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Charitable PlanningCharitable Planning
Leaving Your Legacythrough
Leaving Your Legacythrough
Chua Tia Guan Head of Tax & Financial Planning
Great Vision Advisory Group
Chua Tia Guan Head of Tax & Financial Planning
Great Vision Advisory Group
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Definition of LegacyDefinition of Legacy
• Moral values?• Moral values?
• No clear definition• No clear definition
• Reputation?• Reputation?
• Vision? • Vision?
• Money or Wealth?• Money or Wealth?
• Contribution to the society?• Contribution to the society?
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Why the RICH use charitable planning as a means of leaving their Legacy?Why the RICH use charitable planning as a means of leaving their Legacy?
• Strong sense of calling
• Visionary
• Tax benefit purposes
• Reputation and recognition
• Strong sense of calling
• Visionary
• Tax benefit purposes
• Reputation and recognition
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Why the RICH use charitable planning as a means of leaving their Legacy?Why the RICH use charitable planning as a means of leaving their Legacy?
• Preservation of wealth
- legacy for generations
- children not capable
- fish vs fishing net
• Preservation of wealth
- legacy for generations
- children not capable
- fish vs fishing net
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Charitable PlanningCharitable Planning
(a) : Determine your Cause(a) : Determine your Cause
(c) : Decide how much to set aside
(c) : Decide how much to set aside
(b) : Determine who can benefit(b) : Determine who can benefit
(d) : Determine the type of vehicle
(d) : Determine the type of vehicle
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Generally in Malaysia, the work 'charitable' can be classified into four categories;
(a) for the relief of poverty;
(b) for the advancement of education;
(c) for the advancement of religion;
(d) for other purposes (e.g. medical, sports, cultural etc) beneficial to the community
(a) : Determine your Cause (a) : Determine your Cause
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• is it limited by nationality?
• whether for specific race, colour, religion or group of people?
• whether the founder’s family members can benefit from the trust or foundation
(b) : Determine who can benefit (b) : Determine who can benefit
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• will it be a lump sum contribution or periodical contribution
• will the trust/ foundation be dependent on the founder’s contribution only or also from the general public
• Depends on the distribution requirement and budget
(c) : Decide how much to set aside(c) : Decide how much to set aside
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(d) : Determine the type of vehicle(d) : Determine the type of vehicle
Types of charitable planning vehicles available:-
• Setting up foundation/ institution/ trust
• Using testamentary trust
• Using insurance trust
• Outright gift
Types of charitable planning vehicles available:-
• Setting up foundation/ institution/ trust
• Using testamentary trust
• Using insurance trust
• Outright gift
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(d) : Determine the type of vehicle(d) : Determine the type of vehicle
Tax Approved
Organization/ Institution/
Trust
Tax Approved
Organization/ Institution/
Trust
Non-tax Approved
Organization/ Institution/
Trust
Non-tax Approved
Organization/ Institution/
Trust
vsvs
If using Charitable Foundation/ Institution/ Trust
If using Charitable Foundation/ Institution/ Trust
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Benefit of Tax Approved institution/ organisation/ trust
• Tax deduction on cash donation paid
- Individual/ corporate donors allowed deduction up to 7% of Aggregate Income
• Tax exemption on income (including donation)
- Income fully exempted
(d) : Determine the type of vehicle(d) : Determine the type of vehicle
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Tax Approved vs Non-Tax Approved Body
Issues for consideration:-
• Approval from IRB
• Board of Trustee
• Beneficiaries
• Minimum fund disbursement requirement
Issues for consideration:-
• Approval from IRB
• Board of Trustee
• Beneficiaries
• Minimum fund disbursement requirement
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Tax Approved vs Non-Tax Approved Body
Issues for consideration:-
• Approval requirement for changes
• Investment
• Tax benefit
Issues for consideration:-
• Approval requirement for changes
• Investment
• Tax benefit
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• The institution or organisation may be established through the following
(A) Company limited by guarantee (Companies Commission Malaysia)
(B) Other organisation/ institution (Registry of Societies)
(C) Trust Fund under Trustees’ Incorporation Act (PM’s department)
(d) : Determine the type of vehicle(d) : Determine the type of vehicle
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A) Company limited by guarantee (Companies Commission Malaysia)
• Need to obtain approval from Minister of Domestic Trade and Consumer Affairs
• Need to prepare project paper to state the following:-
i)Company’s Objective
ii) Cash flow projection for first 2 years
iii) Background and profile of the founder
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A) Company limited by guarantee (Companies Commission Malaysia)
• Need to prepare project paper to state the following (Cont’d):-
iv) Donation commitment letter from the founder on the amount to be donated into the Company
v) Background and profile of the board of directors
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A) Company limited by guarantee (Companies Commission Malaysia)
• Any amendment to M&A or appointment of new directors will need Minister’s approval
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B) Other organisation/ institution (Registry of Societies)• Terms of the Foundation governed by the
constitution & Societies Act
• Lengthy process to set-up
• Management of the society (i.e. meeting, voting, etc) need to be clearly stipulated in the Constitution
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C) Trust Fund under Trustees’ Incorporation Act (PM’s department)
• Trust Fund incorporated under Trustees (Incorporation) Act, 1952
• Terms of the Trust Fund governed by the trust deed
• Need to apply to the PM’s department for
the incorporation of the Trust Fundso
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C) Trust Fund under Trustees’ Incorporation Act (PM’s department)
• Appointment of Trustee subject to approval from the PM’s department
• Any subsequent changes need to apply to the PM’s department for approval
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Conclusion• Objectives?
• Beneficiaries?
• Eligibility or criteria?
• Board of Director/ Board of Trustee?
• Funding
• Project paper (including projection of receipt and expenditure)
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Thank youThank you
www.greatvision.com.mywww.greatvision.com.my