Guidelines on the Application for Approval of a Covid-19 Relief Fund Under Subsection 44(11C) of the ITAThe Malaysian Inland Revenue Board (“MIRB”) has, on 5 May 2020, issued the “Guidelines on the Application for Approval of a Covid-19 Relief Fund under Subsection 44(11C) of the ITA.” Under Section 44(11C) of the ITA, a tax deduction against the aggregate income of a person (subject to restriction) is allowed for cash donations or contributions in-kind, made by the person for any project of national interest approved by the MOF. The issuance of the Guidelines demonstrates that the Ministry of Finance (“MOF”) recognises the initiatives to fight against the Covid-19 outbreak as a project of national interest.
The above Guidelines explain the conditions and procedures in applying for the approval of a Covid-19 Relief Fund (“Relief Fund”), including:• eligibility criteria for the applicants; • qualifying recipients of the Relief Fund; and• qualifying donations.
The salient points of the Guidelines have been set out below.
Qualifying DonationsThe following donations can be set off against the aggregate income of a qualifying person.
Aggregate Income
Cash
EquipmentSuch as ventilators, patient beds, air conditioners
Disposable itemsSuch as masks, hand sanitiser, gloves, test kits and Personal Protection Equipment
Financing the provision of permanent or temporary infrastructureExamples: tent / marquee tent for additional beds
** The amount to be deducted shall not exceed the difference between 10% of the aggregate income and the total amounts deducted under Sections 44(6) [cash donations to approved institutions/organization], 44(11B) [cash donations for approved sports activity] and 44(11D) [wakaf or endowment made] of the ITA.
Raw / readily edible food itemsExamples: rice, oil, soy sauce, sugar, canned food and readily edible food items
• A non-profit oriented entity established and registered in Malaysia as:(a) A company incorporated and limited by guarantee under the Companies Act 2016 –
Companies Commission of Malaysia;(b) A society registered under the Societies Act 1966 – The Registry of Societies Malaysia;(c) Trustees of bodies or association of persons incorporated under the Trustees (Incorporation)
Act 1952 – Legal Affairs Division of the Prime Minister’s Department; or• An institution/organisation approved under subsection 44(6) of the ITA (subject to certain
conditions)
• Government departments / agencies • Non-governmental agencies which are registered with relevant authorities (as specified)• Government / private hospitals• Public universities• Orphanages / nursing homes for the elderly / homes of people with disabilities • The homeless, hardcore poor and refugees **• Animal shelters / zoos
The donations must not be made for profit or political motives. Recipients should also have their income tax file numbers (if available), except for the recipients indicated with ** above.
Conditions and Procedures
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1 Qualifying Applicants of the Relief Fund
Qualifying Recipients of the Relief Fund
3 • Start and end date of the collection of funds for the Relief Fund• List of identified donors (if available)• Targeted donation amount (if available)• List of identified donees and forms of donations
Please refer to Appendix B of the Guidelines for the application form.
The founder / applicant of the Relief Fund is required to appoint board members / committee members / members of the board of trustees to manage the fund. More than 50% of the members should have no relationship with the founder of the Relief Fund. ‘Relationship’ is defined as:-• Family relationships such as parents, children and siblings including close family relationships;• Employer and employee relationships; or• Directors / employees from the same company or group of companies
The founder and members of the Relief Fund, including the employees of the entity that has established the Relief Fund, are not allowed to enjoy benefits from the Relief Fund.
• For cash donations, an official receipt containing the relevant details must be issued to donors [Item 3.6(a) of the Guidelines]
• For donations in-kind, the Relief Fund (as approved by the MOF) will need to issue an acknowledgement of the receipt of donations from the donor with its official stamp as per the format in Appendix D of the Guidelines
• The donor is required to keep the official receipt / acknowledgement of receipt as well as the approval letter from the MOF (whichever relevant) for the purposes of claiming a tax deduction, which can be made from Year of Assessment 2020
Conditions and Procedures (Cont’d)
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Appointment of Members
Documents to be Kept for Income Tax Purposes
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• The application for the establishment of the Relief Fund can be submitted to the MOF from 30 April 2020 to 31 August 2020
• An Activity Implementation Performance Report must be submitted to the MOF and MIRB every 3 months
• The MOF reserves the right to withdraw its approval if it is found that the Relief Fund is not adhering to the stipulated conditions
• A separate bank account has to be opened for the establishment of the Relief Fund
• The appropriate actions must be taken to dissolve the Relief Fund upon the expiry of the approval period granted by the MOF as stipulated under Item 6.1 of the Guidelines
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
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