‘Explain need to tax donations for religious bodies’

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PETALING JAYA: A DAP lawmaker claims to have no knowledge of a recent amendment to the Income Tax Act 1967 that has made some types of donations received by non-Muslim religious bodies taxable.

Seputeh MP Teresa Kok said she was not aware of the amendment passed by Parliament on Nov 23 and the Senate on Dec 15.

“We had long parliamentary sessions and nobody looked at the Income Tax Bill. Normally, Prime Minister Najb Razak will announce it in his budget speech,” she told FMT.

The Borneo Post quoted a tax consultant as saying the amendment meant that income not exclusively for religious worship or advancement of religion would be subject to income tax with effect from assessment year 2017.

The accountant told the daily that before the amendment, all types of income, including dividends, were tax exempted. After the amendments, he said income that was not for charitable purposes would be taxable.

In the report, Kuching Chinese Community Charitable Trust Board chairman Dr Chou Chii Ming said religious institutions such as churches and temples and charitable bodies would now need to pay tax on some of the donations received as income.

The amendment to Paragraph 13(1)(b) of Schedule 6 of the Income Tax Act 1967 specifies that income “solely for charitable purposes for year of assessment” is exempted from tax.

Kok said the amendment could have slipped past MPs as there had been many Bills requiring their attention, which had also been largely centred on PAS president Hadi Awang’s private member’s Bill in the last sitting.

“I urge the prime minister to clear the air about whether the interpretation of the amendment of the Income Tax Act is correct and to explain the rationale behind it.

“If our reading of the amendment is indeed correct, then the government should reverse it.”

She advised religious organisations to be prepared for the effects of the amendment on their income.

“It will be unfair for the non-Muslim religious bodies as much of their income is derived from donations. They are not profit-oriented bodies.”

Lembah Pantai MP Nurul Izzah Anuar said the government was usually expected to engage religious institutions before introducing any amendment impacting their operations.

“The problem is the arbitrary style of governance under BN, which negates any effort at engagement and at providing proper accountability.”