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Keyman Insurance Tax Deduction Malaysia

Keyman Insurance Tax Deduction Malaysia
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Quiz of the day - Keyman Insurance Tax Deductible Malaysia

1. Issue

KTP Tax Consultant Sdn Bhd can claim a tax deduction on Mr. Koh Teck Peng personal insurance in KTP Tax Consultants Sdn Bhd?

What is the personal tax impact on Mr. Koh Teck Peng?

In my opinion, the personal insurance paid by the Company for Mr. Koh is not tax allowable as Mr. Koh is control director of KTP Tax Consultants Sdn Bhd.

However, Mr. Koh has to declare the total amount of premium paid in his personal income tax which is taxed under paragraph 4(b) of the ITA

2. Fact

Company Tax impact

There are a number of requirements that must be met in order to claim a tax deduction.

According to Income Tax Act 1967 Section 33(1), expenses only can be deductible if it wholly and exclusively incurred in the generate of income is allowable as a tax deduction.

Refer to Paragraph 4 of Public Ruling No.2/2003 – Key Man Insurance, if the insurance meets the following two requirements, the premium payable on a term life policy or an accident policy which is no return after expiration policy is allowable as a deduction against gross income from a business:-

• The insurance has no element of investment

• beneficial of the insurance must remain with the employer or company not the “key-person” or his family

However, a whole life policy and endowment policy is deemed to have element of investment due to both of these policies have cash value that are redeemable.

Therefore, these two policies would be regarded as a capital asset of a Company and thus the premium paid on these policies would not be allowed for tax deduction under paragraph 5.

Connected person

Addition, if the premium paid for director insurance on life of that person who owns share in the company is not allow to claim tax deduction in controlled company. It is also not permitted to deduct the premium for a ''key-man'' insurance coverage on the life of a business partner or sole proprietor under paragraph 7.

Personal Tax Impact

Refer to paragraph 6.8 Insurance premiums - Public Ruling No.5/2019 – Perquisites From Employment

The amount of the annual premium paid by the Company on behalf of the employee (including his family, his nominee) is a perquisite to the employee and shall reported in employee Form EA.

By reporting in the Form EA in employee, this would results in the amount of annual insurance premium become taxable income for the employee.

3. Reference

  • Public Ruling No: 2/2003 “Key-man” Insurance

    https://phl.hasil.gov.my/pdf/pdfam/PR2_2003.pdf

  • INCOME TAX ACT 1967 - Section 33(1) Adjusted income generally

    https://phl.hasil.gov.my/pdf/pdfam/Act_53_20190101.pdf

  • INCOME TAX ACT 1967 - Section 139 Controlled companies

    https://phl.hasil.gov.my/pdf/pdfam/Act_53_20190101.pdf

  • Public Ruling No.5/2019 – Perquisites From Employment

    https://phl.hasil.gov.my/pdf/pdfam/PR_05_2019_2.pdf

Authored by Ms Lee Liu Shi, audit & tax associates, in her personal LinkedIn post.

DIRECTOR GENERAL OF INLAND REVENUE vs KAYUSAR SDN BHD

DIRECTOR GENERAL OF INLAND REVENUE vs KAYUSAR SDN BHD
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DIRECTOR GENERAL OF INLAND REVENUE vs KAYUSAR SDN BHD

Lesson from Tax Case:

Director General of Inland Revenue (DGIR) had the authority to charge the gain from disposal based on the market value if the taxpayer selling the property at equal to the purchase price to a connected person.

Background information

Kayusar Sdn Bhd is a reputable timber company.

The Company entered into a sale and purchase agreement by selling a condominium unit at RM398,000.00 which was equal to the purchase price.

Tax Issue:

Does transfer of ownership of property between connected persons stated under Para 23 Schedule 2 RPGTA required to be arm’s length price?

IRB opinion:

a) Section 25(2) of RPGT Act 1976 empowers DGIR to disregard and/or vary the transaction as the transaction has a direct effect on the chargeability of the tax.

b) DGIR charged the gain from the disposal of the condominium to the RPGT based on the market value determined by the Jabatan Penilaian dan Perkhidmatan Harta (JPPH).

The decision by The Court of Appeal

a) The Court of Appeal consistently found the Special Commission of Income Tax (SCIT) and High Court did not commit any error of law in their decision.

b) The responsibility was on the Company to prove that the market value determined by JPPH was inaccurate. However, the Company has failed to prove it.

c) The Company failed to discharge its obligation under its own name on 15 May 2014.

Therefore, the Company appeal is terminated with cost.

Source:

https://www.hasil.gov.my/media/rofh2uyb/20220427-revenews-kayusar.pdf

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What are 5 responsibilities of the director under SSM?

What are 5 responsibilities of the director under SSM?
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What are 5 responsibilities of the director under SSM?

1) Lodgement of Annual Return (AR)

Section 68(1) of Companies Act, 2016 require a company to lodge the AR to SSM not later than 30 days from the anniversary of its incorporation date.

Penalty: Fine not exceeding RM50,000.00

2) Prepare Financial Statements

Section 248(1) of Companies Act, 2016 require a company to prepare the financial statements within 6 months of its financial year end.

Penalty: Fine not exceeding RM500,000.00 or imprisonment not exceeding 1 year or both

3) Circulation of Financial Statements

Section 258(1) of Companies Act, 2016 require a company to circulate the financial statements within 6 months of its financial year end.

Penalty: Fine not exceeding RM50,000.00

4) Lodgement of Financial Statements

Section 259 (1) of Companies Act, 2016 require a company Lodge the financial statement to SSM within 30 days from the circulation date.

Penalty: Fine not exceeding RM50,000.00 and if continuing offence, a further fine not exceeding RM1,000 for each day

5) Late Lodgement Fee

SSM issued a Practice Directive No.1/2017 – The Lodgement Requirements and Related Matter that further details out the penalty for late lodgement of documents.

For any documents that is lodged to SSM later than the prescribed timeframe as per stipulated in the Act, the following late lodgment penalty shall apply:

After deadline Penalty(RM)

* 7 days to 3 months RM50
* 4 months to 6 months RM100
* 7 months to 12 months RM150
* 13 months onward RM200

The Company is required to pay this penalty amount on the spot at the time filing for the documents to SSM.

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MSC Malaysia - Tax Benefits

MSC Malaysia - Tax Benefits
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MSC Malaysia - Tax Benefits

Background

Since its introduction in 1996, MSC Malaysia has catalysed and transformed Malaysia into a knowledge-based economy. The strategic initiative was created to foster a conducive ecosystem driven by high-end infrastructure development and ICT companies’ catchment within the identified corridors.

MSC Malaysia, driven by the Malaysia Digital Economy Corporation (MDEC) as

the nation’s lead digital economy agency, has contributed immensely towards the growth of the nation’s digital economy.

Since 1996 Malaysia has attracted 2,794 active MSC-status companies.

What is Multimedia Super Corridor Status?

In 1996, Malaysia launched the Multimedia Super Corridor (''MSC'') initiative, aimed to promote and boost Malaysia's digital economy by offering a range of incentives, including tax exemptions to companies who are eligible to attain MSC status.

MSC Tax Benefits

Overall incentive

  • 100% pioneer status exemption of statutory income (Tier 1 & Tier 2)

  • 5 + 5 years (if extension approved) (Tier 1 & Tier 2)

  • 70% pioneer status exemption of statutory income (Tier 3)

  • 5 + 5 years (if extension approved) (Tier 3)

Category of Tier

  • Tier 1 = Designated premises within MSC Malaysia Cybercities or Cybercentres

  • Tier 2 = Other commercial premises within MSC Malaysia Cybercities or Cybercentres

  • Tier 3 = Not applicable

Other incentives

  • 100% Investment Tax Allowance on new investments from the date on which the first qualifying capital expenditure.

  • Eligible for R&D grants.

  • Freedom to source capital globally.

  • Freedom of ownership by exempting companies from local ownership requirements.

  • Unrestricted employment of foreign knowledge workers

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MSC Malaysia - Promoted Activities

MSC Malaysia - Promoted Activities
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MSC Malaysia - Promoted Activities

Background

Since its introduction in 1996, MSC Malaysia has catalysed and transformed Malaysia into a knowledge-based economy. The strategic initiative was created to foster a conducive ecosystem driven by high-end infrastructure development and ICT companies’ catchment within the identified corridors.

MSC Malaysia, driven by the Malaysia Digital Economy Corporation (MDEC) as

the nation’s lead digital economy agency, has contributed immensely towards the growth of the nation’s digital economy.

Since 1996 Malaysia has attracted 2,794 active MSC-status companies.

What is Multimedia Super Corridor Status?

In 1996, Malaysia launched the Multimedia Super Corridor (''MSC'') initiative, aimed to promote and boost Malaysia's digital economy by offering a range of incentives, including tax exemptions to companies who are eligible to attain MSC status.

MSC Promoted Activities

PU(A) 389 2018 which comes into operation on 1 January 2019, the following activities are promoted activities for income tax exemption purpose under the MSC tax incentives.

  • Big data analytics

  • Artificial intelligence (AI)

  • Financial technology (FinTech)

  • Internet of things (IOT)

  • Cybersecurity

  • Data centre and cloud

  • Blockchain

  • Creative media technology

  • Sharing economy platform

  • User interface and user experience (UI/UX)

  • Integrated circuit (IC) design and software

  • 3D printing

  • Robotics

  • Autonomous

  • Systems/network architecture design and support

  • Global business services or knowledge process outsourcing

Additional new actitivities under Malaysia Digital

  • Virtual, augmented or extended reality

  • Drone technology

  • Advance telecommunication technology

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10% Sales Tax on Low Value Goods

10% Sales Tax on Low Value Goods
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Sales Tax Low Value Goods

Background

The 10% sales tax on low-value goods (LVG) will be in effect from April 1, according to the Royal Malaysian Customs Department.

Goods imported from overseas that are priced under RM500 will be subject to the tax.

RMCD Announcement

According to a statement on RMCD website, LVG sellers are responsible for acquiring ‘Registered Seller’ (RS) status with the Customs Department.

Registration will be required for both Malaysian citizens and foreigners who deal in low-value goods brought into the country via land, sea or air, and exceeds RM500,000 in total sales value within 12 months.

Key Summary :

1. RMCD Announcement on LVG (Low Value Goods) 1/2023

The Royal Malaysian Customs Department (RMCD) has issued an Announcement on LVG (Low Value Goods) 1/2023 (Announcement) dated 6 January 2023.

The Announcement states the following: -

a. The legislation related to sales tax on LVG have come into force on 1 January 2023.

b. The effective date for charging and levying sales tax on LVG will be from 1 April 2023.

c. In accordance with the legislations related to sales tax on LVG:-

i) any person whether in Malaysia or a foreigner;

ii) who sell LVG;

iii) brought into Malaysia by land, sea or air mode; and

vi) the total sales value of LVG into Malaysia exceeds RM500,000 within 12 months,

is responsible for being registered as a Registered Seller (RS).

d. Applicants can start applying to be registered from 1 January 2023.

e. More information regarding registration can be accessed via https://lvg.customs.gov.my

f. Any queries or feedback regarding Sales Tax on LVG can be emailed to mylvg@customs.gov.my

PS : Online shoppers should note that the tax will apply only to the actual value of the goods regardless of shipping fees.

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MSC Tax Incentive : Eligibility Criteria

MSC Tax Incentive : Eligibility Criteria
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MSC Malaysia

Background

Since its introduction in 1996, MSC Malaysia has catalysed and transformed Malaysia into a knowledge-based economy. The strategic initiative was created to foster a conducive ecosystem driven by high-end infrastructure development and ICT companies’ catchment within the identified corridors.

MSC Malaysia, driven by the Malaysia Digital Economy Corporation (MDEC) as

the nation’s lead digital economy agency, has contributed immensely towards the growth of the nation’s digital economy.

Since 1996 Malaysia has attracted 2,794 active MSC-status companies.

What is Multimedia Super Corridor Status?

In 1996, Malaysia launched the Multimedia Super Corridor (''MSC'') initiative, aimed to promote and boost Malaysia's digital economy by offering a range of incentives, including tax exemptions to companies who are eligible to attain MSC status.

Stay tune for more MSC in coming days.

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KTP (Audit, Tax, Advisory)

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

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Amend Borang BE LHDN

Amend Borang BE LHDN
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Amend Borang BE

If you have over-declared your income or under-claimed the tax reliefs in your e-BE submission, you can amend the information via the e-Application for Amended BE.

Online amendment can be made via e-Filing under the following circumstances:

  • Over-declared of income

  • Under-claim for tax relief or tax rebates

Terms & Conditions

1. The original tax return form is submitted via e-Filing (e-BE Form).

2. e-BE Form must be submitted within the stipulated period (not a late submission)

3. e-Application for Amended BE can be submitted once only, within a year of assessment

4. Supporting documents should be uploaded using the format required in the column provided.

Source

e-Application for Amended BE can be accessed starting April 1st 2022.

The e-Application for Amended BE via https://mytax.hasil.gov.my/ > e-Filing

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Amend Borang BE LHDN

Amend Borang BE LHDN
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If you have over-declared your income or under-claimed the tax reliefs in your e-BE submission, you can amend the information via the e-Application for Amended BE.

Online amendment can be made via e-Filing under the following circumstances:

  • Over-declared of income

  • Under-claim for tax relief or tax rebates

e-Application for Amended BE can be accessed starting April 1st 2022.

The e-Application for Amended BE via https://mytax.hasil.gov.my/ > e-Filing

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𝐓𝐇𝐊 (Secretarial, Account/Payroll, Advisory)

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(update) IRB Byhasil

(update) IRB Byhasil
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(update) IRB Byhasil

Latest development on ByHasil

Recent tax questions from clients :

1. Byrhasil is not working

2. What is E-TT?

3. What is virtual tax number in E-TT?

IBR Byrhasil is not working. However, our client can choose to make the tax payment with e-TT.

E-TT tax payment

e-TT method is to generate the Virtual Account Number (VA No.) and is unique for each transaction.

The client still needs to pay the tax with e-banking and the VA no. will be the bank account number.

Read more story on e-TT on our blog

https://ktp.com.my/.../e-telegraphic-transfer.../08apr22

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An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

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A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

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Tax Filing Program 2023

Tax Filing Program 2023
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Tax Filing Program 2023

The Inland Revenue Board (IRB) Return Form (RF) Filing Programme for 2023 is now available on HASiL official portal as a reference for taxpayers to submit their return form this year.

In a statement on Sunday (Jan 1), the IRB said taxpayers dan employers are encouraged to use the e-Filing facility for the submission of RF which will be the primary method for submission of tax returns in the future.

It also encouraged tax agents to use the Tax Agent e-Filing (TaeF) (https://taef.hasil.gov.my/) service to submit RF.

Source

It can be accessed through www.hasil.gov.my or via quick access at https://www.hasil.gov.my/media/mpofkuqz/programmemfailbn_2023.pdf.

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KTP (Audit, Tax, Advisory)

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

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Nombor Bill LHDN FAQ

Nombor Bill LHDN FAQ
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Use of reference number (nombor bill) for IRB tax payment Part 2

This “Nombor Bill” is the “reference number” when making payment for LHDN online or counter.

FAQ

IRB has released FAQ for the “Nombor Bill” and “System E-biliing”

You can scroll down to the bottom through myTax link https://mytax.hasil.gov.my/ and click the ''User Manual'' to download.

Summary Information for the Nombor Bill:-

1. Start from 01.01.2023, taxpayer need to obtain the Nombor bill through ''MyTax'' (but currently unable to login)

2. All payments to LHDN need the Nombor Bill except for PCB and stamp duty

3. Transition period: Currently taxpayer still can use the Income Tax File Number as reference number until 30.06.2023.

Source

Enclosed is the Media Release for “Nombor Bill” from LHDN for your reference.

https://bit.ly/3WBDOgI

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An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

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Use of nombor bill for tax payment

Use of nombor bill for tax payment
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Use of reference number (nombor bill) for IRB tax payment

This “Nombor Bill” is the “reference number” when making payment for LHDN online or counter.

Below is the summary information for the Nombor Bill:-

1. Start from 01.01.2023, taxpayer need to obtain the Nombor bill through ''MyTax'' (but currently unable to login)

2. All payments to LHDN need the Nombor Bill except for PCB and stamp duty

3. Transition period: Currently taxpayer still can use the Income Tax File Number as reference number until 30.06.2023.

Source

Enclosed is the Media Release for “Nombor Bill” from LHDN for your reference.

https://bit.ly/3WBDOgI

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KTP (Audit, Tax, Advisory)

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

KTP Lifestyle

An internal community for our colleagues on work and leisure.

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Season's Greetings, Happy New Year 2023

Season's Greetings, Happy New Year 2023
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Season's Greetings, Happy New Year 2023

Happy New Year

Stay awesome in the coming year.

May many fortunes find their way to you.

May the joy and happiness around you today and always

May the new year bless you with health, wealth and happiness

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KTP (Audit, Tax, Advisory)

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

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最新劳工法令

最新劳工法令
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最新劳工法令, 明年1月1日落实

马来西亚劳工法令条规，你了解多少？

观看视频 #rojaklah https://vt.tiktok.com/ZS8jsaUaL/

阅读英文版 from 我们的 KTP 博客 blog

https://www.ktp.com.my/.../key-amendments-to.../11sept2022

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KTP (Audit, Tax, Advisory)

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.

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Insolvency Test for A Company

Insolvency Test for A Company
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Insolvency Test for A Company

In terms of the “solvency test”, solvency relates to the assets of the company, which are fairly valued, equal or exceed the liabilities of the company.

What does it mean to be insolvent?

It is a state of financial distress where a company is unable to pay its bills.

What are the warning signs of insolvent companies?

  • Inability to pay your debts.

  • Poor profitability.

  • No access to finance.

  • Unpaid creditors beyond normal credit terms.

  • Unable to raise further equity funding.

What is the company insolvency test?

  • Cash flow test

  • Ratio test

The purpose is to analyze:

  • Existing debt of company

  • The dates any company income will be received

  • The date each debt will be due for payment

  • The company’s present and expected cash resources

  • Whether the company’s debts are payable in the near future

Ratio Insolvency Test

Quick Ratio = Projected Cash + Account Receivable / Current Liabilities

Reveal the reliability of the company’s repayment of short-term debts with current assets and inventory.

Solvency ratio = Projected Net Profit + Depreciation / Current Liabilities

It is to measures the ability of a company to meet its short-term debts.

Current ratio = Projected Current Assets / Current Liabilities

It is commonly used as a quantification of short-term solvency and give a sense of the efficiency of a company’s operating cycle or its ability to turn its product into cash.

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Personal Tax Relief 2022

Personal Tax Relief 2022
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Personal Tax Relief 2022

Overview

Year 2022 is approaching to its end and now is the time for you to keep and plan on your personal tax.

Do you know what personal deduction can be claimed for year 2022?

With that, here’s the full list of tax reliefs for YA 2022.

Key takeaways:

You will know the Tax Relief and consequences for non-compliance as follows:

1. What types of Personal Tax Relief for YA 2022?

2. What types of donation allowed for deduction?

3. What types of documents are required to be kept?

4. How many years to keep the documents?

5. What are the consequences of non-keeping proper records?

Summary of learning

1. What types of Personal Tax Relief for YA 2022?

- Please refer to the link https://bit.ly/3R1Y6fU to get the full listing.

2. What types of donation allowed for deduction?

  • Gift of money to the Government/ approved institutions;

  • Contribution in fighting against the COVID-19 pandemic; or

  • Gift of money / cost / value of gift of medical equipment to any healthcare facility approved by the Ministry of Health or etc

  • For full information on tax allowable donation for deduction, please refer to the link https://bit.ly/3R1Y6fU.

3. What types of documents are required to be kept?

Receipts and supporting documents for the tax deduction claimed must be kept for future reference and inspection if required from LHDNM.

4. How many years to keep documents?

Must be kept for a period of seven (7) years after the end of the year in which the return form is furnished to LHDNM.

5. What are the consequences of non-keeping proper records?

A RM300.00 – RM10,000.00 fine or imprisonment for a term not exceeding twelve months of both.

Source

a) Public Ruling No. 5/2021 – Taxation of A Resident Individual Part I - Gifts Or Contributions And Allowable Deductions

https://phl.hasil.gov.my/pdf/pdfam/PR_05_2021.pdf

b) Public Ruling No. 5/2000 – Keeping Sufficient Records for Individuals & Partnerships

https://phl.hasil.gov.my/pdf/pdfam/PR5_2000_Rev.pdf

c) Public Ruling No. 6/2000 – Keeping Sufficient Records for Persons Other Than Companies Or Individuals

https://phl.hasil.gov.my/pdf/pdfam/PR6_2000_Rev.pdf

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An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

THK (Secretarial, Bookkeeping, Payroll, Advisory)

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What is Use of Right Assets in Accounting?

What is Use of Right Assets in Accounting?
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What is Use of Right Assets in Accounting?

Background

MFRS 117 introduces the treatment of both finance lease and operating lease, but operating lease is treated as an off-balance sheet lease.

MFRS 16 superseded MFRS 117 and introduced the “right to use” approach, which requires lessee to recognize the rights and obligations arising from the lease arrangement in the balance sheet with the effect from 01.01.2019 in order to standardize the treatment for both finance and operating lease.

Definition of Right-of-Use Asset -  MFRS 16

  • Lessee has the rights to control the use of an identified asset for a period of time. [Para 9]

  • Lessee able to obtain all of the economic benefits generated from the use of assets. [Para 9]

  • Lessee able to decide how and for what purpose the asset is used [Para 9]

  • Lessee has the obligation to make payment for the identified asset [Para 9]

  • Risk and reward of the ownership for the asset is still mainly retained with the lessor. [Para 65]

Exemption of MFRS 16 – Para B6

  • Short term lease (Less than 12 months) and contain no purchase option.

  • Lease for asset with a low value when new

Initial measurement:

(i) Cost of the right of use asset should include [Para 24]:

  • Lease liability

  • Prepayment of lease payment – lease incentives

  • Initial direct costs

  • Dismantling costs

(ii) Lease liability [Para 26]:

  • Present value of lease payments

Subsequent measurement:

(i) Right of use assets [Para 30]

  • Cost – accumulated depreciation – accumulated impairment loss

(ii) Lease liability [Para 36]

  • Recognise lease interest and payment

Tax implications:

Lessee:

  • Not entitled to claim the capital allowance on the leased assets [Public Ruling No. 5/2014 - Para 11.3]

  • Depreciation charged is non-tax deductible

  • Interest expenses is tax deductible if fulfilled the condition of Section 33 (1) of Income Tax Act 1967 

Sources:

  • MFRS 16

  • Section 33 (1) of Income Tax Act 1967

  • Public Ruling No. 5/2014

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SSM Heavy Fines on Company, Sole Proprietor and Partnership

SSM Heavy Fines on Company, Sole Proprietor and Partnership
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SSM Heavy Fines on Company, Sole Proprietor and Partnership

Update any changes in company information promptly

Recently we came across an interesting press release published by SSM on 26 October 2022 where the Registrar of Business (ROB) imposed a fine of RM4,000 on the owner of a sole proprietor as a result of giving a false business address.

This serves as a reminder to the public that prosecution will be taken against any person who is found to have given false or misleading statements and information to SSM. SSM is always consistent in regulating compliance with the law and ensuring the corporate community is aware of its responsibility and business ethics.

In this newsletter, we would like to emphasize and spread awareness to our client and the public that it is important to update the business or company’s particular promptly once there are any changes in the details.

Why it is important?

To avoid any heavy penalty imposed by SSM.

Accordingly to the following act governed under SSM, it is a requirement for the business owner or company’s directors to update any changes in the particular such as a change in residential address, or renewal passport number for foreign director and shareholder.

  • ROB Act, 1956 – Section 5B

  • Companies Act (CA), 2016 – Division 8 Registered Office and Registers - Section 51 and 58

When need to notify on the changes?

  • ROB - within 30 days from the date of changes

  • ROC - within 14 days from the date changes.

What are the penalty and fines if failure to comply?

a) Late filing fees are applicable as follows:

Private company:

- Not more than 3 months – RM 50.00

- More than 3 months but not more than 6 months – RM100.00

- More than 6 months but not more than 12 months – RM150.00

- More than 12 months – RM200.00

b) Compound upon conviction

ROB - not exceeding RM10,000 or to imprisonment for a term not exceeding 1 year or both

ROC -

i) Section 51 - not exceeding RM20,000

ii) Section 58 - not exceeding RM50,000

Final Words

In conclusion, the business owner and company directors’ must update any changes of information to SSM. The information provided to SSM must be true and correct to avoid any unnecessary penalty imposed by SSM.

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Common Mistakes in Reinvestment Allowance

Common Mistakes in Reinvestment Allowance
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Common Mistakes in Reinvestment Allowance

Reinvestment Allowance is a red flag to IRBM so Reinvestment Allowance is always scrutinized by our IRBM during tax audit/investigation.

What is reinvestment allowance?

Reinvestment allowance (RA), as the name suggests, is an incentive to encourage companies to reinvest and expand their businesses. It is only granted after the company has been in business for a certain period of time, and only to companies resident in Malaysia.

How good is reinvestment allowance?

The allowance is given for 15 years from the first year of claim. The allowance is computed at 60% of QCE incurred and can be utilised against 70% of statutory income

Latest development in reinvestment allowance

Budget 2021 has announced that a special Reinvestment Allowance (RA) will be given for eligible manufacturing and agricultural projects in Years of assessment (YA) 2020 to YA 2022.

This means that eligible companies that have fully utilized their 15-years RA can enjoy additional RA claims for 3 years (YA2020 to YA2022).

Common mistakes in claiming reinvestment allowance

  • The purchase invoice is the only supporting document available. The absence of a project paper, feasibility study, business plans, budgets, directors resolutions, and other relevant documents supporting the project;

  • Mismatch between the company incurring the investments and the company using the plant and machinery;

  • Claim RA on assets incurred for the benefits of related companies/directors.

  • Claim RA on non-qualifying activities.

  • Claim RA on the transfer of assets from related parties who have previously claimed RA on the same assets.

  • The absence of payment records to support the qualified assets.

  • Supporting documents are not kept for at least 7 years.

  • Clain RA concurrently with other tax incentives (like PS, ITA & etc).

  • No written/ pictorial production flow on the qualifying project

     

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KTP (Audit, Tax, Advisory)

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

THK (Secretarial, Book-keeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource book-keeping, and payroll services to clients

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THK Group of Companies THK Management Advisory Sdn Bhd 200401000220 (638723­X) THK Secretarial PLT 202304003367 (LLP0037327-LGN)

Wisma THK, No. 41, 41-01, 41-02, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru, Johor, Malaysia.
+6012-771 7903 (Secretary Department)
+6012-771 7803 (Account Department)
+607-361 3443

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