预付款和应计项目您掌握了多少呢?

相信大家在资产负债表里常看到预付款 (Prepayment) 和应计项目(Accrual), 但是您是否知道这两个账目的意义存在？该怎么在账目上呈现呢？

科普时间到！让我们带大家一同了解这其中的迷思…

1. 顾名思义：

(a) 预付款

在当年度提前付款下一年的费用。

举个例子：一般上，公司的火险是以一年份的方式付费，公司所偿还的火险保障期已包括了下个年份的费用。

(b) 应计项目

每个月或每年公司应还的费用但是还未付款。

举个例子： 公司每个月都需要偿还电费，但是由于电单在下一个月才收到因此无法在当个月付款。此时我们就必须在当个月应记这笔开销。

2. 在年度报表有什么影响?

(a） 预付款

让公司的年度报表更准确，以便管理层能够做出理想的判断与决定。

这项账目是呈现在年度报表中的流动资产 (Current Assets)。

(b） 应计项目

让公司明确的了解每个月或每年开销的数额，以便预先储备足够的现金以及避免不必要花费。

这项账目是呈现在年度报表中的流动负债 (Current Liabilities)。

3. 何时要输入进或出账目？

(a） 预付款

输入账目：在当下付款时就必须把下个月份或年份的费用归类去预付款的账目。

输出账目：当预付款的日期已达到时就必须把此账目输出到费用的账目。

(b） 应计项目

输入账目：每个月尾或年末时必须把应还但未付款的费用输入到应计项目。

输出账目：在付款的那一天就必须把应计项目输出。

4. 复式记帐法

(a) 预付款

输入账目：

Debit 费用

Debit 预付款

Credit 现金

输出账目：

Debit 费用

Credit 预付款

(b) 应计项目

输入账目：

Debit 费用

Credit 应计项目

输出账目：

Debit 应计项目

Credit 现金

5. 例子

(a） 预付款

公司收到保安公司的账单并在1月时已付款。单据中保安费的日期是从01/01/2021 致 28/02/2021总计RM 120。此时公司必须把1月的费用RM 60输入到保安费（Expenses），2月的预付数额RM 60输入到预付款的账目。当2月时才把预付款中的数额输出到保安费。

(b） 应计项目

公司在每个月为都会在月尾之前计算薪水并支付，但由于这个月的现金流动不是很宽裕。因为此，公司想把这笔薪水RM 12,000 在下个月的5号之前才

公司在每个月都会计算薪水RM 12,000并在下一个月的5号之前才将薪水支付给员工。即使公司还未支付，公司还是必须将当个月的薪水RM 12,000输入到应计项目。直到公司将薪水支付给员工时我们才将这笔费用输出。

欲知更多可参考以下网址： IFRS - Conceptual Framework

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Can newly incorporated investment holding company (IHC) enjoy tax rebate RM20,000 x 3 years?

On 12 December 2020, LHDN released Practice Note. 4/2020 to clarify the changes in tax rate from 17% to 24%.

Effective from year assessment 2020 onwards, certain companies (see below) will NOT be entitled to enjoy the SME (17%) tax rate.

The following companies are NOT entitled to enjoy the SME (17%) tax rate:

a)    Company without business source of in

I.        Investment Holding Company (IHC) (not listed on Bursa Malaysia)

An investment holding company refers to a company that owns investments such as properties and shares for long term investment and derives investment income (''non-trade income'') such as dividend, interest or rental income. The company's principal activity is that of investment holding.

II.        Company ceased business operation but has other income such as rental income or interest gain.

Term and condition on tax rebate for company :

1. Which has a gross income from source or sources consisting of a business not exceeding fifty million ringgits for the basis period for a year of assessment; and

2. To enjoy the SME (17%) tax rate, the Company need to fulfil the following conditions:

a)    Share capital / Total capital contribution ≤ RM2.5 million; and

b)    *Must have gross income from source or sources consisting of a business not exceed RM50 million.

Unlisted investment holding company (IHC)  …. NO BUSINESS source ! Not SME ! So… IHC cannot enjoy tax rebate RM20,000 x 3 years.

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𝐖𝐡𝐲 𝐩𝐞𝐨𝐩𝐥𝐞 𝐛𝐮𝐲 𝐩𝐫𝐨𝐩𝐞𝐫𝐭𝐲 𝐯𝐢𝐚 𝐚 𝐒𝐝𝐧 𝐁𝐡𝐝 (𝐩𝐫𝐢𝐯𝐚𝐭𝐞 𝐥𝐢𝐦𝐢𝐭𝐞𝐝 𝐜𝐨𝐦𝐩𝐚𝐧𝐲)? 𝐏𝐚𝐫𝐭 𝟑

Client called us to ask whether they can enjoy tax rebate RM20,000 x 3 years on new incorporated sdn bhd as investment holding company which buy property solely.

Let's run through the terms and conditions on RM20,000 x 3 years tax rebate.

Share your thinking with us in the comment section on the eligibility on tax rebate RM20,000 x 3 years on investment holding company.

We will share our professional opinion in coming days.

PS : Term and condition of the tax rebate RM20,000 x 3 years

1. A rebate may be granted for a period of three consecutive years from the year of assessment in which a company or limited liability partnership first commences operation, in an amount equivalent to its operating or capital expenditure which it has incurred limited to a maximum amount of twenty thousand ringgits [RM20,000] for each of assessment

2.  Where the total amount of the rebate under subsection (1) exceeds the income tax charged (before any such rebate) for any year of assessment, the excess shall not be paid to the company or limited liability partnership, or be available as credit to set off the tax liability of the company or limited liability partnership for that year of assessment or any subsequent year.

3. The company or limited liability partnership referred to in subsection (1) shall be a company or limited liability partnership resident and incorporated or registered in Malaysia-

4. Which has a paid-up capital in respect of ordinary shares or contribution of capital (whether in cash or in kind) of two million and five hundred thousand ringgit and less at the beginning of the basis period for a year of assessment;

5. Which has a gross income from source or sources consisting of a business not exceeding fifty million ringgits for the basis period for a year of assessment; and

6. Which has commenced operation on or after 1 July 2020 but not later than 31 December 2021.

7. The Minister may, by statutory order, impose such conditions as he thinks fit to give effect to or for carrying out the purposes of this section.

8. Where in a year of assessment the company or limited liability partnership fails to fulfil the conditions specified in subsection (3) or (4), the amount of rebate under subsection (1) shall not be granted for that year of assessment in which the failure occurs and in the subsequent years of assessment.

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The disadvantages of buying property via Sdn Bhd (private limited company)

#1 Taxation

The Sdn Bhd will be taxed 24% instead of SME preferential tax rate (17% on first RM600,000 chargeable income, 24% on subsequent chargeable income)

#2 Cost

The cost of setting up a Sdn Bhd run from thousands dollar.

The annual compliance cost on audit, tax and secretarial run from thousands dollar.

#3 Profit distribution

Shareholder can only reap the profit via dividend distribution under the Company Act 2016.

#4 Personal guarantor

The director/shareholder may act as personal guarantor to the bank for loan financing on the property.

#5 Loan Financing Ratio

Bank normally charge higher interest rate and borrowing limits to Sdn Bhd compared with individual.

#6 Transfer of shares

Shares of Sdn Bhd are not openly tradeable and may be difficult to find a buyer.

#7 Closure of company

The closure of sdn bhd may be time consuming and costly.

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The advantages of buying property via Sdn Bhd (private limited company)

#1 Risk Diversification

Pool more money up to 50 shareholders into the Sdn Bhd to buy one/more property.

#2 Easy/Flexible disposal

The shareholders who want to exit the investment can be done via transfer of share of the sdn bhd instead of disposal of property.

#3 Execute legal document

The shareholders of the Sdn Bhd can delegate the signing of documents to director of the company.

#4 Estate planning

Share of the deceased shareholder can be transferred to the beneficiaries.

#5 Debt Service Ratio

A ratio where bank use to determine the borrower capacity for payment of debt via company earning power.

#6 Loan to Share Capital Ratio

Higher share capital is used as one of criteria for bank borrowing on property.

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Do you know what is the difference in Bad Debts, Provision for Doubtful Debts and Bad Debts Recovery?

Due to the impact of Covid-19, the economy has become worse. There are many companies that will face a situation in which the debts cannot be collected.

However, if the companies are unable to collect the debts, what should we do on account?

Don’t worry, let us show you how to do it!

1. Definition：

(a) Bad Debts

- The uncollectible debts from customers.

(b) Provision for Doubtful Debts

- The estimation of future uncollectible debts from customers.

(c) Bad Debts Recovery

- The cash is recovered from bad debts written off previously.

2. What is the document needed to prepare?

(a) Bad Debts

- Issuing reminder notices.

- Legal action

(b) Provision for Doubtful Debts

- The aging report shows customers in slow payment and long outstanding.

(c) Bad Debts Recovery

- The payment slips form customer or Bank receipt.

3. When do we need to do the transaction in account?

(a) Bad Debts

- Once the debts are confirming uncollectible.

(b) Provision for Doubtful Debts

- The debts are overdue but still can be pursued for collection though difficult.

(c) Bad Debts Recovery

- The overdue is received from customers on the bad debts written off.

4. Double Entry：

(a) Bad Debts

Debit Bad Debts Written Off (Expenses)

Credit Account Receivable (Current Assets)

(b) Provision for Doubtful Debts

Debit Allowance for Doubtful Debts (Expenses)

Credit Provision for Doubtful Debts (Current Liabilities)

(c) Bad Debts Recovery

Debit Cash at Bank (Current Assets)

Credit Bad Debts Recovery (Income)

5. Example:

Example 1:

In year 2021, Company A’s account receivable is RM 100,000.00 and RM 10,000.00 is uncollectable due to the customer is bankrupt.

Answer:

The journal entry is debit Bad Debts RM 10,000.00 and credit Account Receivable RM 10,000.00.

Example 2:

In year 2020, Company A's account receivable amounted to RM 200,000.00. Company A decided to provide 5% for doubtful debts on the year.

Answer:

The journal entry is debit Allowance for Doubtful Debts RM 10,000.00 (RM 200,000.00 X 5%) and credit Provision for Doubtful Debts RM 10,000.00 in year 2020.

Example 3:

In year 2021, customer paid RM 1,000.00 to Company B for a debt which had already been written off as bad debts in year 2020.

Answer:

The journal entry is debit Cash RM 1,000.00 and credit Bad Debts Recovery RM 1,000.00 in year 2021.

You may refer to the link for more information of tax treatment on bad debts: Is Provision of Bad Debts eligible for tax deduction?! Is Provision of Bad Debts tax deductible?

Case Study on the Transition of MFRS 16 Leases

Background

ABC Sdn Bhd's financial statement is in accordance of Malaysian Financial Reporting Standards (MFRS).

The Company has signed a 5 years tenancy agreement since Year 2018 for the warehouse used in its business.

Struggles

The accountant of the Company is wondering whether

Ø   They should apply for MFRS 16 Leases to comply the Standards?

Ø   What is the corrective action if they fail to comply in Year 2019?

Ø   What is accounting entries to recognise the MFRS 16 Leases?

Q1: They should apply for MFRS 16 Leases to comply the Standards?

Solution Exemption requirement

The Company can elect not to apply only if the lease contract is:-

1. Short-term lease

- less than 12 months

 2. For low value assets

- Not highly dependent on, or highly interrelated with other assets

- Benefit from use of assets on its own or together with other sources that are readily available to the lessee

 If the Company is not exempted, it has to apply the Standard and determine the following items:-

1. Discount rate

- Implicit interest rate; or

- Incremental borrowing rate

2. Application method

- Retrospectively to each prior reporting period; or

- Retrospectively with the cumulative effect

Q2: What is the corrective action if they fail to comply in Year 2019?

Solution The Company has to do the restatement of its financial statement for the reporting period by applying MFRS 129 Financial Reporting in Hyperinflationary Economies.

Q3: What is the accounting entries to recognise the MFRS 16 Leases?

Solution The accounting entries for recognition of right-of-use assets and lease liability will be as follow:-

Dr. Right-of-use assets

            Cr. Lease liability

Dr. Depreciation

            Cr. Accumulated depreciation

Dr. Interest on lease liability

            Cr. Lease liability

Dr. Lease liability

            Cr. Bank/Cash

 Source:

MFRS 16 Leases https://www.masb.org.my/pdf.php?pdf=BV2018_MFRS%2016.pdf&file_path=pdf_file

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Background

The main objective of this incentive is to further promote high-value added activities in the E&E industry to transition into 5G digital economy and Industry 4.0.

This Special Investment Tax Allowance is to encourage companies in the E&E sector that have exhausted the Reinvestment Allowance in Malaysia to further reinvest in Malaysia.

Type of Incentive:

Investment Tax Allowance of 50% on qualifying capital expenditure to be offset against 50% of Statutory Income.

The exemption period is valid for a period of 5 years starting from the date of the approval letter.

Eligibility Criteria:

1. Manufacturing company incorporated under the Companies Act, 1965/2016, and residents in Malaysia.

2. Possess valid Business License from the relevant Local Authority.

3. Possess Manufacturing License (ML) from MITI or Confirmation Letter of Exempted from Manufacturing License from MIDA (whichever is applicable).

4. The applicant company is engaged in manufacturing activities in the E&E sector and intend to reinvest for the purpose of expansion, automation, diversification and modernization.

5. The applicant company has fully exhausted the eligibility period of fifteen years to claim Reinvestment Allowance (RA) under Schedule 7A ITA 1967 by 31 December 2019 and is currently not enjoying any other tax incentives approved by the Government.

6. The applicant company will be subjected to the following conditions:

 a. The minimum investment in the related proposed projects shall be at least RM1.5 million in capital expenditure within a period of five (5) years as proposed

b. The company to incur the minimum yearly operational expenses (as proposed by company); and

c. The company to hire minimum number of Malaysian full time workers (as proposed by company)

Application Process:

1. Company submits application to MIDA through MIDA e-Incentive portal.

2. MIDA evaluates the non-technical eligibility.

3. MIDA issues a ‘Consideration Letter’ to the Applicant Company and Carbon Copies (c.c.) to the Minister of International Trade & Industry (MITI), Ministry of Finance (MoF), and Inland Revenue Board (IRB).

Effective Date of Application:

Applications received by MIDA from 1 January 2020 until 31 December 2021 are eligible to be considered for this incentive.

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Weekly E-KTP Newsletter #191: Permanently increase of Indebtedness threshold to RM50,000

Summary

A higher threshold for winding up proceedings against a debtor who inability to pay debts

Full story

Suruhanjaya Syarikat Malaysia (SSM) has permanently raised the indebtedness threshold for companies from RM10,000.00 to RM50,000.00 with effect from 1 April 2020; after introduced a temporary measure from 23 April 2020 to 31 March 2021 under Section 466 of the Companies Act 2016.

This initiative was aimed to reduce the burden and impact on companies facing cash flow problems. This is prevention to companies being winding up and able to continue doing business during the COVID-19 pandemic.

Upon implementation of this initiative, the number of winding-up petitions is expected to reduce and companies will be able to continue doing business without worry. This is supported by the number of petitions submitted to SSM from April to December 2020 recorded at 665 cases as compared to 1,760 cases in the year 2019 and 1,533 cases in the year 2018.

Is the threshold considered an appropriate amount? As elaborate from Datuk Seri Alexander Nanta Linggi, the Minister of Domestic Trade and Consumer Affairs, this amount was considered appropriate from two (2) perspective as below:

1. not too low in forcing companies to wind up due to small amounts of debt, and

2. not too high which could burden smaller creditors for not being able to take action against companies in debt.

Hence, SSM hopes that the implementation of this initiative will help and support the corporate sector during the economic recovery period, especially for companies affected by the COVID-19 outbreak.

Source :

SSM Press release https://bit.ly/3dLpE7s

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#KTP

#Thk

#windingup

#SSM

What should you do on tax matters after the conversion from enterprise to sdn bhd ?

Form CP 502

Upon conversion from enterprise to sdn bhd, you shall vary the instalment payments if do not agree with the Notice of Instalment Payments (CP500).

Form CP502 must be filled up by using a black ink pen and be submitted to the respective IRBM branch which handles the taxpayers' file.

The due date for submission of Form 502 is not later than 30 June 2020.

CP 204 Tax estimation for Sdn Bhd

Submission of tax estimate in Malaysia is mandatory under Section 107C of the Malaysian Income Tax Act, 1967.

According to Public Ruling 07/2011, A company which has been in operation (existing) should furnish estimation of tax payable not later than 30 days before the beginning of the basis period for a year of assessment.

For those that have just commenced business the estimate of tax payable should be furnished within 3 months from the date of commencement of business of the company, trust body or co-operative society.

SME is not required to furnish an estimate of tax payable or make instalment payments for a period of 2 years beginning from the year of assessment in which the SME commences operations.

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𝐓𝐇𝐊 (Our associate in secretarial & accounting services)

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We are one-stop (20 years+ history) audit, tax, secretarial, accounting and payroll firms which commit to help and grow our clients business.

What is the valuation of stock for the conversion from enterprise to Sdn Bhd?

Referring to Public Ruling 2/2020 Tax Treatment of Stock in Trade Part 1 - Valuation of Stock

Valuation of Stock equal to

1. Price paid on the sales or

2. Value of the consideration

Valuation of Stock is not market value of the stock

Conditions

Where a person permanently ceases to carry on his business and –

(a) any stock of the business is transferred on cessation or shortly after cessation for a valuable consideration to another person who intends to use that sold or transferred stock in his business

(b) the cost of the transferred stock is deductible as an expense in computing the other person’s adjusted income for the basis period for a year of assessment of his business

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We are one-stop (20 years+ history) audit, tax, secretarial, accounting and payroll firms which commit to help and grow our clients business.

Instructional Video - How to Register with HRDF

Background

Recently, the Government has expanded the scope of industries for employers who have more than 10 employees to register Human Resources Development Funds (HRDF).

The objective is to increase the training opportunities for all employees to up-skill themselves and be prepared for a future ready workforce against technology displacement.

The Government has also encouraged those employers who are not mandatory to register to submit the Form 1 as well.

We understood this is a challenge for some employers on how to do the registration.

To clear your doubt, please watch our video with one click.

https://bit.ly/3sFAzWN

Sources:

Human Resources Development Fund Official Website https://www.hrdf.com.my/

P.U.(A) 84 Pembangunan Sumber Manusia Berhad (Amendment of First Schedule) Order 2021

https://www.hrdf.com.my/wp-content/uploads/2016/12/FEDERAL-GOVERMENT-GAZETTE-PEMBANGUNAN-SUMBER-MANUSIA-BERHAD-AMENDMENT-OF-FIRST-SCHEDULE-ORDER-2021.pdf

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We are one-stop (20 years+ history) audit, tax, secretarial, accounting and payroll firms which commit to help and grow our clients business.

What is control transfer under income tax act for the conversion from sole proprietorship to Sdn Bhd?

As per refer to Public Ruling 1/2018 Public Ruling 1/2018 Disposal of Plant and Machinery Part II - Controlled Sales

Control transfer is transaction of asset between two parties.

• The acquirer of the asset has control(at least 50%) over the disposer and; vice versa

• Some other person has control over the disposer and acquirer of the asset

• The disposal is effected in consequence of a scheme of reconstruction or amalgamation of companies

The disposal is effected by way of a settlement or gift or by devolution of the property in the asset on death

The conversion of sole proprietorship to Sdn Bhd will subject to control transfer.

 As the control right of sole proprietorship and Sdn Bhd come from one person.

Treatment in tax

• The disposal of asset from sole proprietorship to Sdn Bhd.

• The assets deemed transfer at residual expenditure instead of the transaction price.

• Disposer would not subject to balancing charge or allowance.

• Acquirer's can't claim the initial allowance and claim annual allowance based on disposer's acquisition price but restricted to the residual expenditure.

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𝐊𝐓𝐏 𝐂𝐚𝐫𝐞𝐞𝐫 (Our job platform for interns, graduates & experienced candidates )

• Instagram https://bit.ly/3u2PxHg

• Facebook http://bit.ly/3rPxz9o

𝐓𝐇𝐊 (Our associate in secretarial & accounting services)

• Website www.thks.com.my

• Facebook http://bit.ly/3duvQ5z

We are one-stop (20 years+ history) audit, tax, secretarial, accounting and payroll firms which commit to help and grow our clients business.

Question 7: Is professional firm considered as employer? (eg: sole-proprietor, partnership and LLP)

Answer:

Yes, all are considered as employer if they have contract of service with employee.

“Employer means any person who has entered into a contract of service to employ any other person as an employee, and includes an agent, manager or factor of such first-mentioned person.”

Question 8: What is the compound for not registering?

Answer:

According to Section 13(2) of PSMB Act 2001, the employer is liable to a fine of not exceeding RM10,000 or imprisonment not exceeding 1 year or both.

Question 9 : How to define employees?

Answer:

It included all the employees who are under “Contract of Service”.

Included: partners from partnership, trainee, part time, non-professional employees (eg: cleaner, coffee lady, receptionist)

Excluded: Internship

“Contract of service means any agreement, whether oral or in writing and whether express or implied, whereby one person agrees to employ another as an employee and that other agrees to serve his employer as an employee, and includes an apprenticeship contract”

Question 10 : Is internship consider under contract of service?

Answer:

No. Internship is not under contract of service.

Question 11 : How to define wages?

Answer:

Wages = salary + fixed allowance. Not include: no fixed allowance, bonus.

 “Wages means the basic salary and fixed allowances or other emoluments of a like nature paid in cash by or on behalf of an employer to an employee, and includes any leave pay and arrears of wages but does not include: -

a)       any contribution paid by an employer on his own account to any pension fund, provident fund, superannuation scheme, retrenchment, termination, lay-off or retirement scheme, thrift scheme or any other fund or scheme establish for the benefit or welfare of the employee;

b)      any travelling allowance or the value of any travelling concession;

c)       any sum payable to the employee to defray special expense entailed on him by the nature of his employment;

d)      any gratuity payable on discharge or retirement;

e)      any bonus or commission; or

f)        any allowances paid to apprentice under apprenticeship contract;”

“Monthly wages means the wages paid by an employer to an employee for the whole or part of the month during which the employee id employed by the employer.”

 Question 12 : Is director fee subject to HRDF?

Answer:

A director who only receive director fees is not considered as employee.

Question 13 : What are the steps to claim HRDF?

Answer:

Step 1: Send application first and is approved training (registered under HRDF)

Step 2: Approved and attend training (include registered under HRDF and internal training (eg: conduct by manager)

Step 3: Submit complete document for the claim after training (will have a workshop on guiding how to claim)

Question 14 : Any expire date to utilize the fund?

Answer:

Yes, you need to claim the fund within 24 months. Otherwise, it will be forfeited after 24 months from the date of contribution.

Question 15:  The levy payment is exempted from March to May 2021. Does it mean the first levy payment is on wages for June 2021 and the payment due date is on or before 15 July 2021?

Answer:

Yes, the company need to pay the levy on salaries from June 2021 onwards. Levy payment to be made no later than 15th of the month.

Question 16 :  How much is the rate of levy if number of employees reduce to less than 10? Do I need to notify Corporation?

Answer:

No, you no need to notify Corporation. The rate of levy shall remain at 1% of the monthly wages of each of the employees until the end of the current year.

However, the rate of levy shall be 0.5% if the number of employees remains below 10 after the current year.

[Refer to Section 15(5) and Section 15(6) of PBSM 2001]

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KTP

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• Instagram https://bit.ly/3jZuZuI

• Linkedin https://bit.ly/3sapf4l

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𝐊𝐓𝐏 𝐋𝐢𝐟𝐞𝐬𝐭𝐲𝐥𝐞 (Our internal community for our colleagues)

• Tiktok http://bit.ly/3u9LR6Q

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𝐊𝐓𝐏 𝐂𝐚𝐫𝐞𝐞𝐫 (Our job platform for interns, graduates & experienced candidates )

• Instagram https://bit.ly/3u2PxHg

• Facebook http://bit.ly/3rPxz9o

𝐓𝐇𝐊 (Our associate in secretarial & accounting services)

• Website www.thks.com.my

• Facebook http://bit.ly/3duvQ5z

We are one-stop (20 years+ history) audit, tax, secretarial, accounting and payroll firms which commit to help and grow our clients business.