The tax deduction of an amount up to RM300,000 on the renovation and refurbishment of any business premises was proposed earlier. Now the rules regarding this particular tax deduction have been framed.
To assist businesses and taxpayers while understanding these rules, the IRB has provided a FAQs document. It answers all the possible questions, which demand clarification.
Below are a few of the key points that are discussed in the said FAQs document.
- It clarifies that all the business premises are eligible to apply for this tax deduction. Hence, irrespective of the fact that whether the taxpayer has rented business premises or owns it, the renovation cost would be a tax deduction.
- The rules also demand that an external auditor must certify the renovation/refurbishment cost of the business premises. This is essential to seek the tax deduction.
- According to the FAQs document, the term external auditor relates to a certified auditor. Such an auditor must verify the cost or renovation by issuing a certification.
- However, it has been mentioned in the rules that fees charged by the external auditor won’t be considered as a part of the renovation cost. Hence, such an expense isn’t eligible for a tax deduction.
- Even if the cost of refurbishment/renovation of any business premises goes above the RM300,000 benchmark, the taxpayer can only claim RM300,000.
- This relaxation or deduction is valid only if these expenses are incurred from 1 March 2020 till 31 December 2021.
- Following are the supporting documents that a taxpayer claiming a tax deduction must provide.
– A valid Business registration certificate
– A tenancy agreement or a valid document showing the ownership of a business premise
– Original invoices that endorse the amount spent on refurbishment and renovation
– Certification provided by an external auditor (certified)