Gross Income From An Employment

Gross Income from an Employment
By Tan Thai Soon

The following shall be treated as gross income from an employment.

Section 25 (1)
Where gross income from an employment:-
(a) is not receivable in respect of any particular period; and
(b) first becomes receivable in the relevant period,
it shall when received be treated as gross income of the relevant person for the relevant period.

Comment
The assessability of employment income is on receipt basis, and "received" means legal entitlement of the income or is able to obtain the receipt on demand e.g. Salary. However, any bonus proposed in 2008 but not receive in the same year will not be assessed as gross income in that particular year.

Section 25(2)
Where gross income from an employment is receivable in respect of the whole of the relevant period it shall when received be treated as gross income of the relevant person for the relevant period.

Section 25(3)
Where gross income fails to be treated under subsection (1) and (2) as gross income for the relevant period, then if its receipt first becomes known to the DG on a day more than 5 years after the end of the relevant period, it shall be treated for the year of assessment which begin 5 years before the beginning og the year of assessment which includes that day.

Comment
This section serves as an anti avoidance provision to prevent loss of revenue, if the DG discovers the receipt of employment income is time barred.

Gross Income From A Business

Gross Income from Business

Section 24(1)
Where a debt owing in respect of
a) any stock in trade sold
b) any services rendered
c) the use or enjoyment of any property
the amount of the debt shall be treated as gross income.

Comment
This section use accrual concept is in comparable with the accounting principle.

Section 24(2)
The market value of any stock in trade which has been taken for private purposes without payment or any stock withdrawn from business for gifts or donation other than disposal.

Comment
A furniture trader give a compliment furniture sofa set to his relative for wedding gift. A sum equal to the market value of the furniture set will be added back to gross income for tax purpose.

Section 24(5)
Interest income of an investment dealing business or a money lending business.

Section 30(1)
Recovery of a bad debt which has previously been allowed as a deduction in ascertaining the adjusted income.

Section 30(4)
Waiver of debts by creditors which pertaining to any amount of expenditure previously allowed as a deduction in ascertaining the adjusted income.

Comment
Any purchases from trade creditor will reduce the gross income, therefore any debts written off by the creditor should be added back to increase the gross income for tax purpose.