How To Deduct Entertainment Tax From Income Tax

To determine deductibility of expenses incurred can be very tedious and bewildering

FOR income tax purposes, any expenses incurred in the course of a business will only be eligible for tax deduction if the expenses are solely incurred in producing the business income.

It is important to establish the deductibility of an expense as in the event of a field audit which results in the Inland Revenue Board (IRB) discovering an understatement of tax due to claims on expenses which are not tax deductible, a taxpayer will not only suffer additional tax but also a 45% penalty.

With effect from year of assessment 2004, entertainment expense will only be eligible for 50% tax deduction except for specific circumstances where it will qualify for full deduction.

This article will explain the three steps to determine the amount of entertainment expenses allowable as a deduction.

Are the expenses incurred entertainment expenses as defined in the income tax law?:

Entertainment is defined to include:

(i) the provision of food, drinks, recreation or hospitality of any kind; or

(ii) the provision of accommodation or travel in connection with or for the purpose of facilitating entertainment of the kind mentioned in (i) by a person or an employee of his in connection with a trade or business carried on by that person.

Are the entertainment expenses solely incurred in producing the business income?:

Expenses allowable for accounting purpose do not necessarily qualify for tax deduction. The entertainment expenses must be wholly and exclusively incurred in producing the business income to be eligible for tax deduction. Domestic and private expenditure charged to the business accounts will not be tax deductible. For example, entertainment expenses incurred by a sole proprietor in taking his family out for a meal will not be deductible as it is private in nature.

Are the entertainment expenses eligible for full tax deduction?

Expenses incurred on the following entertainment will qualify for full tax deduction:

1. the provision of entertainment to employees. Examples of such expenses include free meals and refreshments, annual dinners, outings and family day.

2. the provision of entertainment by a person who carries on a business of entertaining. Where a taxpayer is in the business of providing entertainment to paying customers, the cost of providing such entertainment will be deductible.

Examples of expenses which are tax deductible include provision of cultural shows by restaurants or hotels at their premises to entertain their customers and meals provided by airlines or other transportation business to its passengers.

3. the provision of promotional gifts at trade fairs or trade or industrial exhibitions held outside Malaysia for the promotion of exports from Malaysia.

Expenses incurred on gifts to customers or visitors who attend the above events will qualify for tax deduction. These would include samples of products, small souvenirs, bags, and travel tickets

4. the provision of promotional samples of products of the business of that person. It should be noted that only the products of the taxpayer given out as promotional samples will be allowed full deduction.

Examples of such expenses include:

● A complimentary drink or meal provided by a restaurant.

● Free samples of products manufactured/distributed by the business.

● Free samples of new products.

5. the provision of entertainment for cultural or sporting events open to members of the public, wholly to promote the business of that person.

Examples of cultural or sporting events and the entertainment expense related to such events are shown in Table A.

Taxpayers can do some tax planning in maximising their entertainment expenses claim by using the above provision. For instance, entertainment expenses incurred by a property developer in organising a carnival for the purpose of launching a new project or new property release will normally qualify for a 50% tax deduction. By including a cultural or sporting event, the property developer will be able to claim full tax deduction.

6. the provision of promotional gifts within Malaysia consisting of articles incorporating a conspicuous advertisement or logo of the business. The gifts need not be products of the business. However, the gifts must have a conspicuous advertisement or logo of the business.

7. the provision of entertainment which is related wholly to sales arising from the business of that person. Examples of such expenses include:

● Food and drinks for the launching of a new product.

● Redemption vouchers given for purchases made.

● Discount vouchers, shopping vouchers, concert or movies tickets, meal or gift vouchers and cash vouchers.

● Free gifts for purchases above a certain amount.

● Redemption of gifts based on a scheme of accumulated points.

● “free” maintenance/service charges or contribution to sinking fund by property developers.

● Lucky draw prizes to customers.

● Expenditure on trips given as an incentive to dealers for achieving the sales target.

● Provision of light refreshments to customers when making sales.

Entertainment expenses which are not eligible for 100% tax deduction under Step 3 above will only qualify for 50% tax deduction.

The tax treatment of some of the entertainment expenses are shown in Table B.

The process of determining the deductibility of entertainment expenses can be very tedious and often bewildering.

To ensure that the expenses are appropriately categorised, it is in the interest of taxpayers to educate their staff to provide details such as who they entertained and the purpose of the entertainment. Proper records such as invoices, receipts, payment vouchers, etc must be kept to support the claim in case of tax audit by the IRB.

By Lee Voon Siong

3 Year Laptop Malfunction Rates by Manufacturer

Got this chart from Lowyat. Those who intend to purchase laptop should check out above chart before deciding (lower bar indicates better reliability)

Jusco at Bandar Mahkota Cheras

Jusco has started the construction of a two-storey height shopping center at Bandar Mahkota Cheras recently. Due to the size and AEON actually owns the building, I believe this new shopping center will operate under Jusco brand instead of MaxValue.

This is defintely a good news for all residents in BMC. IMHO, Cheras is an underserved area - it has growing population, rising number of middle-high income family and closed to KL city center. What it lacks is only commercial activities, which C180 will offer in the near future. Once the road expansion work at Phenix and Bulatan Cheras completed, Cheras Selatan will prosper even further.

Photos taken this afternoon:

Construction notice

Construction work started

Location (Wikipedia):-
Jusco
C180

New Blog Created - Ringgit News

Today I've created a new blog called Ringgit News. The main purpose is to provide some general information on all financial news and economic developments in Malaysia.

Welcome to Ringgit News!

Nationwide Rollout of CTCS on July 1

KUALA LUMPUR: With effect from July 1, Bank Negara Malaysia (BNM) is implementing the nationwide rollout of the Cheque Truncation and Cheque Conversion System (CTCS).
In a statement yesterday, BNM said the cheque clearing system in Malaysia would be driven by the transmission of cheque images and data between banks and the clearing house as compared with the current physical exchange of cheques.


The CTCS system is now managed and operated by the Malaysian Electronic Clearing Corporation Sdn Bhd (MyClear), which is a wholly-owned subsidiary of the central bank. MyClear started operations on Jan 2, 2009. 

BNM said CTCS modernised the cheque processing infrastructure in Malaysia through the electronification of the cheque clearing process and reduction of risks and costs associated with paper-based payment instruments. 

"Cheques continue to be an important mode of payment, accounting for about 91.6% of non-cash payment value. 

"The implementation of CTCS would enhance the efficiency of cheque clearing and contributes toward lowering the cost of doing business, thereby enhancing the competitiveness of businesses as well as the overall economy," it said.

BNM said outstation cheques and local cheques in the country as a whole would be cleared on the same day and funds would be credited to the depositor’s account no more than two days later. 

However, in the states of Kelantan and Terengganu, which have different weekend bank holidays, cheques deposited on Sunday will require an additional working day for funds to be made available into the depositors’ accounts. Consumers and businesses will also no longer need to pay commission fees for outstation cheques.

BNM said with the rollout of CTCS, members of the public were reminded that effective Sept 1, 2009, only the newly designed cheques conforming to the eSPICK Cheque Design Standards and Specifications would be accepted by the banks for clearing.

退休保本储蓄户口计划 ?!

无意间在佳礼中文论坛里看见这样的连接.

寿险保客必读 - 揭开寿险代理的一切夸大、隐瞒、误导、欺诈的销售手段！
http://bohtahche.blogspot.com/

感谢BTC勇于揭发保险业所谓‘退休保本储蓄户口计划’的真相. 希望大家可以转告其他人!

* 保险的宗旨是给予生命和心爱的人一个保障, 绝非赚钱或储蓄. 若要"包本", 可将钱存入定期即可; 若要"投资", 可选择股票, 债券, 基金等...

赤い糸 / Akai Ito / Red Thread / 红线

如果几个月前有留意Astro应该会注意到这一部戏. 它改编自同名手机小说, 于2006年在手机小说网站“魔法图书馆”上开始连载, 连续十八天占据了作品榜榜首的位置, 点击率很快超过了一千六百万. 次年出版的《红线》系列小说销量突破了一百八十万. 接着推出了剧场版, 如今再登大银幕.

我终于今天一口气将它的剧场版给看完了. 个人觉得戏的上半场的布局还真不错, 后半场就稍微普通了些. 故事发生在一所高中, 主要讲述男女主角如何 (曾经) 巧妙的相遇, 分开, 再团聚在一起, 就像有条红线将他们联系在一起... 说起来还真惭愧, 看到了某些情节连吃到了这么老的我也会流起泪来.

如果有时间不妨看一看这部戏, 说不定它可以钩起你过往高中生活的回忆...

如果有兴趣, 可以参考以下连接
http://www.crunchyroll.com/forumtopic-420239/new-drama-movie-akai-ito/?pg=0
http://wwwz.fujitv.co.jp/akai-ito/index.html
http://milkteazoo.wordpress.com/2009/01/01/akai-ito-magazine-article/

小说版 (日文)
小说版 (英文, 粉丝翻译)

Pep Talks Don't Motivate Staff Then What Can?

Psychology At Work - By Dr Goh Chee Leong

MORALE among the staff team is low. Productivity is low. Management decides that something needs to be done and quickly. So they get a trainer to give a “motivational talk”.

“Just come over”, they say, “give them a two-hour pep talk” and the expectation is that all of them will be inspired and motivated.

We want instant solutions for long-term problems.

If only life were so simple. If only leadership were so simple.

Don’t get me wrong. Words are powerful and when delivered by a skilful orator, they have the potential to exert an incredible amount of influence on a whole mass of people.

A good motivational talk certainly can lift the spirits for a moment, but therein lies the problem. Its effects are temporary at best.

The reality is that to boost motivation levels in the organisation on a more permanent basis, there needs to be more a fundamental change taking place in the organisation.

Research in organisational psychology has identified numerous organisational factors that contribute to workers’ motivation levels.

I have attempted to synthesise the various variables into four elements that, in my opinion, characterise the organisational culture of a highly motivated team.

EMPOWERMENT

People are motivated when they are given room to take ownership of their work process.

Read any management guidebook and it’ll tell you the same thing: Choose people who have the ability to get the job done. Set them clear targets and give them room to work.

Avoid micro-managing. Where possible give them freedom to make decisions about their work environment and their work processes. There are always boundaries and limits to freedom and decision-making rights of course, but the principle should be to give as much space as possible.

This is particularly important when you are dealing with your “top performers” and “high potentials”. These people are usually highly intelligent, highly motivated and full of ideas about how to get the job done. Nothing de-motivates them more than being straight-jacketed.

Sometimes as supervisors we make the mistake of over-managing perhaps, because they are trust issues.

Some organisations are overly bureaucratic, creating so much red tape that staff lose any incentive to implement improvements because it’s just too much trouble to change anything.

Some organisations regulate their processes and SOPs (standard operating procedures) to the point that staff no longer have any room to make any decisions or to exercise any discernment which makes the organisation rigid, inflexible and clumsy.

The danger about all this over-regulation is that it takes away a sense of control and ownership from the worker and this is de-motivating.

GROWTH

People are motivated when they perceive that the organisation is facilitating their growth and development.

Research seems to indicate that this is as important as financial remuneration especially for younger workers. They need to see that the current challenges they face are part of a personal development process for them. “What doesn’t kill me makes me stronger.”

Good organisations have transparent career development pathways for their staff and they communicate these regularly so that everyone is clear about what level they are at and what level they can aspire to.

Good organisations also provide the means for staff to make this leap. Talent management has become less of a buzzword and more of an operational necessity at many organisations that wish to compete at a global level.

The bottom line is that people are motivated when there is something to aspire to in their careers and it’s got to be more than just the money. Most “top performers” and “high potentials” are driven people who have relatively strong ambitions. Show them how their current “suffering” is going to help them get to where they want and they’ll be motivated to climb mountains and swim oceans for you.

CLARITY

People are motivated when they are clear about the goals, missions and objectives.

Good leaders are great at communicating the vision, mission and direction in a way that is both clear and inspiring. They are constantly “defining the mountaintops”.

High potentials like challenges. They want to be stretched. They seek a sense of achievement and accomplishment. That is why clarity of the mission is so important to them. Like soldiers in the battlefield, they want clear targets, clear objectives, clear victories.

Some organisations are poor at communicating expectations to their staff. As a result, workers have no sense of their performance indicators, their monthly targets, their scope of responsibilities. This ambiguity can be de-motivating.

EQUITY

People are motivated when they perceive that they are being treated fairly.

Nothing turns off a “high potential” more than the perception that “performance doesn’t really matter in this organisation”.

This is a problem that plagues organisations the world over. People feel that it’s all about office politics. It’s all about who you know rather than what you do. “As long as you’re close with the boss, they’ll let you get away with murder.”

In this kind of work culture, workers become experts at “managing” and “handling” their bosses, rather than improving their actual work performance. The name of the game becomes how to impress the boss rather than how to get things done. Once the worker sees a disconnect between his/her effort and the reward, you can forget about motivation, where the real work is concerned.

The solution of course is to put into place a comprehensive and well-executed performance management system that has clearly defined and measurable hard targets. I like the use of hard targets because it minimises manipulation.

The system needs to be fair and it needs to be seen to be fair.

A Chain-Reaction Of Illegality

Statement by Tengku Razaleigh Hamzah
Wednesday March 4, 2009

A chain-reaction of illegality

The BN’s takeover of Perak has set off a chain-reaction of illegality which has left Perak quite possibly without a legitimate government. One of our most prosperous states has been reduced to a failed state.

One lie leads to many lies. Each bad action leads to a cascade of follies. Particularly when the lie or violation concerns something very basic. This is a principle we teach our children. It is a simple but universal truth now being demonstrated in Perak.

With each violation the sense of decency and restraint and the habits that bind us to the Constitution are loosened. The confidence in the rule of law that makes civilized life possible is diminished.

Laws are invisible things. They are exist only when they are understood and observed. When the government of the day ignores foundational principles such as the separation of powers, the Constitution becomes a dead piece of paper. But the Constitution is not just any law. It is the set of laws that founds our nation, defines its basic principles, guarantees our individual rights and prescribes the structures, duties, and powers which make a national community possible. It is the foundation and source of the legal authority underlying the existence of Malaysia.

Those who so blithely ignore the Constitution for political ends are quite literally wrecking the foundations of this country to further their own interests.

This must stop.