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Business Expenses (Bad and doubtful debts (Trading debts can be bad…
Business Expenses
Bad and doubtful debts
Under Sec 34 (2)
Deduction for bad debts
The debts are partly / wholly irrecoverable
Such debts reasonably estimated to be bad
Specific debtors identified
Trading debts can be bad
Debtor died without leaving any assets from the debt can be recovered
Debtor is bankrupt
Keyman insurance
Insurance for the life of employee or director
Cover loss of business income due to sudden death, injury & accident
Tax deductible of the amount premium
Policies no element of investment
The right of insurance proceeds remain to employers/ company
Entertainment expenses
Expenses provide to suppliers, trade debtors & employees
Exceptions
Entertainment business
Promotional gifts at foreign trade fairs
Cultural or sporting events
Provision of library facilities S34 (6)(g)
Accessible to the public
Contribute to public libraries, libraries of schools & higher education
Deductible restricted to RM100,000
Donation in cash contributions
Claims deduction restricted to RM 20,000
Child care centre S34(6)(i)
Revenue expenses such as maintenance of child care centre benefit to employees will given deduction
Capital expenses such as land, premises for child care centre is not given deduction
Definition
Any expenses incurred in the ordinary course of business
Business expenses are deductible and are always netted against business income
Outgoing and expenses
Under Sec 33 (1) for deductibility
Losses due to theft, defalcation of employees
Wholly and exclusively
Cannot define in the Act
Can be deductible
For the purpose of business
Example: rent expenses
Incurred
Under Sec 33
Money actually laid out
Example: debt owned by a company
Capital expenditure
Expenses related to fixed capital
Acquisition of long-term assets
Example: facilities or manufacturing equipment
Expand a company's ability to generate earnings
Revenue expenditure
Expenses related circulating capital
Shorter-term expenses
Operational costs of running a business
Example: purchase stock, electricity expenses
Purpose of maintaining a company's ability to operate
Interest expense on money borrowed
Under Sec 33 (1) (a)
Deduction under 2 circumstance
Loan employed in the production of gross income
Loan laid out on asset for the production of business income
Domestic or private expenses
Under Sec 39 (1) (a)
For business purpose, deductible is allowable
For dual purpose, disallowed as deduction
Double deduction of expenses
Approved internship programme
Monthly allowance not less than RM500 paid to students
Double deduction require letter from TCMB approved internship programme
Scholarship expenses S34 (6)(1)
Companies provide scholarship to students for diploma, degree
Given tax deduction
Student has no means of his own
Total monthly income of parents not exceed RM5000
Student receiving full time instruction
Cash contribution to Bantuan Pelajar Miskin 1 Malaysia Fund
Deduction available to the person
Limited liability partnership
Cooperative society
Resident individual having business sources