Is Profit made from the resale of Coldplay ticket taxable?

I talk about tax treatment on illegal income made from resale of cold play ticket

Introduction

The recent fiasco of the resale of cold play ticket that skyrocketed to RM43,000 per ticket has really drawn everyone attention.

The ministry of Domestic Trade and Cost of Living Ministry are investigating on whether there is any breach for the resale of the ticket under the Consumer Protection Act 1999.

However, the profit made from the resale of the ticket is still subjected to the law. For the individual who sold and profited from the marked up price, despite in breach of the law, is still accountable to pay taxes from the proceed of the sale.

Let says, they buy the coldplay ticket at RM288, and they have to re-sell it at RM5000.

They make a whopping profit of RM4,712. They will still be taxed on the income received on the RM4,712.

They will taxed under section 4(f) of the Income Tax Act 1967 (ITA 1967).

Despite their act of reselling the ticket is illegal under the law, income tax law will still tax them on the basis that income tax law will not differentiate illegal income or legal income. As long as it is income, the law will tax the reseller on the profit made.

Case Law 1 : DGIR v LTS (1985)

The case law of DGIR v LTS (1985) has shown that a timber log company that did not possess any timber log license, had been taxed on the income it received from the sale of its illegal timber log.

Case Law 2 : Margaret Luping v KPHDN (2000)

The same approach has been adopted in the case of Margaret Luping v KPHDN (2000), Court of Appeal decision where the issue was related to net proceeds paid to the state government of sabah.

Conclusion

In tax law, there is no equity. if you have earned monies from illegal activities, you will still need to pay taxes, at the same time, you are also to deduct your expenditure in deriving your income in the production of your income even though from illegal activity.