[TAX UPDATE] CP500 : Why Landlords Are Suddenly Receiving Instalment Notices

[TAX UPDATE] CP500 : Why Landlords Are Suddenly Receiving Instalment Notices

“Why only now? Last year no issue, and suddenly this year I kena CP500?”

If you earn more than just your business income with rental income. Don’t be shocked when CP500 suddenly drops into your inbox last few weeks.

LHDN confirm the rule was always there. Always. Just that last time the system didn’t bother to catch you. This year? Lucky you, the system decided to upgrade and issue you a CP500.

Congratulations, you’ve officially been noticed.

What Exactly is CP500?

CP500 is the Inland Revenue Board’s (LHDN) “Notis Bayaran Ansuran” or instalment payment notice. It applies to individuals who have non-employment income such as:

  • Rental income

  • Business income or profits

The purpose is straightforward : instead of waiting until filing season to collect one lump sum of tax, LHDN collects it in advance, split into six instalments.

How Does CP500 Work?

  • LHDN estimates your current year’s tax based on your previous year’s return (Form B).

  • The tax is divided into six instalments, due in March, May, July, September, November, and January of the following year.

  • You must pay each instalment within 30 days of the due date.

  • If you miss the deadline, LHDN automatically imposes a 10% penalty on the outstanding amount.

Common Misunderstandings About CP500

Many taxpayers think CP500 is an additional tax on top of their annual income tax. That’s not correct. CP500 is simply an advance payment. When you file your tax return next year, all CP500 payments are set off against your final liability.

For example:

  • If your actual tax is RM12,000 and you’ve already paid RM10,000 via CP500, you only need to settle the remaining RM2,000 when filing.

  • If you’ve overpaid through CP500, the excess will be refunded to you after assessment.

Can You Revise the CP500 Amount?

Yes. If your income is lower this year than the previous year, you can submit Form CP502 to revise the instalments. There are two opportunities to do this:

  1. By 30 June (first amendment)

  2. By 31 October (second amendment)

If your income has dropped significantly … say, your tenant moved out or your business slowed down. You should revise as soon as possible to avoid overpaying.

One caution : if your revised CP500 turns out to be more than 30% lower than your actual tax, LHDN may impose a 10% penalty on the difference.

Who Doesn’t Need to Pay CP500?

If you only have employment income, and your employer already deducts monthly tax (PCB), CP500 does not apply to you. The instalment scheme only targets individuals with rental or business income.

Key Dates and Reminders

  • CP500 notices are typically issued by February each year.

  • Instalments fall in March, May, July, September, November, and January.

  • Always pay within 30 days to avoid a 10% penalty.

  • Check your MyTax portal (https://mytax.hasil.gov.my/) or your email to confirm if you have been issued a CP500.

  • Keep proper records of all payments for your own reference or if LHDN requests proof.

Why CP500 Matters to You

Think of CP500 as a way of spreading your tax burden across the year. For landlords and business owners who rely on irregular cash flow, this instalment scheme prevents the shock of having to pay a huge lump sum during filing season.

If you receive a CP500 notice, don’t panic. It doesn’t mean you’re being taxed twice. It simply means LHDN wants you to contribute progressively towards your final tax bill.

The only real danger is ignoring the notice. Late payment attracts a 10% penalty, and once imposed, it cannot be reversed easily.

Final Takeaway

CP500 is not new. It has always been part of LHDN’s system for individuals with income beyond employment.

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