Attention to accounting practician - Public Rulling Update

PR No. 2/2010 –
Allowable Pre-operational and Pre-commencement of Business Expenses
The Inland Revenue Board [“IRB”] has issued the Public Ruling [“PR”] No. 2/2010 – Allowable Pre-operational and Pre-commencement of Business Expenses on 3rd June 2010 which provides clarification on the tax treatment of pre-operational or pre-commencement of business expenses allowable when a person commences operations or business. The PR No. 2/2010 takes effect from the year of assessment [“YA”] 2010 and supersedes the PR No. 2/2002 issued on 8th July 2002.


-. Incorporation Expenses
[Income Tax (Deduction for Incorporation Expenses) Rules 2003 and Income Tax (Deduction for Incorporation Expenses) (Amendment) Rules 2005]
The maximum authorised share capital requirement for companies to be eligible to claim a deduction for “incorporation expenses” has been increased from RM250,000 (for companies incorporated in Malaysia on or after 1st January 1973 but prior to 13th September 2003) to RM2,500,000 (for companies incorporated in Malaysia on or after 13th September 2003) (with effect from the YA 2004). The said incorporation expenses incurred shall be deemed to be incurred in the

-. Establishment Expenditure of a REIT or PTF
[Income Tax (Deduction for Establishment Expenditure of REIT or PTF) Rules 2006]
A Real Estate Investment Trust [“REIT”] or Property Trust Fund [“PTF”] approved by the Securities Commission which has incurred establishment expenditure can claim a tax deduction of such expenditure against its gross income (with effect from the YA 2006).

-. Pre-commencement of Business Expenses Relating to Recruitment of Employees
[Income Tax (Deduction of Pre-Commencement of Business Expenses relating to Employee Recruitment) Rules 2008]
A person who has incurred expenses within the period of 1 year prior to the commencement of his business in respect of recruitment of employees for his business qualifies for tax deduction of such expenses against his gross income from the business (with effect from the YA 2009).


Sumber MASB