education about malaysian taxation principles and practice Part 4

5.0 Accruing in or derived from
Malaysian income tax system is founded on the modified territorial concept. Income accrued in or derived from Malaysia will be taxed at the time of accrual or derived notwithstanding the fact that the income may not have been received in Malaysia.

There are two important factors to determine the assessability of income :
(i) the 'accrued / derived' test;
(ii) the geographical boundaries of 'Malaysia'.

5.1 'Accrued/derived' test
Accrued means 'right to receive' while derived has been defined in the Act according to the sources of income as follows :

Section Sources of income Derivation section
4(a) Business 12
4(b) Employment - general 13(2)
- public services, statutory authority 13(3)
4(c) Dividends 14(1)-(3)
Interest 15
Discounts -
4(d) Rents -
Royalties 15
Premiums -
4(e) Pensions 17(1)-(3)
Annuities and other periodical payments -
4(f) Others -
4(g) Special classes of income 15A