – 20/12/2019 - 81 days

Mr. Ghafur was in Singapore for social visit from 1/4/2016 until 14/4/2016 and social
visit in Vietnam from 16/7/2016 until 21/7/2016.

Required:
Determine Mr. Ghafur’s residence status for the relevant year of assessment. Give
reasons for your answer.

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QUESTION 4

Mr. Hamilton, a France engineer, arrived in Malaysia on a five (5) year contract with a
multi- national corporation based in Kuala Lumpur on 1 October 2016. His pattern of
stay for the next five years is as follows:

Period of stay Remarks No of
days
1/10/2016 – 31/12/2016 In Malaysia
1/1/2017 – 31/1/2017 In Malaysia 92
1/2/2017 – 14/2/2017 France (visit wife) 31
15/2/2017 – 31/7/2017 In Malaysia 15
1/8/2017 – 7/8/2017 In Singapore 168
8/8/2017 – 31/12/2017 In Malaysia 7
1/1/2018 – 31/1/2018 In Malaysia 145
1/2/2018 – 31/5/2018 France (official visit) 31
1/6/2018 – 31/7/2018 In Malaysia 121
1/8/2018 – 30/10/2018 France (official visit) 61
31/10/2018 – 31/12/2018 In Malaysia 91
1/1/2019 – 30/4/2019 In Tokyo 62
1/5/2019 – 31/7/2019 In Malaysia 120
1/8/2019 – 31/12/2019 France (official visit) 92
1/1/2020 – 1/5/2020 In Malaysia 153
121

Mr. Hamilton terminated his contract prematurely and left Malaysia on 1 May 2020 for
Parisas he wanted to spend more time with his family.

Required:
Determine the residence status of Mr. Hamilton for the years 2016 to 2020.

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QUESTION 5

a) Mr. Sufi, a Japan citizen comes to Kuala Lumpur for the service of
“Ministry ofTourism”. The following pertains to his pattern of stay since his

arrival, 2011

Period Days
31
20/11/2011 -20/12/2011 108
15/9/2012 – 31/12/2012 14
222
1/1/2013 – 14/1/2013 123
23/1/2013 – 31/8/2013 100
14/2/2014 – 16/6/2014 19
24/8/2015 – 1/12/2015
191
13/12/2015 – 91
31/12/2015 208
1/1/2016 – 10/7/2016 183
1/2/2017 – 2/5/2017
24/3/2019 – 17/10/2019
1/6/2020 – 30/11/2020

Additional information:
i. From 15/1/2013 to 22/1/2013, Mr. Sufi was in Italy to attend a seminar related

to hiscareer in Malaysia.
ii. He was not in Malaysia in year of assessment 2018.

Required:

a) Determine the residence status of Mr. Sufi for the year of assessment 2011 up
to 2020and quote the relevant sections.

b) State THREE (3) advantages of an individual who is resident compared to
a non- resident.

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QUESTION 6

Mr. Shah is a consultant. In his career, he always goes for job visit at outside
Malaysia. Hewas in Malaysia for the following periods:

Periods Days
122
1/9/2010 – 31/12/2010 92
365
1/10/2011 – 31/12/2011 42

1/1/2012 - 31/12/2012 76
184
18/11/2013 – 50
29/12/2013 36
1/1/2014 – 18/3/2014
46
1/7/2014 – 31/12/2014 75
320
1/1/2015 – 20/2/2015 104
228
26/11/2015 –
31/12/2015
1/1/2016 – 15/2/2016

2/10/2016 – 15/12/2016

16/2/2018 – 31/12/2018

19/3/2019 – 30/6/2019

16/2/2020 – 1/10/2020

Additional Information:

i. Mr. Shah was in Singapore from 19/3/2014 to 30/6/2014 to attend a
conference related to his career.

ii. He was not in Malaysia in year of assessment 2017.

Required:

Determine the residence status of Mr. Shah for the year of assessment 2010 until
2020 and give reason to support your answer.

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QUESTION 7

Mr. Fugero is a Philippine citizen, worked in Malaysia. He was in Malaysia for the
following periods:

28/8/2015 – 13/12/2015 108 days
10/2/2016 – 3/9/2016 206 days
4/1/2017 – 31/12/2017 363 days
1/1/2018 – 20/1/2018 20 days
16/2/2018 – 6/5/2018 80 days
25/4/2019 – 30/7/2019 97 days
1/6/2020 – 30/10/2020 152 days

Required:

a) Determine the residence status of Mr. Fugero for year of assessment 2015 to
2020. Quote the relevant section.

b) If on 1/1/2018 – 20/1/2018 Mr. Fugero went to Phuket for a family holiday,
determine the residence status for that year. Quote the relevant section.

QUESTION 8

a) Mr. Rayyan commenced employment with a Taiwan company in October 2014
overseeing his employer’s operations in Taiwan and Malaysia. His record of
stays in Malaysia from 2015 to 2020 is as follows:
Note

1/8/2015 – 30/9/2015 [1]
10/12/2015 – 31/12/2015
1/2/2016 – 15/7/2016

20/8/2016 – 10/9/2016

5/11/2017 – 28/12/2017 [2]

10/1/2018 – 25/7/2018
9/ 4/2019 – 22/4/2019
5/3/2020 – 30/4/2020
15/7/2020 – 1/9/2020

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Notes:

(1) From 16 July 2016 to 19 August 2016 (both dates inclusive), Mr. Rayyan was in
Australia to visit his sister who was undergoing medical treatment.

(2) From 29 December 2017 to 9 January 2018 (both dates inclusive), Mr.
Rayyan was inThailand to attend a seminar.

Calculate Rayyan’s number of days in Malaysia and determine his residence status
for the year of assessment 2015 up to the year of assessment 2020. Support your
answers by stating the relevant subsections of the Income Tax Act 1967.

b) Mr. Marchallo was in Malaysia for the following periods:

Periods Days
1/1/2010 - 28/2/2010 59
92
1/10/2011 -
31/12/2011 184
1/7/2012 - 31/12/2012 91
1/2/2013 - 2/5/2013 100
1/3/2014 - 8/6/2014 Brazil
1/7/2015 – 4/7/2015 (conference)
5/7/2015 - 31/12/2015 180
169
1/1/2016 - 18/6/2016 101
1/9/2018 - 10/12/2018 104
19/3/2019 - 30/6/2019 228
16/2/2020 - 1/10/2020

Determine the residence status of Mr. Marchallo for the year of assessment 2010 to
2020 and give reason to support your answer.

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QUESTION 9

a) Explain the situation when an individual can be treated as a permanent resident
in Malaysia under Section 7(1)(b) of Income Tax Act 1967 (including
explanation of the temporary absence).

b) Mr. John arrived in Malaysia on 1 July 2015. His activities are as follows:

Dat Place Day
s s
e 62
1/7/2015 – 31/8/2015 Malaysia 15
76
1/9/2015 – 15/9/2015 Attended conference in Sydney
11
16/9/2015 – 30/11/2015 Malaysia 51
184
1/12/2015 – 11/12/2015 Visited his father sick in Oklahoma
90
12/12/2016 – 31/1/2016 Malaysia 214

1/3/2017 – 31/8/2017 Malaysia

1/7/2018 – 28/9/2018 Malaysia

1/3/2020 – 30/9/2020 Malaysia

Required:

Determine the residence status of Mr. John for the years of assessment 2015 until
2020 and state the relevant section.

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QUESTION 10

Miss Feena is a consultant. In his career, she always goes for job visit at outside
Malaysia. Hispattern of stay in Malaysia was as follows:

Basis Year Periods Days
2013 17/12/2013 – 31/12/2013 15
2014 1/1/2014 – 31/12/2014 365
2015 1/1/2015 - 27/10/2015 300
2016 1/7/2016 – 28/9/2016 90
2017 Not in Malaysia 0
2018 1/3/2018 – 8/7/2018 130
2019 22/12/2019 – 31/12/2019 10
2020 1/1/2020 – 1/3/2020 60

Required:

Determine the residence status and quote the section for the relevant years. Give
reason for every section.

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