With effect from Year of
Assessment (YA) 2021, P.U. (A) 470/2021 stipulates that:
- Rental expenses incurred by the company shall be allowed a further deduction for the purpose of employees’ accommodation.
- The rental
expenses are incurred within the period of 1 January 2021 until 31 December 2022.
- A further deduction of up to RM50,000 is available for each company.
To put it simply, this means the amount of deduction
allowed shall be in addition to any deduction allowable under section (s.) 33 of the Income Tax Act (ITA) 1967.
For example:
Let’s say ABC Sdn. Bhd. incurred rental expenses of RM40,000 from 1 February 2021 until 31 January 2022. On top of getting RM40,000 in tax deduction under rental expenses allowable under s.33 of the ITA 1967, ABC Sdn. Bhd. would also be entitled to a further deduction of RM40,000 under P.U. (A) 470/2021. With that, the total amount of tax deduction ABC Sdn. Bhd. could get would amount to
RM80,000.
Now, what if the rental expenses incurred was RM70,000 instead? In this case, ABC Sdn. Bhd. would still get a further tax deduction under P.U. (A) 470/2021, but it would be restricted to RM50,000.
Hence, the total tax deduction for ABC Sdn. Bhd. would amount to RM120,000.
Other Factors of Qualification
First of all, the term “company” refers to a company resident in Malaysia:
(a) which is incorporated under the Companies Act 2016;
(b) which is carrying on the business of manufacturing or manufacturing-related services; and
(c) which has obtained an approval of compliance under the Safe@Work programme from the Ministry of International Trade and Industry (MITI).
Secondly, the company must obtain the Certificate for Accommodation to register for the Safe@Work programme with MITI. The employee’s accommodation shall be certified with a Certificate for Accommodation from the Department of Labour in accordance to s. 24D of the Employees’ Minimum Standards of Housing,
Accommodations and Amenities Act 1990 and shall exclude the accommodation for a director.
