Income Tax Act 1967

Issue: Lee Corporation decided to pay a bonus to all employees who have been with the company for more than 6 years. The directors passed the resolution on 10 December 2007 to the effect that all employees who had been with the company for 6 years or more were to be paid a bonus of RM 2,500. The money was actually received by the employees on 5 January 2008.

Answer: : Under Section25(1) of ITA 1967, where gross income from an employment is not receivable in respect of any particular period; and first becomes receivable in the relevant period, it shall when received be treated as gross income of the relevant person for the relevant period; the bonus was not payable in respect of any particular period and therefore, when received by the employee, must be taken into account as gross income for the basis period in which the income was first receivable. The amount was first receivable when it was voted by the directors on 10 December 2007 and is, therefore, to be taken into account in calculating gross income for the year ended 31 December 2007.