HOW IS FOREIGN-SOURCED INCOME TREATED IN MALAYSIA?

We contacted the Inland Revenue Board of Malaysia (IRBM) with this scenario and these questions:

“Let’s say I live and work in Malaysia, but I own a rental property in New Zealand. A tax return will be filed for this property with the Inland Revenue Department of New Zealand. My questions are:

1. If this property generates losses, can these be offset against tax paid in Malaysia by the owner? 
2. If this property generates taxable income, does Malaysia take into account tax paid in New Zealand when calculating the tax in Malaysia?”

Here is their reply, word for word:

1. “Cannot offset/absorb Malaysian Tax , there is difference (sic) tax authority.
2. Yes, rental income derived from property in New Zealand.” 

So, much like the UK (but unlike Australia), your rental losses here in New Zealand can’t be offset against income earned in Malaysia.  However, any tax paid here on profits from rental property will be recognised by the IRBM.

Remember, even though you live and work in Malaysia, you’ll still have filing responsibilities here in New Zealand, namely a non-resident personal tax return/s for the owners and an IR3R rental tax return.

Questions?
Please call us on 0800 890 132 or email us.

Other countries
Please see the following entries for tax treatment of rental property in NZ by Australia, Singapore , Thailand and the UK.

NB: Information provided on this website is not intended to provide an exhaustive or comprehensive statement of tax law and should not be used as a substitute for considered written advice. All information published is subject to our standard terms and conditions and disclaimer

Image courtesy of foto76 at FreeDigitalPhotos.net