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Notification of Change in Accounting Period

Previously, there was no provision in the Income Tax Act 1967 (“the Act”) requiring a company, limited liability partnership, trust body or co-operative society to notify the Inland Revenue Board (“IRB”) of any change in its accounting period, apart from the guidance provided by the IRB via its Public Ruling.

In order to enforce and enhance self-compliance with regards to the timely notification on the change in accounting period, the above entities must notify the IRB in the prescribed form (CP204B) of the change in their accounting period by the prescribed due date with effect from Year of Assessment (“YA”) 2019 as follows:

Accounting Period of

New Accounts

Due Date to Notify the IRB

Less than 12 months

30 days before the end of the new

accounting period

More than 12 months

30 days before the end of the

original accounting period

Please see the following examples for the determination of the date of notification:

Example 1

 

Original accounting period: 1 January 2019 to 31 December 2019

New accounting period of less than 12 months e.g. 1 January 2019 to 31 October 2019 (shortened)

01.01.2019                YA 2019                      31.10.2019       31.12.2019

|------------------------------------------------------------|--------------------|

Due date to notify IRB: 01.10.2019

 

Example 2

 

Original accounting period: 1 July 2018 to 30 June 2019

New accounting period of more than 12 months e.g. 1 July 2018 to 31 December 2019 (lengthened):

 

01.07.2018                      YA 2019                      30.06.2019        31.12.2019

 

|------------------------------------------------------------------|------------------------|

Due date to notify IRB: 31.05.2019

 

The following penalties will apply for failure to comply with the notification requirement:

Penalties

Effective Date

Any late filing penalty that has been

imposed based on the accounting period prior to the new accounts shall continue to be recoverable.

YA 2019

Any amount of penalty that has been

imposed on failure to pay any tax instalments or under-estimation of tax payable based on the accounting period prior to the new accounts shall continue to be recoverable.

YA 2019

Non-compliance with the notification

requirement is an offence and upon conviction, the taxpayer would be liable to:

(i)     fine between RM200 to RM20,000; or

(ii)    imprisonment for a term not exceeding 6 months; or

(iii)   both the above fine and imprisonment term.

30 December

2017

Steps to be Taken

 

In view of the enforcement based on the new provisions, the relevant entities that wish to change their accounting period shall take into account the notification requirement to the IRB within the stipulated deadline and ensure strict compliance to avoid the imposition of the abovementioned penalties.

In practice, where the submission deadline of the Tax Return should be a later date due to the change of accounting period and the Company fails to notify the IRB in the prescribed form (CP204B) of the change in its accounting period by the prescribed due date, late filing penalty will be triggered automatically once the submission deadline of the Tax Return based on the original accounting period lapses. Please be mindful that any late filing penalty that has been imposed based on the original accounting period shall continue to be a debt due and recoverable by the IRB based on the new provisions.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Contact KPMG

Should you have any questions or require further clarification, please do not hesitate to contact any of our Executive Directors, Directors, Associate Directors or Managers whom you are accustomed to dealing with or who are responsible for the tax affairs of your organisation at the following telephone numbers for respective offices:

Petaling Jaya Office

Tai Lai Kok
Executive Director –
Head of Tax and Head of Corporate Tax
ltai1@kpmg.com.my
+ 603 7721 7020

Long Yen Ping
Executive Director –
Head of Global Mobility Services yenpinglong@kpmg.com.my
+ 603 7721 7018

Bob Kee
Executive Director –
Head of Transfer Pricing
bkee@kpmg.com.my
+ 603 7721 7029

Ng Sue Lynn
Executive Director –
Head of Indirect Tax
suelynnng@kpmg.com.my
+ 603 7721 7271

Soh Lian Seng
Executive Director –
Head of Tax Risk Management
lsoh@kpmg.com.my
+ 603 7721 7019

Nicholas Crist
Executive Director –
Corporate Tax
nicholascrist@kpmg.com.my
+ 603 7721 7022

Dato’ Leanne Koh
Executive Director – 
Corporate Tax
leannekoh@kpmg.com.my
+ 603 7721 7026

Neoh Beng Guan
Executive Director – 
Corporate Tax
bneoh@kpmg.com.my
+ 603 7721 7025

Ong Guan Heng
Executive Director – 
Corporate Tax
guanhengong@kpmg.com.my
+ 603 7721 7027

Chang Mei Seen
Executive Director – 
Transfer Pricing
meiseenchang@kpmg.com.my
+ 603 7721 7028

Ivan Goh
Executive Director – 
Transfer Pricing
ivangoh@kpmg.com.my
+ 603 7721 7012

 

 

 

Evelyn Lee 
Executive Director –
Penang Tax
evewflee@kpmg.com.my
+604 238 2288 (ext. 312)

Regina Lau
Executive Director –
Kuching & Miri Tax
reglau@kpmg.com.my
+6082 268 308 (ext. 2188)

Titus Tseu
Executive Director –
Kota Kinabalu Tax
titustseu@kpmg.com.my
+6088 363 020 (ext. 2822)

Ng Fie Lih
Executive Director –
Johor Bahru Tax
flng@kpmg.com.my
+607 266 2213 (ext. 2514)

Crystal Chuah Yoke Chin
Tax Manager –
Ipoh Tax
ycchuah@kpmg.com.my
+605 253 1188 (ext. 320)