Capital gains are not taxable in Malaysia, unless it's your sole source of living income.

That means you buy at rm1 and sell it off at RM2, you get to pocket the whole rm1 profit without kena any tax.

simple google search for capital gains tax.. hm..
https://home.kpmg.com/xx/en/home/insights/2...income-tax.html

"..Additional capital gains tax (CGT) issues and exceptions

Are there additional capital gains tax (CGT) issues in Malaysia? If so, please discuss?

Other than real property gains tax, there is no other CGT.

Are there capital gains tax exceptions in Malaysia? If so, please discuss?

Not applicable.

Pre-CGT assets

Not applicable...."

Based on my understanding if buy stock, your stamp duty is consider a form of tax... besides dividend return is also tax at company side...
So what you get in the end no longer need to be tax.

Wrong.. Dividends are not taxed at company side but pay on behalf by the company for its shareholders.

Upon dividend declaration, the tax is deducted from shareholders and it is the income for the shareholders and taxable.

By then, the dividends which have been paid by the company is able to offset under S108 against any taxes.

Sorry long story short means share holders no need to pay any additional tax right?

profit earned from local stock market is not subjected to income tax. anyway you do pay gst on the cost so it is not completely tax free.

normally countries who have capital gain tax on investment in stock market, also offer some kind of tax credit to offset your losses suffer from investment. malaysia has neither of that.

Did you received any dividend voucher lately?

Did you noticed that there's ZERO taxable income in your dividend voucher?

Do you know Single Tier System it's already effected in 2008?

Next year already 2018, and you still talking about S108 tax credit.

This post has been edited by rapple: Oct 23 2017, 03:47 PM

oh my god.. i left this industry almost 10 years.

What industry you have to be in to know this?

S108 tax credit is claim through shareholders PERSONAL TAX submission YEARLY.

Generally, investment return is treated as capital gain, and capital gain is not taxable.

But if a person use the investment tool to trade upon to make a living, eg. a broker trade stock in the market to make a living, then it is considered trading profit, and trading profit is taxable.

Imputation dividend (tax credit system) already became a history.
From 2014 onwards, all dividends are single tier (aka tax exemption in the hand of shareholders) as it is already taxed at company level.

Knight_2008 is right. Capital gain is not taxed in Malaysia, except it falls under the ambit of S4 of income tax law definition of income

So be careful. If you are a regular trader, then your idea of "capital gain don't need to pay tax" may be taxed under income tax (being assess under carrying on a business). If you thought your capital gain is not taxable, and use the profit to buy car buy house, then IRM may be triggered and you may be at risk.

However, although this is the tax law, I personally have not seen anybody around me kena income tax as a result of trading stock. Or maybe they never tell me they kena audit

And since we are in this topic, same applies to flipping properties. If your frequencies is high, you will be assessed under income tax instead of RPGT. I remember there was an announcement 1-2 years ago by IRB saying if a person buy and sell 2 properties per year, and/or at consistently interval then you will be assessed under income tax instead of RPGT

As for 1 tier dividend, an investor cannot say they are not taxed. Because the company has paid the tax. The company only declare the net income. So you only get dividend which is already net of tax

Unlike the imputation system, where shareholder re-gross back and claim franking credit, and being assessed again. The end result is similar as 1 tier system. But 1 tier system is a lot more straight forward and save a lot of administration

This post has been edited by Showtime747: Oct 23 2017, 05:05 PM

it is define clearly that "to make a living", or as trading - buy sell buy sell .....

i think i can start a class in lowyat forum to teach you all about badges of trade.

key word is badges of trade.

let me question all those people who said capital gain without looking into badges of trade.

money changer, they 'invest' in foreign currency, then sell it to you and make a profit out of it. they do it 24/7, so its capital gain or is it business gain? how do you determine ?

there are rules defining what is capital gain and what is not, dont see the word forex trading, share trading, investment = capital gain in nature....

You already gave the early hint/answer...

Trading is definitely taxable.

Money changer is trading currency by offering money exchange service, their business is not investing.
So their profit is taxable.

Flipping property actually may be seen as a form of trading as well.
That's why those flip or trade excessive number of property, those profit made may be seen as "trading profit".

If the property trade is treated as trading profit, then RPGT is not applicable.

This post has been edited by cherroy: Oct 24 2017, 09:56 AM

Aiyo! In short, no need to pay when you declare income tax

after reading all posts from this page.....it seems like your above post is "not with the normal consensus of others" unless more "IFs" and "When" details are furnished to complete the short post of yours.

TS is just asking about capital gain (and dividend) from unit trust and stock which would have taxes already deducted if any when cash out

he is not asking about whether dividend from unit trust and stock are taxable

something like tat... because without knowing the full picture, one can not be certain on the treatment. for example,

A invest 1mil in few stocks and make and make 500k within a year.
B invested 1mil in stock market, making transaction on daily basis. accumulate hundred of transactions a year to make 500k.

these 2 scenarios would have different treatment although 'A' might be fall under income tax instead of capital gain, but its arguable since its only few transactions. but B making hundred or thousand transactions a year is very likely to be non capital gain.

this is because the moment they saw their own keywords stocks, forex they will jump into conclusion ... capital gain in nature.... but in fact, badges of trade or other case law to define what is trade and what is capital gain... not just the word, investing/stock/forex.

for years i have been seeing these few confused topics on tax arising from forumer :-

1. foreign income not taxable
2. capital gain not taxable

We need to know how to define foreign income and how to define capital gain. i saw a lot of people define these 2 using their own interpretation.

This post has been edited by klthor: Oct 24 2017, 10:44 AM

so if my wife not working and use my money and generate income from stocks, she has to pay tax? Then i cannot claim the rm3k wife relief?

It depends on your wife whether she is trading the stock typically like constantly with high volume daily/monthly or in other word, trading stock is becoming like her job, or just buy and hold type for investment.

3K relief is for wife not working, if she works as stock trader, then clearly it will be not entitled to claim the relief.

Whilst dividend from stocks is single tier which is tax exempted.

You need to distinguish the difference in term of the income definition.

The issue here will be resolved if one can define if his investment is 'investing' in nature or 'trading' in nature.

Nobody here could make an exact distinction between trading and investing. I don't blame you because I myself do not know. IRD are also very vague on this.

1. It's not about the number of trades you make, but it's about the duration you hold. The more cash in hand you have, the more trades in smaller amounts you could make. So, number of trades should not be the determinant to categorise you as an 'investor'. I used the word 'should not' because I am not sure what IRD/LHDN thinks.

2. We have to clearly define how long of a holding period of an investment for it to be classified as 'investing' and how long to be classified as 'trading. From what I heard, it's 3 months, not sure though. So, if you hold securities for more than 3 months, it's considered as capital gain tax.

At the heart of it there is confusion because LHDN also not sure about how to treat capital gain... every so often then will sue someone in court and try to get capital gain declared as income... all this because of our income tax act and how they try to define income ...

part 2 section 4f
(f) gains or profits not fall
ing under any of the foregoing
paragraphs.

so far if i remember correctly the judge throw out the last attempt because he say section (f) is to broad... but dunno now how.... goverment so poor... maybe do to capital market whaT They do to the poor doctors

Agree, as well as Knight_2008. Capital gain is non taxable.

at first, I thought it was an easy and a straight answer just like yours....but then after I continued to read more postings by other forummers on this 2 pages.....I had second thought.

the fact capital gain is not taxable remain unchanged, it boils down to how you define capital gain. for example, we all know speeding is against the law. but what is speeding? definition of speeding etc etc... some said 80km/h, some said 90km/h, some said 110km/h, some said 60km/h

like now, i still can see some said the number of transactions doesnt matter but the duration of holding. more than 3 months is consider capital gain etc. that is why the confusing part kicks in, interpretation of the law. we all have our own interpretation. im not a lawyer, you guys can search badges of trade case law. if you still insist on your own interpretation, you can always take LHDN to court. once you won, it will become a case law and a guide line for the rest of us. if LHDN won, they will use this case law to take action against all other similar cases.

This post has been edited by klthor: Oct 25 2017, 10:41 AM

ini macam, why dont my wife just use my name and account to trade? in that case, i dont have to pay any extra tax on the earning and wife still considered not working and i can claim the rm3k tax rebate rite?

If lhdn define yr stock income as trading...then ?

i am already salaried and paying a hefty income tax

Paying a hefty income tax and capital gain/stock trading is two different matter.

If IRB deem your capital gain as an income then you will be fine plus the tax rate for that year of assessment.

i dont understand this.... since trading is no done full time,

what about if dump money in to asm funds? say rm600k? the interest is stated as tax free but can they say it is income?

Distribution/dividend from unit trust is already tax therefore you won't have issue on this.

Having a full time job doesn't mean your "side income" it's non-taxable.

This post has been edited by rapple: Oct 25 2017, 11:27 AM

lol maybe we should stop spreading fear to small time traders.

http://msiataxjunior.blogspot.my/2011/11/b...s-of-trade.html

have a read and thats it. from what i see, unless you make it like your bread and butter...AKA arms' length transaction. else you are safe.

This post has been edited by klthor: Oct 25 2017, 11:39 AM

thanks guys

justs for some final clairification

so if my wife spends lavishly, buys bmw, MK, overseas trips mainly europe ... all money given by me, she cannot be inquired by lhdn right? all money i have records and paid tax by me,

well, they can send a letter to your wife to ask for source of 'fund'. once she can prove it, source of fund from you. then they will turn to you to check your income. if your wife shows fund from you 500k, but your income tax form stating 50k a year. good luck.

ok thanks
i can prove my income....

unless you are super big fish, else they will just look at the facts, logic, evidence and discuss with you and call it a day. big fish, raid, freeze accounts, check transaction yada yada. so far i only eye witness once LHDN raid big fish, i think 2~3 teams consist of 20 lhdn officers and police...raid office, house, and registered office. freeze bank accounts.... really once in a life time.

Like someone said, if your stock income is lesser than 90% of your total income, then you should be safe. Better verify with LHDN on the percentage.