Budget 2010 - Personal Relief

The Budget 2010 announced on 23 October 2009 proposes for increment of personal relief from RM8,000 to RM9,000 is a welcome measure as the Malaysian are facing a difficult time following the economic downturn in 2008.

However, I would think that the increment is insufficient as compare with the increase of the cost of living. An increment of RM1,000 per annum is only approximate to RM80 per month. Is this sufficient for us to cope with the rising cost of our daily spending (excludes luxury spending)?

I think the personal relief should be higher ranging from RM10,000 to RM12,000 per annum. Besides that, government should also increase the child relief for taxpayers in order to relieve the burden of taxpayers having children. Is the child relief of RM1,000 per annum still sufficient in nowadays?

Besides that, the government also propose for a reduction of maximum personal income tax rate from 27% to 26%. The reduction benefits those middle and upper income group taxpayers because the maximum personal income tax rate of 27% only taxed for taxpayers with yearly income of RM100,000 and above. As one of the taxpayer mentioned in an interview, it is good to have some saving but it is nothing to shout about. The move is generally not appreciated by those group of taxpayers as the saving is insignificant to them.

On the contrary, if the personal income tax rate would remain at 27% but the personal relief could be higher, it will help larger group of taxpayers.

In conclusion, the increment in personal relief is a welcome measure but it is also nothing to shout about.

Closure, Strike Off or Winding Up of a Sdn. Bhd.

Businessman are keen to know the procedures, time required and costs involved in setting up a Sdn. Bhd. in Malaysia. However, as a well organised businessman, we should aware or familiar the procedures, time required and costs involved in closing or winding up of a Sdn. Bhd. I would think that closure of company is important too when the business does not develop as per our initial business plan, we need to close the company in a proper manner to ensure our name are not being blacklisted by Suruhanjaya Syarikat Malaysia (SSM).

If we would like to close a Sdn. Bhd., we need to segregate the company into two (2) categories, solvent and insolvent companies.

Solvent companies are those company having positive shareholders' fund (Share capital + retained profits) or in layman terms, company make money before and have enough money/reserve to refund to the shareholders.

Insolvent companies are those company having negative shareholders' fund (Share capital - accumulated losses) or in layman terms, company make losses previously and have no money/reserve to refund to the shareholders. Besides that, shareholders are expected to advance to the company in order to close the company.

Under S308 of the Companies Act 1965, the company may make application to the Registrar of Company to strike off the company. The strike off is the power given to the Registrar of Company to close the company.

We refer to the guidelines issued by SSM, insolvent companies which are dormant or ceased operations in prior years are allowed to apply to Registrar to strike off the company. There are other criteria stated in the guidelines i.e. the shareholders must not be corporate shareholders, all penalty due to government bodies fully settled and etc must be complied before the Registrar would consider the strike off application.

I would strongly encourage the businessman to make the application to strike off the company if the basic conditions are fulfill. As per our experience, it is unlikely that the strike off will be rejected if the conditions are fulfill. In addition, SSM has recently announce that the moratorium period to strike off the company has been extended to 31 December 2009. It is easier for SSM and the applicant to strike off the company during this moratorium period.

The most important thing that need to be noted is the cost involved to strike off a company is very nominal, application fee is only RM120 and accounting firm is charging normally around RM700 for the strike off exercise. Thus, the total cost involved is less than RM1,000.

The application process normally takes 3 - 6 months and it is faster as compare to closure of company under the winding up process.

Step up to apply to strike off the company if the company had ceased business operations and no intention to commence business in the near future. It is a cost saving measure rather than maintaining the company and expose to the penalty risk if any non compliance arises.

S308 SSM Strike Off Guidelines

http://www.ssm.com.my/berita/media/New308_070112.pdf