BUSINESS DEDUCTIONS (10.8.2 – 10.8.8) (10.8.3 Advertising Costs (– The…
(10.8.2 – 10.8.8)
10.8.2 Advances & Loans
• -Advances made to third party
• -Advances not made in the course of the business of company
• -Advances that become bad, not collectible and irrecoverable
• -Bad/irrecoverable advances or loans made by trade as commercial expediency - personal relationships
• -Bad debts or doubtful debts if it was made in connection with business, They are incidental to the income of business
• -Nature of business and consisted of funds employed in business
Advances to Supplier to Secure Source of Supply
• Acceptable as capital loss:
• If money is advanced to a supplier to create, secure or safeguard a source of supply of raw materials.
• Unacceptable as capital loss:
• The amount advanced is for the purchase of raw materials in the ordinary course of business.
• Advance for 10-year supply of material.
10.8.3 Advertising Costs
under sec 33(2) ITA.
– Deduction for the expenditure in local advertising is allowed as an ordinary deduction.
– Double deduction for expenditure on foreign advertising of Malaysian branded good was extended to expenditure incurred on local advertising of Malaysian branded goods.
– The condition for local brand to be eligible for deduction :
– The company must be at least 70% Malaysian owned
– The brand owned by company
– The brand is registered in Malaysia
– The company’s product must achieve export quality standards.
– Plant and machinery :
– Form of large billboards and expensive
– Elaborate neon signs
– Repairs and maintenance of the billboard and neon signs will qualify for deduction under sec 33(2) ITA.
– Promotional activities (relate to sports and culture events) – not qualify as advertisement expenditure – fall under donation.
• Restricted to an amount not exceeding 2-month salary
• Effect from year of assessment 2002 – tax deduction for bonus was eliminated.
10.8.5 Books & Periodicals
• Expenditure incurred on periodicals, journals and other publications – that are relevant to the production of the taxpayer’s income or incurred in the carrying on of the – will deductible.
• Cost of set of several volumes will treated as capital and capital allowances will be given against the business income.
10.8.6 Business Acquisition Cost
• Each case of business acquisition has to be examined in the light of its own facts to which the relevant statutory provisions must be applied in determining the deductibility or otherwise of the expenditure.
10.8.8 Travelling Expenses
• Not deductible.
• However, there are some circumstances that have been allowed where it could been proven that a business call has been made.
Travelling between Home & Work
Considered as a private and domestic expenditure.
under the Act.
Travel between Places of work
• It is an
rule that where the taxpayer carries on his income producing activities in two or more different places
for income tax purpose.
Travelling from Home
which is also the Office or Base
• Travels between two work places (whether one of the work place is the base or office that also “double” as his residence