INTRODUCTION
Gains or profits from carrying on a partnership are liable to tax.
Partnership can exist between :
Individuals
Two companies
Individual and Company
Individual and trustee
RESPONSIBILTIES
To get and complete a copy of Income Tax Return Form P from the nearest LHNDM Branch (if the form does not reach on time)
To prepare statement of accounts and other statements such as rental statements and commission statements
To engage qualified tax agent to prepare business accounts (if required)
Refer to supporting documents such as life insurance receipts, donation receipts, receipt books, zakat receipts for deductions, reliefs and rebate
The Precedent Partner is responsible for filling up Form P and issuing Form CP30 to each and every partner - CP30 Form. CP30 shows distribution of income (profit/loss) to each partner
Every partner has to report his share of partnership income in his Form B
Precedent Partner is also responsible for informing LHDNM officially if the partnership ceases
Husband and wife have to fill separate Income Tax Return Forms
All supporting documents like business records, CP30 and receipts need not be submitted with Form P
Keep all business records, supporting documents for deductions, reliefs and rebate for a period of 7 years
Business records include profit and loss account, balance sheet, sales records, purchase records, stock receipts, bills and bank statements
The last date for submission of Form B and P is 30th June
Payment of tax due (if any) should be made on or before 30th June.
To comply with the installment scheme (CP500) - link Installment Scheme CP500
GROSS INCOME FROM PARTNERSHIP Gross Income from Partnership includes:
Cash receipts from sale of goods or from services provided
All debts incurred from sale of goods and services provide.
Receipts in kind
Recovery of bad debts
Insurance compensation received for business loss
Withdrawal of business stock or stock taken for personal use
ADJUSTED INCOME FROM BUSINESS SOURCE Is derived from gross income after deduction of business expenses such as:
Allowable business expenses
Allowable specific expenses
Double deduction expenses allowable under Income Tax Act 1967
Export Allowances
BUSINESS EXPENSES
Allowable
Expenses incurred in the production of income
Example:
Payment for wages/ salary
EPF Payment
Rental of business premise
Interest on business loan
Expenses for repair of premise and vehicles used for business purpose
Not Allowable
Personal expenses
Example:
Accommodation benefit
Payment of telephone bills
Purchase of personal assets
Example:
Personal Car
Furniture
Initial Expenses Example:
Expenditure on incorporation of business venture
Advertisement expenses
ALLOWABLE SPECIFIC EXPENSES
Specific expenses that are allowable such as:
Expenditure incurred in providing equipment for disabled employee (OKU)
Expenditure incurred in respect of publication in National Language
Donation to libraries
Expenditure incurred in providing services, public amenities and contribution to a charity or community project
Expenditure incurred in providing and maintenance of a child care centre for the benefit of employees
Expenditure incurred in establishing and managing a musical or cultural group
Expenditure incurred in sponsoring any art or cultural event
CAPITAL ALLOWANCE
Is given as deduction from business income in place of depreciation expenses incurred in purchase of business assets.
Examples of assets used in a business are motor vehicles, machines, office equipment, furniture and computers.
Conditions for claiming capital allowance are:
Operating a business
Purchase of business assets
Assets are being used in the business
Owner of the assets
Rates are determined according to the types of assets. Types and rate of Capital Allowance are as follows:
Initial Allowance
All types of assets 20%
Annual Allowance
Motor Vehicles and Heavy Machinery 20%
Plant and Machinery 14%
Office Equipment, Furniture and Fittings 10%
Computer 20%
If you would like to know more, please contact Bestar.
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