SocialTax Relief

Commercial Renovation Tax Exemption

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Started from 15.12.2020, Malaysia government launch Commercial Renovation and Refurbishment Tax Exemption for public. Commercial renovation and refurbishment between 01.03.2020 to 31.12.2022 (extended in Budget 2022) can be tax exemption up to RM 300,000! (Basically Renovation belongs to capital expenditure which are not allowed to tax reduction):

 

Any taxpayer incurs R&R expenses on business premises and the premise is used for business purpose, he is eligible for renovation tax deduction.
*Business Premise: The premises are either owned or rented by the taxpayer and used for business purpose.

Cost qualified for this tax deduction:

1. General electrical installation
2. Lighting
3. Gas system
4. Water system
5. Kitchen fittings
6. Sanitary fittings
7. Door, gate, window, grill and roller shutter
8. Fixed partitions
9. Flooring (including carpets)
10. Wall covering (including paint work)
11. False ceiling and cornices
12. Ornamental features or decorations excluding fine art
13. Canopy or awning
14. Fitting Room or changing room
15. Recreational room for employee
16. Air-conditioning system
17. Children play area
18. Reception area
19. Surau
Cost that aren’t qualified for this tax deduction:
1. Designer fee
2. Professional fee
3. Purchase of antique (purchase of an object or work of art which , represents a previous era in human society, is a collatable item due to its age, rarity, craftmanship or other unique features and appreciates in value over time)

For any taxpayer who wish to claim this tax deduction, external auditor are needed to certified all the cost incurred. The external auditor must be a qualified auditor who can verified the expenses incurred by the taxpayer on claims for renovation and renewal costs business. Kindly take note that the payment to the external auditor is not eligible to be included in the tax deduction.

 

If you are looking for an external auditor, reach us now!

FAQs for Renovation Tax Deduction

1. Who is eligible for this tax deduction?

(a) Any taxpayer who incurs R&R expenses on business premises.
(b) The business premises are used by the taxpayer for its business purposes.
(c) This deduction is given in determining adjusted income taxpayer business under paragraph 4 (a) of the Act Income Tax 1967.

2. What is meant by business premise under this tax deduction?

The premises are either owned or rented by the taxpayer and used for business purpose.

3. What are the cost that qualified & not qualified for this tax deduction?

Qualified cost:

a) General electrical installation
b) Lighting
c) Gas system
d) Water system
e) Kitchen fittings
f) Sanitary fittings
g) Door, gate, window, grill and roller shutter
h) Fixed partitions
i) Flooring (including carpets)
j) Wall covering (including paint work)
k) False ceiling and cornices
l) Ornamental features or decorations excluding fine art
m) Canopy or awning
n) Fitting Room or changing room
o) Recreational room for employee
p) Air-conditioning system
q) Children play area
r) Reception area
s) Surau
*All the cost involved must be certified by an external auditor.

 

Cost that are not qualified:
a) Designer fee
b) Professional fee
c) Purchase of antique

4. What is meant by an external auditor?

External auditor means a qualified auditor who can verified the expenses incurred by the taxpayer on claims for renovation and renewal costs business.
If you are looking for an external auditor, reach us now.

5. Is payment to external auditor included in costs of renovation and refurbishment?

No, the payment is not included in R&R expenses and is not allowed to be deducted.

6. What if the expenditure exceeds RM 300,000?

If the expenses exceed RM 300,000, taxpayer is only able to deduct up to RM 300,000.

8. What are the supporting documents required?

(1) Business registration certificate
(2) Proof of ownership of business premises. If the business premise is rented, a valid lease agreement is needed.
(3) Invoice of relevant R&R expenses
(4) Verification of R&R expenses by a certified external auditor