: Compare and Contrast the Three Categories of Scope of Charge to Income Tax

At first we need to assess the characteristics for ordinary income. Ordinary income is generated from personal exertion (i.e. Salary income), property (rent, interest) and carrying out business activities. According to ITAA 1997, section 6-5 (1) , the assessable income constitutes income derived from ordinary concepts. There are some provisions listed under section 10-5 may be effect the treatment of ordinary income.

Malaysia is a country of democracy, a multiparty system. The ruling party Barisan Nasional has been in power for over 25 years. That fact has provided the country with a high degree of stability, which is an important factor for companies investing in the country. Corruption exists in the country. This may be an obstacle for foreign companies, as it increases the company's costs and could cause problems. Transparency International takes 47th Malaysia out of 180 countries in its Corruption Perception

Individuals thrive off producing income in order to meet their day-to-day needs and wants. Tax is imposed on these income producing activities to provide the government revenue. This involves identifying the various ranges of assessable income. The legal question which must be addressed is any of the income that was earned by these individuals assessable income under the Australian income tax assessment act? To answer this question, we must determine if a nexus exists between Australia and the person(s) being taxed by applying the concepts of Residency, Source and Derivation.

According to the ITAA97, assessable income is defined as income that can be taxed, provided the taxpayer earns enough to exceed their tax-free threshold1. Allowable deductions are defined as any amounts that reduce the taxpayer’s taxable income. Only expenses incurred in the running of a business can be claimed as allowable deductions. In addition, it is not permissible to claim for the ‘Goods and Services Tax’ (GST) component

Each individual pays income taxes when they receive enough wages, and they also pay sales taxes when they purchase for goods. There are diverse kinds of taxes which are should be paid by both sellers and buyers. Many politicians of a country greatly consider the fairness of paying taxes to receive high attention (206). The fairness of taxing based on the ideal tax system which is fair, equivalent and clear to all taxpayers. There are two conflicting principles of fairness of taxes; one is the benefits principle and another is the ability-to-pay principle.

Tax system is a legal system of imposing and collecting taxes from the citizens of the country. As it has been stated by Albert Einstein, the hardest task in the world is to understand the tax system of a country. The United States’ tax system is so complicated that its tax code contains almost 3 million words and 6,000 pages. Moreover, the taxes implied by city and state governments add more complexity to the federal taxation system. In this case, we do not need to understand the complexity of tax code system in order to get acquainted with the significant role of taxes in American society.

My opinion about the legislation is refers to laws made by a person or body, which has power to make law. In Malaysia, Parliament and Legislative Assemblies have powers to enact laws in their respective areas. Laws made by Parliament may extend to the whole country. However, laws enacted by a State Assembly only

Malay is the largest ethnic group in Malaysia and Malay language is their mother tongue. Malay language is Malaysia’s official language.

Under the s 6 – 1 (1) of Income Tax Assessment Act 1997 (ITAA97) (Cth), assessable income includes both ordinary income and statutory income. Ordinary income can be defined as income derived from ordinary concepts (s 6 -5 (1) ITAA97). The common forms of ordinary income include salary, wages, rental income, royalties, dividends and interest payment. To decide if the income is assessable or non-assessable income, the courts has derived the factors to categorize the income by principles as follows:

To avoid or reduce territorial double taxation of the same income derived by the taxpayer, an agreement between two contracting countries called Double Taxation Agreement (DTA) is signed. It is also called Double Taxation Treaty, as it has the status of a ‘treaty’. Articles under the agreement cover various areas. While Article 7 of Malaysia’s double tax treaties denies Malaysia the right to tax business profits of an enterprise where the enterprise has no permanent establishment in Malaysia, this principle looks into a few essential issues.

The ruling party of Malaysia, Barisan Nasional has been in power since the country’s independence in 1957. This fact has provided Malaysia a high degree of stability and the confidence of foreign investors / businesses.

Malaysia consists of two parts: Peninsular Malaysia and Sabah and Sarawak, which are located along the northern rim of the island of Borneo. Based on

Continuous rapid economic growth has raised Malaysia from an agricultural and commodity-based low-income economy to a successful middle-income economy. As a mixed economy, Malaysia has elements of a free market economy nevertheless with intervention government. Malaysia's economic activity consist of a mixture of sectors whereas mixed of capitalism and socialism The strong economic performance has helped improve the quality of life for Malaysians and supported advances in education, health, infrastructure, housing and public amenities and others.

A company must have at least one Company Secretary. The secretary could be the natural person and also the resident of Malaysia. The Secretary should own the professional bodies or licensed by the SSM. The office in Malaysia should be registered also. Every company need to prepare its accounts and to be audited by approved auditors in Malaysia every year. The auditors work for the company who must be approved auditors in Malaysia (How to register a company in Malaysia? n.d.).

(4) Regular financial assistance shall not, except where the applicant is in the opinion of the Committee especially deserving of assistance , be given to any person other than a Malaysian citizen.