Pindaan Garis Panduan Potongan Bagi Perbelanjaan Berhubung Dengan Yuran Kesetiausahaan Dan Yuran Pemfailan Cukai Mulai Tahun Taksiran 2022
The amended guidelines for tax deductions for secretarial and tax filing fees were published on the Inland Revenue Board (IRB) website on August 17, 2022.
The guidelines are in Bahasa Malaysia and are titled “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The previous guidelines, dated 11 May 2021, have been replaced by the new 12-page guidelines.
The following paragraphs make up the new 12-page Guidelines:-
Introduction
Objective
The Laws
Tax Treatment Effective from YA 2022
Qualifying Secretariat Fees
Qualifying Tax Fees
Unqualifying Expenses
Tax Treatments Relating to Secretariat Fees & Tax Fees
Introduction
The taxpayer is responsible for bearing the costs of expenses such as secretarial fees and tax filing fees to comply with legal obligations when conducting business.
Since both fees are not directly related to the production of the gross income of a business, they cannot be deducted from taxable income [s 33(1) of the ITA 1967].
However, effective from the Year of Assessment 2015, costs involved with these secretarial fees and filing fees have become eligible for deduction under the Income Tax Rules (Kaedah-Kaedah Cukai Pendapatan, KKCP).
Tax Treatment before the year of assessment 2022
The following is a summary table of KKCP on the tax treatment of deductions for expenses such as secretarial fees and filing fees tax before the year of assessment 2022:
The Income Tax (Deduction for Expenses in relation to Secretarial Fee and Tax Filing Fee) Rules 2014 [P.U.(A) 336/2014] stipulate that expenses incurred on secretarial and tax filing fees are eligible for a tax deduction of up to RM5,000 and RM10,000 respectively for each YA.
Expenditure on tax filing fees for tax estimates and instalment payments under Section 107C of the Income Tax Act 1967 for YA 2016 is eligible for deduction for YA 2015 if incurred and paid within the basis period for YA 2015.
However, P.U.(A) 336/2014 is revoked with effect from YA 2020 as a result of P.U.(A) 162/2020, which will take effect as of YA 2020.
The Income Tax (Deduction for Expenses in relation to Secretarial Fee and Tax Filing Fee) Rules 2020 [P.U.(A) 162/2020] stipulate that a tax deduction of up to RM15,000 per YA can be claimed for expenses incurred on secretarial and tax filing fees (i.e. the tax deduction limit for both secretarial and tax filing fees are combined).
[P.U.(A) 336/2014 is no longer in effect as of YA 2020, when these new rules take effect.]
The Income Tax (Deduction for Expenses in relation to Secretarial Fee and Tax Filing Fee)(amendment) rules 2021 [P.U.(A) 471/2021] (Amendment Rules 2021) amended the Income Tax (Deduction for Expenses in relation to Secretarial Fee and Tax Filing Fee) Rules 2020 with the removal of the words “and paid,” thus allowing a deduction for secretarial and tax filing fees to be given to a resident who incurred the expenses.
The Laws
Relevant subsidiary legislations are referred to in these guidelines:-
Income Tax (Deduction for Expenses in relation to Secretarial Fee and Tax Filing Fee)(amendment) rules 2021 [P.U.(A) 471/2021] ;
Income Tax (Deduction for Expenses in relation to Secretarial Fee and Tax Filing Fee) Rules 2020 [P.U.(A) 162/2020].
The relevant provisions of the Income Tax Act 1967 ("ITA") with these Guidelines are Sections 77, 77A, 77B, 83, 86 and 107C.
The following are some of the provisions of other acts besides the ITA that are referred to in these guides:
Section 26 of the Sales Tax Act 2018 [Act 806];
Section 26 of the Service Tax Act 2018 [Act 807];
Section 19 of the Departure Levy Act 2019 [Act 813); and
Section 19 of the Tourism Tax Act 2017 [Act 791].
Tax Treatment Effective from YA 2022
Effective from YA 2022, tax deductions for expenses regarding secretarial and tax filing fees have been amended through Income Tax (Deduction for Expenses in relation to Fees Secretariat and Tax Filing Fees) (Amendment) 2021 [P.U.(A) 471/2021], which explains that expenses concerning secretarial and filing fees are eligible for deduction tax with the condition that it is only 'incurred' by the person within the basis period for each YA.
The following table provides an overview of the deduction for Expenses concerning Secretarial and Fees Tax filing effective YA 2022.
Expenses relating to secretarial and tax filing fees incurred during the basis period for YAs 2020 and 2021 have not yet been claimed for deduction
These expenses are only eligible to be claimed as a deduction once they have been paid for, which must take place in YA 2022 or the year of assessment that follows that.
However, the deduction for secretarial and tax filing fees will include those incurred in YA 2022, with a cap of RM15,000 placed on the total amount of those expenses. (For further clarification, please see the second example in paragraph 8 of the Guidelines)
Secretarial and tax filing fees incurred prior YAs 2020
Beginning on January 1, 2022, taxpayers will no longer be able to claim a tax deduction for any expenses incurred before the basis period for YAs 2020 and 2021 but for which they had not previously claimed a deduction.
Qualifying Secretariat Fees
The payment of secretarial fees to a company secretary who is registered under the Companies Act 2016 ("CA 2016") [Act 777] is considered to be a deductible business expense.
This fee shall be related to the provision of secretarial services to comply with the legislative requirements outlined in the CA 2016.
Examples of the expenses associated with secretarial work that is eligible for deduction:
the provision of related advisory services at company meetings,
the preparation of directors' resolutions,
the issuance of shares,
the submission of prescribed forms under CA 2016, and
a variety of other company-related activities and duties
Effective YA 2022, following amendments made by P.U.(A) 471/2021, the secretarial fee will be eligible for deduction under KKCP P.U.(A) 162/2020 in the basis period for an assessment year upon the service has been received, even if the secretarial fee has not yet been paid.
Qualifying Tax Fees
The following sorts of tax filing fees, when charged by:
a tax agent that has been approved under the ITA 1967 in respect of:-
the preparation and submission of return in the prescribed form for sections 77, 77A, 77B, 83 and 86 of the ITA 1967 for the basis period for the immediately preceding year of assessment;
preparation and submission of forms prescribed for section 107C of the ITA 1967, such as Forms CP 204, CP 204A and CP 204B;
a person who provides services in respect of the preparation and submission of return in the prescribed form for section 26 of the Sales Tax Act 2018 [Act 806];
a person who provides services in respect of the preparation and submission of return in the prescribed form for section 26 of the Service Tax Act 2018 [Act 807];
a person who provides services in respect of the preparation and submission of return in the prescribed form for section 19 of the Departure Levy Act 2019 [Act 813]; or
a person who provides services in respect of the preparation and submission of return in the prescribed form for section 19 of the Tourism Tax Act 2017 [Act 791],
The tax filing fees listed above are eligible for deduction under P.U.(A) 162/2020 beginning with the YA 2022 tax year as a result of amendments made through P.U.(A) 471/2021.
This is the case even if the expenditure is only incurred in the basis period for a YA but has not been paid at the time of that YA's filing.
Unqualifying Expenses
The incidental costs that make up secretarial fees and tax filing fees are the ones that do not qualify for a tax deduction. These costs include:
reimbursement or out-of-pocket expenses,
telephone and fax,
printing, stationery, postage,
travel and accommodation.
For secretarial fees, ineligible incidental expenses included general meeting expenses.
Tax Treatments Relating to Secretariat Fees & Tax Fees
The Guidelines also provide four examples to illustrate the claims on deductions for secretarial and tax filing fees from YA 2022.
Amended Guidelines on Deduction of Secretarial Fees and Tax Filing Fees from YA 2020
Amended Guidelines on Deduction of Secretarial Fees and Tax Filing Fees from YA 2022
In closing, I would like to recommend that you read this post. On July 29, 2022, the Inland Revenue Board of Malaysia (IRBM) provided its response to specific points that were raised in the CTIM Feedback and Comments on Form e-C 2022 on July 20th, 2022:-
IRBM’s Response to CTIM on e-C 2022
https://www.ccs-co.com/post/irbm-s-response-to-ctim-on-e-c-2022
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