Generally, tax deduction is allowed for all outgoings and expenses wholly and exclusively incurred in the production of gross income.
Certain expenses are specifically disallowed, for example:
- Domestic, private or capital expenditure.
- Lease rentals for passenger cars exceeding RM50,000 or RM100,000 per car, the latter amount being applicable to vehicles costing RM150,000 or less which have not been used prior to the rental.
- Employer’s contributions to unapproved pension, provident or saving schemes.
- Employer’s contributions to approved schemes in excess of 19% of employee’s remuneration.
- Non-approved donations.50% of entertainment expenses with certain exceptions.
- Employee’s leave passages with certain exceptions.
- Interest, royalty, contract payment, technical fee, rental of movable property, payment to a non-resident public entertainer or other payments made to non-residents which are subject to Malaysian withholding tax but where the withholding tax was not paid.
- Input tax under GST incurred by a person which is liable but has failed to be GST registered.Input tax under GST incurred by a person which is liable but has failed to be GST registered.
- Input tax under GST incurred by a person entitled to input tax credit.
- Output tax under GST borne by a GST registrant or by a person liable to be registered.
(Credit to 2018/2019 Malaysian Tax Booklet, pwc)