YYC Newsletter 25/6/2020
View in Mandarin
Special Tax Deduction on Rental Reduction
A special tax deduction was introduced in the earlier Economic Stimulus Package for landlords who reduce at least 30% rental on business premises rented to SME tenants, for period of April 2020 to June 2020.
This special deduction has now been extended to 30th September 2020 as announced in the Short-Term Economic Recovery Plan (PENJANA).
The following are the related Frequently Asked Questions:
1. Who is eligible?
2. When is the eligible period?
From April 2020 until 30 September 2020.
3. What is the minimum rental reduction for landlord to enjoy this special deduction?
The rental reduction must be at least 30% from the current monthly rental rate.
4. Is the landlord eligible if he reduces the rent at different rate each month but all rate exceeds 30%?
Yes, as long as the reduction rates are not less than 30% in each of the eligible months.
If in any of these eligible months, the rental reduction is less than 30%, then the company is not eligible to claim the special deduction for that particular month/months.
5. What is the special deduction amount?
The amount of special deduction is equivalent to the amount of monthly rental reduction offered by landlord to eligible SMEs tenants.
6. Definition of SMEs
7. Who is not considered as SMEs?
8. Is a company qualified for this deduction if rents out premise to related company?
The company (landlord) is eligible for this special deduction if the related company (tenant) qualifies as SME.
9. What is meant by business premises for this special deduction?
10. Is this special deduction applicable for rental of machines/ parking spaces/ telecommunication towers?
No. This special deduction is only applicable to rental of business premises used for business purpose only.
11. The landlord has received rental payment for April until June 2020 earlier this year.
Can the landlord offers rental reduction and claim special deduction?
Yes. Landlord who has received rental payment in advance is still allow to offer rental reduction as long as all conditions are fulfilled.
12. What are the required supporting documents?
Taxpayer (landlord) who claims this special deduction is required to keep the following documents:
i. Stamped tenancy agreement;
ii. Rental income statement;
iii. SME Status Certificate issued by SME Corp.*;
*Information regarding registration of SME can be referred at https://smereg.smecorp.gov.my
iv. Tenant’s information, rental information and rental reduction methods**
**To be provided in working sheet (HK) of Company Return Form, please refer to the example attached as below:
Click here to download the above sample working sheet
A Sdn Bhd rents a shop lot to B which is an eligible SME for RM5,000 a month (RM60,000 yearly).
A Sdn Bhd has agreed to offer rental reduction to B for the month of April 2020 to September 2020, of RM2,500 a month.
Rental Reduction for Business Premise by Inland Revenue Board of Malaysia (updated on 15 June 2020)
Generally, property buyers invest in real properties, such as houses, shops or factories under their personal name. However, some would choose to buy properties under the company's name.
What are the differences and the taxes involved? What will be the impact?
Find out in our upcoming Tax Property Webinar where we will cover: