I've seen many contest that offers cars and even house as the grand prize and ppl actually won it. My question is do they need to pay tax on the prize?

Say a person win a car worth rm100k, does the person get taxed according to the value of the car?

How about if the person sold off the car and take the money, will it be taxed?

This post has been edited by zenwell: Dec 20 2010, 08:25 PM

I think yes,
of course u need to consult with lhdn for futher explanation

Interested to know also for those Jackpot from Magnum and Toto.

Windfall gains are not taxable.

It is not taxable? FREE MONEY?

U quote wrong people? I did not said it's not taxable. I mean I interested to know whether those jackpot is taxable or not?

This post has been edited by almeizer: Dec 21 2010, 02:03 PM

Sure got tax , that's why people buy 4D from syndicates as they give higher payout without the tax.

the money u pay for the ticket already inclusive of tax...prizes of the winning is not subjected to tax... tat y many ppl who wan to run away from lhdn...they go buy winning ticket from the winner and show it to lhdn...

As i've said it is not taxable. WHY? Because when you buy RM 1 ticket, you also paid RM 0.10 for Government Service Tax and RM 0.05 for service tax.

Mr. A jackpot RM 10million. RM 10 million will be paid nett to Mr. A, and the money will not be tax by LHDN. Of course you have to show them proof that you kena.

Mr. A jackpot RM 10million. Assume Mr. B has RM 10 million undeclared money. Then, Mr. B can buy Mr.A ticket for RM 10.5 million. Then Mr. B go to buy something worth RM10 million WITHOUT PAYING any TAX for that RM 10million and declare it to LHDN it is JACKPOT.

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Added on December 21, 2010, 2:21 pmNO tax on rewarded money. What you are saying is PAYING Government Service Tax which is totally different thing.

This post has been edited by edyek: Dec 21 2010, 02:25 PM

if u win a car from the context is tax exempted as lhdn treat it as windfall.because it was very slim chances that u can win second time.

Ask yourself this:
Instead of say "winning something" think of it as father gives the son a house. Will it get taxed? The answer is no.
However, when LHDN comes knocking on the door; one would still need to prove that it's a winning from legitimate company or a gift from some others.

Because either way, if it's a legitimate business; they would have declared the winning to LHDN. Thus a check and balance would spot a cheat.

This post has been edited by b00n: Dec 21 2010, 05:14 PM

ooh so it's the responsibility of the party giving out the price to declare to lhdn la. ok understand already. tq

Do not misunderstand yeah.
If like I say, a legitimate company; they would need to declare on their audit how much is "gifts". Or if they give company cars/apartment etc which is specific; they would declare in their audit too.

However, if we're talking about father giving an apartment to his son; then the "father" doesn't need to report to LHDN as there's nothing to "declare" in the 1st place to LHDN. However, if LHDN comes knocking; then one would need to proves by providing documents if any or maybe involving witness to clear the matter up.

Actually for companies like Shell & Petronas, do frequently giv out cash prizes, bside attracting more ppl, do they get larger tax cut or something like that?

Income Tax taxes on income.

To qualify as income the receivables must satisfy two conditions: It must be a periodic/regular, it must come in from a defined source.

Your above scenario of receivables does not satisfy the first condition, hence it is not defined as income.

Not taxable.

Xuzen

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Added on December 22, 2010, 2:28 pmIf the function of giving out prices is to obtain more business, then the taxpaying company can claim as expenses.

Xuzen

This post has been edited by xuzen: Dec 22 2010, 02:28 PM

Usually anything done in connection to promoting the company to attract more sales would be considered as qualified expenses. In this case the competition is considered as means to bring in more sale hence would be allowed.

Nope. Windfall gains are NOT TAXABLE
Like Magnum, Toto etc

how about gift?

let say my best friend gave rm100,000 to me.. it is taxable?

Xuzen explained the condition for taxable income. I guess that's not taxable.

If you have such friend, introduce to me, I won't mind be his/her best friend