Introduction
Taxation of a unit trust in Malaysia is governed by the Income Tax Act 1967 (ITA). This article explains the residence status of a unit trust, deductible expenses, and special deductions under Malaysian tax law.
Residence Status of a Unit Trust
Under subsection 61(3) of the ITA, a unit trust is considered a resident in Malaysia for a basis year if any trustee member of the trust body is resident in Malaysia for that year of assessment.
Deductibility of Expenses
Normal Deduction (Section 33(1))
Expenses wholly and exclusively incurred in the production of gross income are deductible.
Examples include:
- Interest on loans to finance investment purchases
- Direct expenses incurred in letting real property (other than REIT/PTF)
Special Deduction (Section 63B: Permitted Expenses)
Some expenses are not normally deductible but can qualify for a special deduction.
| Expense Type | Examples |
| Manager’s Remuneration | Payment to unit trust managers |
| Unit Holder Register | Maintenance of register of unit holders |
| Share Registration | Fees for registration of shares |
| Professional Services | Secretarial, audit & accounting fees |
| Administrative Costs | Telephone, printing, stationery |
| Postage | Mailing-related expenses |
Key Takeaways
- A unit trust is taxed based on trustee residency under ITA Section 61(3).
- Expenses directly related to income generation are deductible under Section 33(1).
- Certain administrative and management costs are allowed as special deductions under Section 63B.
- Unit trusts should maintain proper documentation to support all claims.
FAQ
Q1: How is a unit trust considered a resident in Malaysia?
A: If at least one trustee is resident in Malaysia for that basis year (Section 61(3), ITA).
Q2: Can all expenses of a unit trust be deducted?
A: No. Only expenses wholly and exclusively incurred in producing income (Section 33(1)) are deductible. Others may qualify for special deductions under Section 63B.
Q3: Do unit trusts pay the same tax as companies?
A: No. Unit trusts are taxed under specific ITA provisions, not under the same structure as companies.
ANC Group – Your Personal Tax Advisor
Tax consulting is the core service of ANC Group. Our tax professionals provide clients with comprehensive tax support and guidance. We offer tax consulting and compliance services for expatriates, entrepreneurs, and listed and non-listed companies.
Our tax consulting services include business tax, transaction tax, personal tax, and corporate income tax. We don’t just guide you in interpreting and applying complicated taxation rules, but to explore new opportunities and business trends.
ANC Group keep you abreast with Malaysia tax updates and any changes in the local regulations.
We work closely with industry specialists, authorities, and associated professionals within ANC Group to provide the best-in-class integrated tax planning solutions. ANC specialists coordinate the accounting and taxation services to bring your business to success.
If you need professional tax advisory services regarding the Malaysia Income Tax Act 1967, our team is ready to assist you. Contact us here to discuss how we can support your business.
