Chapter 5 - Computation of Statutory Business Income Latest

COMPUTATION OF STATUTORY BUSINESS INCOME FOR YA…. RM Net profit before tax (as per I/S) Add: Revenue not included Sales omitted Drawings (based on market value) Bad debt recovered (if the bad debt is previously allowed and not yet added to I/S) Less: Non Business Income Discount received Bad debt recovered (if already included in I/S) Insurance compensation on damaged stock Compensation received from supplier Interest charged on debtors for late payment Dividend income Interest income Royalty income Rental income Gain on disposal of non current assets Add: Non allowable expenses Remuneration to owner – salary, bonus, EPF Salary and bonus for employees EPF for employees (allowable only up to 19% of the total remuneration, any excess is disallowed) Lease rental - passenger vehicle, deduction restricted to RM100,000 for vehicle < RM150,000, new vehicle (YA 2002) RM50,000 for vehicle > RM150,000 Donations – approved or not approved, excluding for Sec.34(6)(h) Bad debt written off (trade debts) Specific provision of bad debt/ doubtful debt General provision of bad debt/ doubtful debt Trade debt taken over Rent expense – for business purpose Interest expense – for business purpose Loss resulting from employee’s defaulting on a loan/advances to employee Damages Cost of tax appeal Violation of laws – fine and penalties Defalcation by directors Defalcation by employees (trading loss) Premium on Keyman insurance (key employees, service director) Entertainment expenses: - to entertain supplier and bankers - entertainment allowance to employees - to entertain employees - to entertain clients - entertainment business - promotional gifts at foreign trade fairs – promoting export - promotional samples of product of the business - promotional gifts consisting of logo of the business - cultural or sporting events to promote the business – public - entertainment relates wholly to sales (page 277) Leave passage for employees – yearly event, within Malaysia Leave passage – overseas

BUSINESS INCOME/TAX 267

RM XX

XX XX XX

XX

NIL NIL NIL NIL XX XX XX XX XX XX

(XX)

XX NIL XX XX

XX NIL NIL XX XX NIL NIL XX XX XX XX XX NIL NIL 50% allowable 50% allowable NIL 50% allowable NIL NIL NIL NIL NIL NIL NIL XX

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Capital expenditure (initial expenses, acquisition of assets, improvement to assets, acquisition repair, painting, replacement on whole or major part of the asset, renovation) Revenue expenditure (repair and maintenance, replacement on minor part of the asset, renewal, repainting, rewiring, road tax, insurance) Life insurance on business owner, directors of a controlled co, partners in partnership or sole trader Depreciation Domestic or private expenses (not for business purpose) Expenditure in respect of translation / publication of books – approved Provision of library facilities - Sec 34(6)(g) : Deductible, restricted to RM100,000 ( donation in kinds and cash contribution) - Sec 44(8) : Deductible, restricted to RM20,000 (cash contribution) Social responsibility payment – approved by Minister Child care centre – revenue expenses, for the employees’ benefit Musical and cultural group – approved by Minister Sponsoring Arts or cultural activity -tax deduction up to RM500,000 (local + foreign) – approved by Minister -tax deduction up to RM200,000 (foreign) Scholarship expense Halal certification Practical training to non-employees International Standardization Activities Information technology related expenditure Cost of developing website – spread throughout 5 years Statutory audit fees Accounting fees Secretarial fees – restricted to RM5,000 Taxation fees – i) submission of income tax return (deductible wef YA 2016) ii) submission of estimates of tax (deductible wef YA 2015) iii) submission of GST return (deductible wef YA 2015) - restricted to RM10,000 Entrance fees to trade association Annual fees to trade association Legal fees on recovery of trade debts Legal fees on tax appeal / purchase of asset Zakat Incorporation expenses (exclude company with authorized capital not exceeding RM2.5 million) Retrenchment payment Annual general meeting expenses Guarantee, commitment fees & bank commission Compensation paid for dismissal of employment Employee benefits – medical expenses, payment of monthly bills, travelling allowance, petrol card, PDA, mobile phone Loss on disposal of non current asset Less: Double deduction Remuneration for disabled employee – salary and bonus Approved research and development expenses Overseas expenses for promotion of tourism Insurance premium for import/export cargo from Company in M’sia. Export credit insurance premium Expenses for promotional of export

BUSINESS INCOME/TAX 267

XX

NIL

XX XX XX NIL

NIL NIL NIL

NIL NIL NIL NIL NIL 20% allowable NIL NIL XX

XX NIL NIL XX XX XX XX XX NIL NIL NIL XX

XX

XX XX XX XX XX XX

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Expenses for approved training Scholarship to University students Approved internship programme Participation in an approved career fair Freight charges – exporting rattan and wood based product Ship freight charges for shipping goods from Sabah and Sarawak to Peninsular Malaysia Minimum wages – monthly additional wages paid from 1//12014 – 31/12/2014 Training cost to unemployed graduates Vendor development programme Cash contribution to Bantuan Pelajar Miskin 1Malaysia Fund Child care centre Interest payable on loans to small scale business Promotion of export of services by service sector such as transportation, communication and utility sector Advertising on Malaysian brand name goods Registration of patent, trademarks and product licensing in overseas Quality standard and halal certification ADJUSTED BUSINESS INCOME Add: Balancing charge Less: Capital Allowances Unabsorbed CA – b/f Current year CA Balancing allowance STATUTORY BUSINESS INCOME Less: Business losses b/f NET STATUTORY BUSINESS INCOME

BUSINESS INCOME/TAX 267

XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX

XX XX XX

(XX) XX XX

(XX) XX (XX) XX

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