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Charitable Planning

Leaving Your Legacy through. Charitable Planning. Chua Tia Guan Head of Tax & Financial Planning Great Vision Advisory Group. Definition of Legacy. No clear definition. Money or Wealth?. Reputation?. Vision? . Moral values?. Contribution to the society?.

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Charitable Planning

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  1. Leaving Your Legacy through Charitable Planning Chua Tia Guan Head of Tax & Financial Planning Great Vision Advisory Group

  2. Definition of Legacy • No clear definition • Money or Wealth? • Reputation? • Vision? • Moral values? • Contribution to the society?

  3. Why the RICH use charitable planning as a means of leaving their Legacy? • Strong sense of calling • Visionary • Tax benefit purposes • Reputation and recognition

  4. 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

  5. Charitable Planning (a) : Determine your Cause (b) : Determine who can benefit (c) : Decide how much to set aside (d) : Determine the type of vehicle

  6. (a) : Determine your Cause 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

  7. (b) : Determine who can benefit • 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

  8. (c) : Decide how much to set aside • 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

  9. (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

  10. (d) : Determine the type of vehicle If using Charitable Foundation/ Institution/ Trust Tax Approved Organization/ Institution/ Trust Non-tax Approved Organization/ Institution/ Trust vs

  11. (d) : Determine the type of vehicle 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

  12. Tax Approved vs Non-Tax Approved Body • Issues for consideration:- • Approval from IRB • Board of Trustee • Beneficiaries • Minimum fund disbursement requirement

  13. Tax Approved vs Non-Tax Approved Body • Issues for consideration:- • Approval requirement for changes • Investment • Tax benefit

  14. (d) : Determine the type of vehicle • 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)

  15. 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

  16. 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

  17. A) Company limited by guarantee (Companies Commission Malaysia) • Any amendment to M&A or appointment of new directors will need Minister’s approval

  18. 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

  19. 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

  20. 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

  21. Conclusion • Objectives? • Beneficiaries? • Eligibility or criteria? • Board of Director/ Board of Trustee? • Funding • Project paper (including projection of receipt and expenditure)

  22. Thank you www.greatvision.com.my

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