Executor and Responsibilities A person who is appointed to manage the estate from a deceased that leaves a will.
. The court will decide who is executor whether his/her appointed by law/court. Executor being a personal representative is responsible to provide for any income tax which is known to be payable, or can reasonably be foreseen to be payable, before making any distribution to beneficiaries. Failure to fulfill this responsibility will render an executor liable to pay a penalty equal to the amount of tax which the failure relates.
Where an individual dies in the basis year for a YA, the
executor is assessable and chargeable to tax on the chargeable income of the deceased: a) for the basis year in which he died; b) for the next succeeding basis year; and c) for the previous years (if necessary)
The chargeable income refers to any income accruing to him (as if he had not died)
The period commencing on the date of death to the
date of last distribution of assets to the beneficiary is known as the period of administration. There is no time limit as to the period of administration. During this period, the executor or administrator would continue liable for the income tax liability on income accrued or derived from Malaysia or received in Malaysia from outside Malaysia on behalf of the deceased person.
The assessment or the additional assessment must be
raised within 3 years after the end of the YA for the basis year in which the death occurred. This is to avoid the executor from being called upon to account for matters which expired many years ago refer to records already destroyed or accountable to personal liability.
Deceased person Chargeable on income received from beginning of the year until date of death. Based on calendar year. Can claim relief( for parents and children) and rebate (zakat) as usual. Executor Chargeable on income received from date of death until the end of the year. Cannot claim relief and rebate. Can claim special relief RM8,000 if deceased person domiciled in Malaysia.
The income for YA between deceased person and executor shall be apportioned as follows:
SOURCE OF INCOME
Business income/ (loss) Interest and dividend Rental income
APPORTIONMENT
Time basis Receipt basis Time basis
*foreign source income received by any person is tax exempt.
Annuity
Definition: income is purchased with the a sum of money and the capital has gone and has ceased to exist, the principal having been converted into an annuity.
Executors remuneration Allow for deduction(if executor is giving authority to
carry on the business of deceased person. Not allow for deduction if remuneration paid to executor for the administrative work.
Administration expenses
Not deductible
Private and domestic expense E.g: expense incurred after the production of income
or related to the assets held by executor.
Distribution of income Payment made by executor of a deceased person to
beneficiary. Not taxable
Aaron, domiciled and resident in Malaysia for tax purposes, died on 30/9/2009.His sources of income for 2009were as follows:
RM000 Adjusted income/(loss)
Business I (Malaysia)
Business II (Malaysia) Business III (Hong Kong) Other income derived form Malaysia: Interest from fixed deposit a/c(credit on 31.12.2009)
60
(24) 10
Rental income
12
The executor, Fahrin, are resident of Malaysia made the following payment outs of the income of the estate of Aaron (deceased)in 2009: -Annuity of RM2000 to beneficiary,Nabil -Distribution of RM3000 to beneficiary,Zizan
Required: a) Chargeable income of Aaron(to date of death) b) Chargeable income of Estate of Aaron(Fahrin) c) Total income of beneficiary Nabil and Zizan.
a) Computation of CI of Aaron for YA 2009
RM000 Business I (3/4 x60) Business II Business III Interest Rental (3/4 x 12) AGGREGATE INCOME (-) current business loss TOTAL INCOME 45 9 54 (24) 30
(-) personal relief-special relief CHARGEABLE INCOME
(8) 22
b) Computation of CI of Estate of Aaron(Fahrin)
RM000 Business I (1/4 x60) Business II Business III 15 exempted
Interest Rental (1/4 x 12)
AGGREGATE INCOME (-) annuity payable TOTAL INCOME (-) special relief CHARGEABLE INCOME
8 3
26 (2) 24 (8) 16
c)
Total income for Nabil : Annuity RM000 2
No total income for Zizan as distribution is not taxable
The executor will submit tax return form for deceased
person.
Tax return form is to reconcile actual tax
2 type of return form:
FORM B-executor has to file for deceased person. It
covers income from 1 January to the date of death. FORM T-assessed on the executor on behalf of the deceased person. It covers income of the deceased form the date of death to 31 December.
