What does Section 74 of the Income Tax Act 1967 state?

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Section 74 of the Income Tax Act 1967 Mandates Payment of Tax Arrears by Next-of-Kin

Section 74 of the Income Tax Act 1967 stipulates that income tax arrears are not automatically discharged upon the taxpayer's death. Instead, the responsibility for settling these outstanding tax obligations transfers to the administrator or next-of-kin of the deceased individual. This legal provision is maintained to uphold the public's sense of responsibility and motivation towards tax compliance, preventing a decline in tax payments due to the perception that death absolves all debts.
Continued Liability for Deceased Taxpayers

The Income Tax Act 1967, specifically Section 74, clearly outlines that tax debts do not cease to exist with the taxpayer's demise. The amount of tax charged is calculated based on the taxable income earned up to the point of death. If the heirs or executors are financially capable, they are expected to fulfil these tax liabilities.
Rationale for Maintaining the Law

Deputy Finance Minister Datuk Seri Ahmad Maslan has stated that the government does not intend to amend this section of the Act. The rationale behind this stance is to prevent a potential decrease in the public's motivation and sense of responsibility to pay taxes. It is believed that without this compulsion, some individuals might act irresponsibly, viewing death as a means to settle all outstanding debts, including those owed to the Inland Revenue Board (IRB).
IRB's Stance on Taxpayer Commitments

The Chief Executive Officer of the IRB, Datuk Dr Mohd Nizom Sairi, has previously affirmed that the next-of-kin of deceased taxpayers bear full responsibility for all their commitments, which include the management and payment of income tax. This reinforces the legal framework established by Section 74, ensuring that tax obligations are addressed even after the taxpayer's passing.

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What does Section 74 of the Income Tax Act 1967 state?

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