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Rental Income - Cash Basis or Accrual Basis ?

#Taxation is taxing.


#ITA1967 is an interesting law and you can never understand unless you really spend hours and hours and days to study it, and yet may still not understanding most of it.

[Click here for a copy from AGC.Gov.my]


For Rental Income the following section are referred:-

* Section 2 - define RENT

* Section 4(a) - rent may be assessable to tax as business income (subject to rules/tests)

* Section 4(d) - rent is assessable to tax as 'investment' income.

* Section 27(1) - Basis period for rent

#ITA1967 = Income Tax Act 1967


The key word use in the Act is #receivable


What is #receivable as interpreted ?

(extract from Author Dr Choong Kwai Fatt's book)

"due and payable", would constitute 'received'


Example:-

Rent pay quarterly in arrears, according to the Leaseback Agreement.


Rent for the months of Feb 2019 & March 2019 due on 31.03.2019


IF the financial year ended 28 Feb 2019, the rent is not yet due, therefore no rent to be recognised as Gross Income for the Year of Assessment


IF the financial year ended 31 Mar 2019, the rent is due, therefore rent to be recognised as Gross Income for the Year of Assessment 2019.

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