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10.8 - Business Deduction (10.8.28 - Community Projects ( Scope of…
10.8 - Business Deduction
Section 33(1) of the ITA generally permits two types of deduction:
Expenses wholly and exclusively incurred in the production of income
Deductions that are “outgoings …. Wholly and exclusively incurred”
10.8.1 - Accountancy Fees
• Accounting/ audit fees and expenses to prepare company tax return is allowed by DGIR as (outgoing) only as concession.(preferences allowance)
• Claim for deduction of expenses incurred in obtaining tax advice is
not deductible
, such as payment to accountant or tax agent on business operation.
10.8.20.3 - Deductibility of Medical Expenses For Directors of Controlled Company
Expenditures that is
disallowed
to claim deduction on medical;
• Expenses not wholly & exclusively incurred in gross income.
• Expenses for dual purpose.
• Domestic & private expenses.
10.8.20.3 - Deductibility of Medical Expenses For Directors of Controlled Company
Expenditures that is
disallowed to claim deductio
n on medical :
Expenses not wholly & exclusively incurred in gross income.
Expenses for dual purpose.
Domestic & private expenses.
10.8.20.4 - Written Disclosure
It is most appropriate that tax professional makes written disclosure of the medical benefits to the IRB.
10.8.21 - Terminating Redundant Employees
• It is an allowable expense if the payments were meant to relieve the new enterprise from onerous contracts.(interest for business)
• Discharge of employees for takeover, the payment will be a capital expenditure but
not deductible
. (not for business interest)
• Paid gratuity must be wholly and exclusively in production gross income to be
deductible
• Paid gratuity that is not wholly and exclusively incurred by the production gross income will be
not allowable expense and non deductible.
10.8.22 - Legal Expenses Incurred In A Restricting Exercise.
• Organization are bound with legal expenses in order to organize new corporate structure
• Legal changes relating to business asset are capital in return hence
not deductible
10.8.23 - Audit Fees
Known as allowable expense to ascertain the adjusted income of a company from its business
10.8.24 Guarantee fees
Incurred related to syndicate loan, held as tax deductible .
Expenditure like guarantee fees, facility and commitment fees in obtaining loans .
Guarantee fees pain to a guarantee.
10.8.25 - Stamp Duties
•
Allowable in revenue
expenditure
not in capital expenses
• Incurred initial borrowing and first tenancy agreements is not allowed
10.8.26 - Insurance Premiums
•
Deductible expense
under the income tax act.
• The premium will
not be tax deductible
against the gross income from the business or employment of the professional is not engaged in practice nor is it deductible against the income from the locum or any other income.
10.8.27 - Renovation Of Workplace For Disabled Employers
•
Deductible
for income tax (alteration or renovation costs of the workplace borne by the employer which is newsary to ensure a safe and condusive working environment for disabled workers.)
10.8.28 - Community Projects
Scope of community projects related to enhancement of income of the poor, conservation or preservation of the environment.
If the community projects were did not give any benefit to the business of the company (section 34(6)(h)
or
Community projects incurred the provision of infrastructure in relation to its business and benefit to community, facilities provided must be free of charged, approved by the minister of finance.
Fully deduction
10.8.29 Employee Recruitment Expenses
• Deduction given when such as expenses are incurred after the company has commencement operation.
10.8.30 - Registration Of Patents And Trademarks For SMEs
in 2010 to 2014, expenses incurred by small and medium enterprise (SMEs) of registration of patents and trademarks in Malaysia were
allowed a deduction
for purpose of income tax computation.
10.8.32 - Franchise Fees
Fee paid by a qualified person to the franchisor for the right to use a mark , trade secret , confidential information , intellectual property or system of franchise owned by that franchisor
The franchise fees are disallowed as they are capital in nature
10.8.33 Secretarial Fees AGM Expenses And Tax Filling
Disallowed as a deduction for income tax purpose.
Based on Public Ruling 6/2006.
Starting on 2015 , secretarial fees up to RM5000 and tax filling fees up to RM10000 to be
deductible expense
.