The Alphard Is in Your Name. Can Your Sdn Bhd Still Claim It? Part 2

(SME TAX STORY) Your Sdn Bhd Pays RM450,000 For An Alphard. But The Geran Is Under Your Name. Can Company Claim Tax? 😂

This is where many SME bosses get confused.

Company pays.

But geran is personal name.

So whose car is it?

According to HASiL Public Ruling No. 5/2014, there are TWO types of ownership for capital allowance.

Legal owner.

Whose name is registered on the car.

Beneficial owner.

Who actually paid for the asset and can prove it with accounts, invoices, receipts and supporting documents.

Now see these 3 cases.

01CASE 1

Geran : Company name.

Company pays RM450,000.

Company uses the Alphard.

Easy.

Company is the legal owner.

Company is also the beneficial owner.

Accounting:

Dr Motor Vehicle RM450,000.

Cr Bank / Hire Purchase RM450,000.

Tax?

Company may claim capital allowance.

But don't happy too early. 😂

Under HASiL Public Ruling No. 6/2015, for a normal passenger car not licensed for commercial transport, RM100,000 qualifying expenditure only applies if:

The car is new.

AND

The total cost does not exceed RM150,000.

Your Alphard costs RM450,000.

So the qualifying expenditure is generally restricted to RM50,000.

Meaning:

Accounts: RM450,000.

Tax capital allowance : Based on RM50,000.😂

02CASE 2

Geran : Boss name.

But company really bought the Alphard.

Company paid for it.

Company controls it.

Company uses it for business.

Company has invoices and payment records to prove it.

Now the company is NOT the legal owner.

But under Public Ruling No. 5/2014, it may still be the beneficial owner.

And if the beneficial owner incurred the qualifying expenditure and uses the asset for its business, it may claim capital allowance.

So personal name on geran does NOT automatically mean company cannot claim.

Accounting may be:

Dr Motor Vehicle RM450,000.

Cr Bank RM450,000.

Tax?

Company may still claim capital allowance as beneficial owner.

But again.

RM450,000 Alphard.

Capital allowance may only be calculated based on RM50,000.

03CASE 3

Geran : Boss name.

Boss really owns the Alphard.

Boss bought it for himself.

Company only pays the instalments.

Now different story.

Company is not legal owner.

Company is also not beneficial owner.

So company cannot simply say:

“We paid, therefore company car.”

No lah. 😂

Accounting may instead be:

Dr Amount Due From Director.

Cr Bank.

Meaning:

“Boss, company paid your personal bill.”

You owe the company.

And the company cannot claim capital allowance on the Alphard just because it paid the instalment.

So remember this.

Company pays does not automatically mean company owns.

And.

Personal name on geran does not automatically mean company cannot claim.

Being the beneficial owner is not enough. The car must actually be used in the company's business. If the boss and his family mainly use it, there is a benefit in kind issue on the director's side, and LHDN may test the business use.

Public Ruling No. 5/2014 tells us to look at legal ownership AND beneficial ownership.

Public Ruling No. 6/2015 tells us how much of the car cost may qualify for capital allowance.

So ask:

• Who REALLY bought the car?
• Who REALLY paid?
• Who REALLY owns it?
• Who REALLY controls it?
• Who REALLY uses it for business?

And most importantly.

• Can you prove it?

One RM450,000 Alphard.

Three different situations. Three different accounting and tax results.

The geran tells us the legal owner.

The money and documents may tell us the beneficial owner.