Updated FAQs– Costs of renovation & refurbishment of business premises
Updated FAQs on the tax deduction on the costs of renovation and refurbishment of business premises
The IRB has published on its website an updated version of its FAQs document in relation to the tax deduction of up to RM300,000 to be given on the costs for renovating and refurbishing business premises, where such costs are incurred between 1 March 2020 and 31 December 2022. The FAQs document is in Bahasa Malaysia, titled “Soalan Lazim Potongan Cukai Bagi Kos Pengubahsuaian Dan Pembaharuan (R&R) Premis Perniagaan Di Bawah P.U.(A) 381/2020 Dan P.U.(A) 481/2021”, and the updated version is dated 31 October 2022.
The FAQs were updated to reflect the extension of the tax deduction until 31 December 2022 under the Income Tax (Costs of Renovation and Refurbishment of Business Premise) (Amendment) Rules 2021 [P.U.(A) 481]. Other key updates in the FAQs are as follows:
- Item 3
The IRB has provided some examples to explain certain types of costs, such as roofing, curtains and power stations, that will not qualify for tax deduction.
- Item 7(c)
Tax deduction is allowed for qualifying costs incurred from 1 March 2020 until 31 December 2022. The costs can be claimed even though the refurbishments and renovations are not completed during the year of assessment (YA).
Example
Company A and B’s financial year ends on 31 December.
Company A
| Renovation and refurbishment | Date the premise is used in the business |
|
| Start | End | |
| 1 May 2020 | 30 June 2022 | 30 June 2022 |
| YA 2020 (amount incurred) (RM) | YA 2021 (amount incurred) (RM) |
Allowed for tax deduction (RM) | ||
| Before 1 March 2020 | On or after 1 March 2020 | YA 2020 | YA 2021 | |
| NIL | 90,000* | 60,000* | 90,000 | 60,000 |
* Company A can still claim the tax deduction in YA 2020 and YA 2021 on the amounts incurred in those respective YAs, even though the renovation was only completed on 30 June 2022.
Company B
| Renovation and refurbishment Product | Date the premise is used in the business |
|
| Start | End | |
| 1 January 2020 | 30 August 2021 | 30 August 2021 |
| YA 2020 (amount incurred) (RM) | YA 2021 (amount incurred) (RM) |
Allowed for tax deduction (RM) | ||
| Before 1 March 2020 | On or after 1 March 2020 | YA 2020 | YA 2021 | |
| 20,000** | 50,000 | NIL | 50,000 | NIL |
** Company B would not be able to claim the cost of RM20,000 in YA 2020, as this was incurred before the qualifying period of the incentive (i.e., from 1 March 2020 to 31 December 2022).
- Item 8
The landlord and tenants of a multi-storey building are eligible to claim tax deductions as long as the costs of renovation and refurbishment are incurred by them:
a) The floor area (whether on the same floor or different floor) occupied by the landlord and tenants must be identified and differentiated.
b) Each of the respective claims by the landlord and tenants must be verified by external auditors and supported by invoices or other relevant documents.
c) Each of the claimant would qualify to claim up to RM300,000 for qualifying costs incurred from 1 March 2020 to 31 December 2022.
