IRBM’s Response to CTIM on Amended Guidelines on Deduction for Secretarial & Tax Filing Fees

On August 17, 2022, the IRB updated the guidelines it had previously published on its website regarding tax deductions for payments associated with tax and secretarial filing fees.

The guidelines are in Bahasa Malaysia and are named "Pindaan Garis Panduan Potongan Bagi Perbelanjaan Berhubung Dengan Yuran Kesetiausahaan Dan Yuran Pemfailan Cukai Mulai Tahun Taksiran 2022" (Guidelines).

The previous guidelines, dated 11 May 2021, have been replaced by the new guidelines, which are 11 pages long.

The new guidelines were changed mainly to reflect changes to the law that took effect in the year of assessment (YA) 2022.

Effective from YA 2020

The Income Tax (Deduction for Expenses in Relation to Secretarial Fee and Tax Filing Fee) Rules 2020 [P.U.(A) 162/2020] allow a resident person who has incurred and paid certain secretarial and tax filing fees (as listed in the Rules) in the basis period for that YA to get a deduction of up to RM15,000 per YA.

Effective from YA 2022

The Income Tax (Deduction for Expenses in Relation to Secretarial Fee and Tax Filing Fee) (Amendment) Rules 2021 [P.U.(A) 471/2021] say that a resident person who incurred secretarial and tax filing fees in the basis period for that YA can get a deduction of up to RM15,000 per YA (i.e., the requirement for the fees to have also been paid has been removed). So, the rules in P.U.(A) 162/2020 would still be in effect for the YAs of 2020 and 2021.

The Inland Revenue Board of Malaysia has issued their responses dated 29 December 2022 to CTIM members’ issues dated 21 September 2022 on the following:-

1. 2% tax deducted under Section 107D of the Income Tax Act 1967

2. Amended Guidelines dated 17 August 2022 on Deduction for Secretarial & Tax Filing Fees from YA 2022

3. Tax rebate under Section 6D of the Income Tax Act 1967

4. Gazette Order - Income Tax (Deduction for the Sponsorship of Scholarship to Malaysian Students Pursuing Studies at Technical and Vocational Certificate, Diploma, Bachelor’s Degree, Master’s Degree or Doctor of Philosophy Levels) Rules 2022 [P.U. (A) 49/2022] – w.e.f. YA 2022

In this article, we will focus on item No 2 - the Amended Guidelines dated 17 August 2022 on Deduction for Secretarial & Tax Filing Fees from YA 2022, while items 3-4 will be discussed in our upcoming articles, and item No 1 has already been discussed in our previous post.

Q1: Para 4.4 of the Amended Guidelines

CTIM Comments:

We understand that the above is LHDNMs position on the application of rule 2(1)(3) of the P.U. (A) 471/2021 (the Rules).

However, as the Rules are effective from the year of assessment (YA) 2022, we believe the above-highlighted wording should be amended to “mulai TT 2022”.

LHDNM Feedback: Paragraph 4.4 in the Guidelines for Deduction of Expenses Relating to Secretarial Fees and Tax Filing Fees for the Year of Assessment 2022 is regularised based on a policy decision.

Q2: Example 3 to explain Para 4.4 of the Amended Guidelines

CTIM Comments:

In the example, the expenses were incurred before YA 2020, but the payment date is in YA 2023.

No tax deduction can be claimed in YA 2022 due to rule 2(1)(3). If the payment is only made in YA 2023, the taxpayer cannot claim any deduction in YA 2022 anyway, as the payment has not yet been made in YA 2022.

For the avoidance of doubt, the date of payment should be amended to any date in YA 2022 to show LHDNM’s position on the implication of rule 2(1)(3) of the Rules.

LHDNM Feedback: LHDNM acknowledges the views and will review the relevant example.

Reference:

38.1 Pindaan Garis Panduan Potongan Bagi Perbelanjaan Berhubung Dengan Yuran Kesetiausahaa

Download 1 PINDAAN GARIS PANDUAN POTONGAN BAGI PERBELANJAAN BERHUBUNG DENGAN YURAN KESETIAUSAHAA • 461KB

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