182 consecutive days for tax can be counted in 2 years?

@KimTNT

the financial year in MY is Jan -Dec for any year. You cannot club 2022 and 2023.

Your physical presence of > 182 days should either be in 2022 or 2023. Ad you already took 2 or more breaks in 2022, you are in-eligible to be tax resident last year.

now you are in MY from Jan 2023 (Nov 2022 should not be counted for 2023), but planned your trip for Jun, instead move your trip by a month to July 2, 2023. This will count your 182 days and then you become tax resident and you can file tax returns for 2022 as well. Or if you had your trip planned well in advance for June, then you must Stay in Malaysia from July 1 - Dec 31, 2023.

Baseline: it's 182 days in one stretch without breaking either in H1 or H2 of that particular year with 14days social Visit but not necessarily. Hope this helps

Hi @pen2punite

Are you trying to say that even the submission window is closed for the year 2022 which is around mid may 2023 .  you still can file for refund after 2nd July (once 183 days is completed) . Or we have to visit LHDN and file manually ?

No. You cannot file in July 2023 for the assessment year 2022. The deadline for filing of the tax return form and payment of any balance of tax payable for the year of assessment 2022 is 30 April 2023. However, the MIRB has granted a grace period until 15 May 2023 for e-filing. Penalties will be imposed by the MIRB for late submission of the tax return form or payment of the balance of tax payable.

Filing will happen as per the deadline for every assessment year , for 2022 it's mid May. However, any excess tax paid during 2022 will be refunded.

The sole purpose of tax residency is to bring the flat 30% tax as an expat to the income slab (you can refer in the website).

or else you will end up paying 30% flat always.

hope this helps.

@pen2punita Thanks for your reply,

As you said above if he stay in Malaysia until July 2 he becomes tax resident for 2022, By the time his role changes to tax resident the submission window is closed for 2022. So in this case we have to visit LHD to claim the refund or wait until 2023 filing?

"Baseline: it's 182 days in one stretch without breaking either in H1 or H2 of that particular year with 14days social Visit but not necessarily. Hope this helps"

I think that is incorrect. One can qualify for tax residency for ANY 182 days in a calender year.The consecutive day rule is only relevant if you have less than 182 days in one year but have the 182 days in a preceding or following year.

The first thing to remember is that you must qualify already as a tax resident to link.

"7. (1) For the purposes of this Act, an individual is resident in Malaysia for the basis year for a particular year of assessment if –

(a) he is in Malaysia in that basis year for a period or periods amounting IN ALL to one hundred and eighty-two days or more;"

Note the statement "a period or periods". The term does not require this be a single continuous period. That would certainly apply for his qualification for this year since he did not qualify under (A) for his previous year. Somehow he must gain tax residency for that initial year by actually spending the time in Malaysia.

The second way to qualify for tax residency is if you have already fulfilled status (A) and want to extend that to a year in which you have fewer than 182-Days. If A then B, maybe. Or the other possibility is no A the previous year...but you have 182 days of continuous residency.

"(b) he is in Malaysia in that basis year for a period of less than one hundred and eighty-two days and that period is linked by or to another period of one hundred and eighty-two or more CONSECUTIVE days (hereinafter referred to in this paragraph as such period) throughout which he is in Malaysia in the basis year for the year of assessment immediately preceding that particular year of assessment or in that basis year for the year of assessment immediately following that particular year of assessment:

Provided that any temporary absence from Malaysia—

(i) connected with his service in Malaysia and owing to service matters or attending conferences or seminars or study abroad;

(ii) owing to ill-health involving himself or a member of his immediate family; and

(iii) in respect of social visits not exceeding fourteen days in the aggregate,

shall be taken to form part of such period or that period, as the case may be, if he is in Malaysia immediately prior to and after that temporary absence;"

https://phl.hasil.gov.my/pdf/pdfam/individual.pdf

So in this case - if one has >182-Days in 2023...one can qualify for tax residency the preceding or following year provided that one can link your days in those years to a CONSECUTIVE period totaling 182 days of residency.

Easy example. Let us say I'm in Malaysia from July through December 2022 (184 days) -> I'm already a Tax resident for that year...I stayed another month in Malaysia in January 2023. Since I did not take a holiday in that period I would also gain tax residency status for 2023. In fact, I could even have taken a holiday in January 2023 of 14 days of less. That's because the 17 days I WAS RESIDENT in late January still would link to my earlier year and give me enough consecutive time (Note: I did not violate the out-of-country rule).

The trap here is if I had taken a full month off in November 2022. I would not have the 182 days for 2023 if I took such a long holiday . So I would lose tax residency status unless I had accumulated days earlier in the year 2022.

Let's say I still qualified for the >182 days (non-consecutive) because my total days were enough in the calender tax year though. Maybe I had forgotten I had spent a a month in early 2023 in Malaysia (so March [gap April-June] then July-October [gap November] and then December. That's 185 days...

******

But how does that 1 month holiday impact my linking for 2023??? My counting for consecutive linking days would only begin in December 2022 (after the disqualifying long holiday). I can only use that one early January 2023 holiday (14 days or under) ...so my consecutive period would not be fulfilled if I take another holiday. I have one month (Dec 1-31, 2022 = 31 days) broken by an early mid january two week holiday (-14 days) then returning from mid-January (@17 days) then Feb 1, 2024 to July 15, 2024 (150 days). So the total consecutive days of 182 could be linked to fulfill both years (if you had not already qualified).

But if you took another holiday you'd have to simply get the >182 days. So beware taking more than one 14-day holiday in any 196-day cycle period unless you can really assure that you can fulfill the 182 day minimum in BOTH years.

There is a third way to qualify for tax residency once you have established it.

"(c) he is in Malaysia in that basis year for a period or periods amounting in all to ninety days or more, having been with respect to each of any three of the basis years for the four years of assessment immediately preceding that particular year of assessment either

(i) resident in Malaysia within the meaning of this Act for the basis year in question; or

(ii) in Malaysia for a period or periods amounting in all to ninety days or more in the basis year in question;

or

(d) he is resident in Malaysia within the meaning of this Act for the basis year for the year of assessment following that particular year of assessment, having been so resident for each of the basis years for the three years of assessment immediately preceding that particular year of assessment."

I understand d) as meaning that if you have been a tax resident for three years...then the fourth year you only need 90-days to qualify.

c) makes my head swim.

https://phl.hasil.gov.my/pdf/pdfam/individual.pdf