Are you also STRUGGLING with these Tax Issues?

Five Common Tax Issues

Taxpayers have many questions pertaining to the numerous tax and non-tax initiatives raised over time. Among those questions, today we will take a look at the five most common ones asked by taxpayers.

Are grants received taxable?

Generally, taxpayers are exempted from tax in respect of income received in relation to allocations given by the government in the form of a grant or subsidy under the Income Tax (Exemption) (No. 22) Order 2006 (P.U.(A) 207/2006). However, tax deduction in respect of the expenditure incurred out (whether in full or in part) of the grant and subsidy received will be disregarded.

Therefore, if taxpayers receive a grant or subsidy from an organisation, they should ensure that the organisation is a ministry or agency under the federal government or the state government.

Are newly incorporated companies allowed to claim special deduction on renovation of RM300,000 prior to the commencement of business?

If we refer to P.U. (A) 381/2021 – Income Tax (Costs of Renovation and Refurbishment of Business Premise) (Amendment) Rules 2021, a deduction is allowed for the cost of renovation and refurbishment of business premises for the purpose of ascertaining the adjusted income from its business.

Hence, expenses incurred by a company prior to the commencement of its business operation cannot be deducted against the gross income of its business as they are not considered wholly and exclusively incurred in the production of the business income under Section 33(1) of the Income Tax Act 1967 (ITA).

Can the Inland Revenue Board of Malaysia (HASiL) call for a taxpayer’s bank account information?

The answer to the above is “Yes.” Section 106A of the ITA grants HASiL the authority to call taxpayers to ask about their bank account information for cases involving a Garnishee Order.

Garnishee proceedings refer to the process of enforcing a money judgment by the seizure or withholding of debts due to any party. In short, it involves a taxpayer owing tax to HASiL, and that the case has gone through civil proceedings.

Thus, taxpayers who comply with the tax regulations and pay their taxes accordingly need not worry about HASiL accessing their bank account information.

Can taxpayers still pay taxes at the HASiL counter?

Starting from 1 April 2021, HASiL counters only accept payments limited to the taxes below:

Real Property Gains Tax (RPGT) – 3% of assets disposal value withheld by the purchaser under section 21B of RPGT 1976 (CKHT 502 Form)
Income tax paid by Foreign Artists (Public Entertainer)
Withholding Tax
Compound payment
Payment of income tax using credit card or debit card

Payment of other taxes is no longer accepted at the HASiL payment counter but can be paid through other options such as via:

MyTax Portal (https://mytax.hasil.gov.my)
The internet banking portal of any commercial banks that accept direct tax payment
The service counter of commercial banks and post offices which have been appointed as HASiL collection agents
The cash deposit machine (CDM) of several commercial banks
The auto-teller machine (ATM) of some commercial banks.

Are taxpayers allowed to pay the 2% withholding tax on commissions online?

Payments for withholding tax on commissions are only accepted via the HASiL counter. Taxpayers are required to submit Form CP107D – Pin 2/2022 in PDF format and CP107D(2) in Excel format when making payment at the counter together with the email which has been sent to HASiL earlier.

Do note that for payment through counters, taxpayers are required to print out the email sent pertaining to Form CP107D and its Appendix for submission. If a taxpayer is located in suburb areas, they are required to courier the cheque to HASiL together with the email sent pertaining to Form CP107D and its Appendix.

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