Transcript Arthur Andersen template - FPAM – Financial Planning

Leaving Your Legacy
through
Charitable Planning
Chua Tia Guan
Head of Tax & Financial
Planning
Great Vision Advisory Group
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Definition of Legacy
• No clear definition
• Money or Wealth?
• Reputation?
• Vision?
• Moral values?
• Contribution to the society?
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Why the RICH use charitable planning as
a means of leaving their Legacy?
• 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?
• Preservation of wealth
- legacy for generations
- children not capable
- fish vs fishing net
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Charitable Planning
(a) : Determine your Cause
(b) : Determine who can benefit
(c) : Decide how much to set
aside
(d) : Determine the type of
vehicle
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(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
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(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
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(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
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(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
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(d) : Determine the type of vehicle
If using Charitable Foundation/
Institution/ Trust
Tax
Approved
Organization/
Institution/
Trust
vs
Non-tax
Approved
Organization/
Institution/
Trust
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(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
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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
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Tax Approved vs Non-Tax Approved Body
Issues for consideration:• Approval requirement for changes
• Investment
• Tax benefit
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(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)
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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 you
www.greatvision.com.my
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