Jumlah terhutang daripada Pengarah

Loans or Advances to Directors by the Company - Section 140B of ITA
1967
Section 140B of ITA 1967 provides that where a company gives loans or
advances to its directors without interest or with interest below arm's length, the
company is deemed to have a gross income consisting of interest from such
loans or advances. This interest is taxable under paragraph 4(c) ITA 1967. The
determination of the interest income is based on the formula provided under
section 140B.

This provision applies to loans or advances to a director defined under
subsection 75A(2) ITA 1967. The provision is only applicable for loans and
advances which are finance by internal funds and not applicable for those
financed by external funds or third parties.
This provision is effective from the year of assessment 2014. However, if the
basis period of a company for the year of assessment 2014 is starts in
2013 the recognition of interest income for the purposes of section 140B
is the interest on the outstanding loans or advances beginning from
1/1/2014.

Example
A Sdn Bhd closes its accounts on 30 April each year. For the accounting period
1 May 2013 to 30 April 2014 (year of assessment 2014), the company granted
interest-free loans to the its directors on 1/7/2013 amounting to RM50,000. The
directors did not make any repayments throughout the whole accounting period
for the year of assessment 2014.
For purposes of section 140B, the interest income of the company for the
year of assessment 2014 is computed on the balance of the loan for the
period 1/1/2014 to 30/4/2014 only. The interest rate charged is based on the
Average Lending Rate (ALR) as published monthly by Bank Negara Malaysia
on its website at www.bnm.gov.my.

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