Upkeep of motor vehicle tax treatment

01Issue

For the purchase of a new non-commercial motor vehicle for a company, specifically, a lorry, is initial insurance and road tax-deductible as expenses or need to add back as capital in nature?

02Fact

1. According to PR 6/2015 #5.2, Expenditure in respect of the vehicle which does not qualify for capital allowance claim is as follows:

(i) road tax, insurance and hire purchase interest does not qualify for capital allowance as the expenditures are recurring expenses which allowable as expenditures under subsection 33 (1) of the ITA.

2. Under subsection 33(1) of the ITA, an expense wholly and exclusively incurred in the production of gross income from a source is allowable as a deduction against gross income from that source. As long as the lorry is used for business purposes wholly and exclusively, the expenses incurred are tax deductible.

03Tax opinion

Road tax and insurance do not qualify for capital allowance. However, they can be deductible as expenses as this is recurring expenses which is allowable as expenditure under subsection 33(1) of the ITA.

04Source

1. Public Ruling No. 6/2015 : Qualifying expenditure and computation of capital allowances

https://phl.hasil.gov.my/pdf/pdfam/PR_6_2015.pdf

2. Income Tax Act 1967 – Section 33(1) Adjusted income generally

https://phl.hasil.gov.my/pdf/pdfam/Act_53_20190101.pdf

Visit Us

• Wisma KTP, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
• Wisma THK, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

KTP (Audit, Tax, Advisory)

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

• Website www.ktp.com.my
• Instagram https://bit.ly/3jZuZuI
• Linkedin https://bit.ly/3sapf4l
• Telegram http://bit.ly/3ptmlpn

THK (Secretarial, Account, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource booking, accounting and payroll services to clients

• Website www.thks.com.my
• Facebook https://bit.ly/3nQ98rs

KTP Lifestyle

An internal community for our colleagues on work and leisure.

• Tiktok http://bit.ly/3u9LR6Q
• Youtube http://bit.ly/3ppmjyE
• Facebook http://bit.ly/3ateoMz
• Instagram https://bit.ly/3jZpKLo

KTP Career

An external job community on vacancy in Johor Bahru for interns, graduates & experienced candidates.

• Instagram https://bit.ly/3u2PxHg
• Facebook http://bit.ly/3rPxz9o

#Ktp #Thks