Bad debt deduction

To qualified for tax deduction one has to do the following at the minimum:

1. The debt is a trade debt

2. Action has been taken to recover the debts, at the minimum send legal letter

3. Appoint a person to evaluate the case, document the date, name and the information used in arriving at the decision

4. When claiming bed debts make sure the Company has stop business dealing with the customer for the simple reason:-

A debt considered as bad upon customer died, bankrupt, missing or no cost effective way to recover.

Hence there will be no valid business or commercial reason for a company to do business with the bad customer.

Entertainment Expense

 

The IRB has issued a revised Public Ruling on the above-mentioned in 22.10.2008.

The new PR give a guide in ascertaining deductibility of Entertainment Expense as follow:

First check is it fall under S18 entertainment expense, if not not allowed but may check if it can be classified to other type of expense.

Secondly test if it satisfied S33(1) wholly and exclusively test, if fail no deduction is allowed.

If pass the S33(1) test, check against S39(1)(i)-(viii) for 100% deduction, otherwise 50% only deductible.

For more comprehensive analysis refer Summary of Entertainment Expense

Leave Passage

Leave passage in 2007 extend to include fare, meal and accommodation.

It is tax exempted on the employee (limited to 3 times local and 1 time oversea (max RM3,000) per year ) otherwise will be part of remuneration that is taxable.

Does not apply to sole-proprietor and partner as no master and servant relationship exist.

From Employer perspective, the fare for a yearly events within Malaysia involving employer, employee and immediate family member of the employee allowed will be allowed a deduction in ascertaining adjusted income for a year of assessment.

Fare for employee leave passage other than above mentioned will not be deductible, but the meal and accommodation is allowed under 39(1)(i)

PUBLIC RULING ADDENDUM 5.2.2009

PERQUISITES FROM EMPLOYMENT
SECOND ADDENDUM TO PUBLIC RULING NO. 1/2006 (dated 25.2.2009)

This Addendum provides clarification in relation to tax exemption on perquisites received by an employee pursuant to his employment in respect of:

(a) innovation or productivity award - paragraph 25C, Schedule 6 of the Income Tax Act 1967 (ITA).

(b)  i. gift of a new personal computer - Income Tax(Exemption) (No. 4) Order 2008; and
      ii. allowances, subsidised interest and gifts (the relevant Income Tax exemption order yet to be gazetted.)

Public Ruling 1/2006 Second Addendum - Perquisites from Employment dated 25.2.2009

LIVING ACCOMODATION BENEFIT PROVIDED FOR THE EMPLOYEE BY THE EMPLOYER ADDENDUM TO PUBLIC RULING NO. 3/2005 (dated 5.2.2009)

This Addendum provides clarification on the change in the determination of value of living accommodation benefit provided for the employee by the employer.

Public Ruling No 3/2005 Addendum Living Accommodation Benefit Provided for the Employee by the Employer dated 5.2.2009

PUBLIC RULING 2000 to 2008

 

Year 2008

No Subject of Public Ruling

3/2008 Entertainment Expense

2/2008Reinvestment Allowance

1/2008Special Allowances for small Value Assets

Year 2007 - no ruling issued

Year 2006

No Subject of Public Ruling 

6/2006Tax Treatment of Legal and Professional Expenses

5/2006Professional Indemnity Insurance

4/2006Valuation of Stock In Trade and Work In Progress Part I

3/2006 Property Development & Construction Contracts

2/2006Tax Borne by Employers

1/2006Perquisites from Employment

1/2006 Addendum Perquisites from Employment

Year 2005

No Subject of Public Ruling 

6/2005Trade Association

5/2005Deduction for Loss of Cash and Treatment of Recoveries

4/2005Withholding Tax on Special Classes of Income

4/2005 Addendum Withholding Tax on Special Classes of Income

3/2005 Living Accommodation Benefit Provided for the Employee by the Employer

3/2005 Addendum Living Accommodation Benefit Provided for the Employee by the Employer

2/2005 Computation of Income Tax Payable by a Resident Individual

2/2005 Addendum Computation of Income Tax Payable by a Resident Individual

2/2005 Addendum No. 2 Computation of Income Tax Payable by a Resident Individual

1/2005Computation of Total Income for Individual

Year 2004

No Subject of Public Ruling

5/2004Double Deduction Incentive on Research Expenditure

5/2004 Addendum Double Deduction Incentive on Research Expenditure

4/2004 Employee Share Option Scheme Benefit

3/2004 Entertainment Expense

3/2004 Addendum Entertainment Expense

2/2004 Benefits-In-Kind

2/2004 1st Addendum Benefits-In-Kind

2/2004 2nd Addendum Benefits-In-Kind

1/2004 Income from Letting of Real Property

Year 2003

No Subject of Public Ruling

2/2003 "Key-Man" Insurance

1/2003 Tax Treatment relating to Leave Passage

1/2003 Addendum Tax Treatment relating to Leave Passage

Year 2002

No Subject of Public Ruling

2/2002 Allowable Pre-operational & Pre-commencement Of Business Expenses For Companies

1/2002 Deduction For Bad & Doubtful Debts and Treatment Of Recoveries

Year 2001

No Subject of Public Ruling

7/2001 Basis Period For Business & Non-Business Sources (Companies)

6/2001 Basis Period For A Business Source (Individuals & Persons other than Companies / Co-Operatives)

5/2001 Basis Period For A Business Source (Co-Operatives)

4/2001 Basis Period For A Non-Business Source (Individuals & Persons other than Companies)

3/2001 Appeal Against An Assessment

2/2001 Computation Of Initial & Annual Allowances In Respect Of Plant & Machinery

1/2001 Ownership Of Plant And Machinery For The Purpose Of Claiming Capital Allowances

Year 2000

No Subject of Public Ruling

8/2000 Wilful Evasion of Tax and Related Offences

7/2000 Providing Reasonable Facilities And Assistance

6/2000 Keeping Sufficient Records (Persons other than Companies & Co-operatives) - Revised

6/2000 Keeping Sufficient Records (Persons other than Companies & Co-operatives)

5/2000 Keeping Sufficient Records (Individuals & Partnerships)- Revised

5/2000 Keeping Sufficient Records (Individuals & Partnerships)

4/2000 Keeping Sufficient Records (Companies & Co-operatives) - Revised

4/2000 Keeping Sufficient Records (Companies & Co-operatives)

3/2000 Basis Period for a Business Source (Individuals & Persons other than Companies & Co-operatives)

2/2000 Basis Period for a Business Source (Companies & Co-operatives)

1/2000 Basis Period for a Non-business Source