Be sure to keep a complete record of your business expenses, including a copy of your business insurance records, so that you can provide evidence that YOU can provide to HMRC when conducting a review. 1. The insurance premium paid for professional liability insurance is tax deductible if the inland revenue board malaysia`s professional liability insurance assuming your business needs IP insurance, that you offer professional advice or services, for example, you should consider buying a policy from day one to cover space for errors from day one. One. The person claiming the costs must be a professional within the meaning of the public decision. Bernard, the sole owner of a law firm, received rm200,000 proceeds from an insurance company, which could not cover the RM250,000 compensation to be paid to a client who had made a claim against him. As a result, Bernard himself had to bear RM50,000 to cover the loss of earnings from the payment of compensation to the claimant. A professional who does not practice his profession but does other business, the PII premium is not a tax-deductible expense. Professional conducts a business related to his professional. If a merchant has obtained a deduction for the piI premium paid, all products received from the insurance company in connection with piI are subject to tax.
takes out an IPI policy to maintain his professional status as an accountant. If you didn`t initially decide to take out IP insurance, but later realize the benefits for your business, it`s not too late to cover previous work. When you purchase your PI policy, you can request that the policy be backdated. The policyholder will want to convince you that you are not buying the policy with an ulterior motive – for example, if, after a few questions, it appears that a claim is coming to you. If a particular professional association allows its members to practise the profession in the form of a partnership and PII is acquired by the company, the piI premium paid by the company is allowed as a deduction from the gross income of the enterprise if the company carries on an activity related to that profession. In addition to various other forms of business insurance, eligible expenses also include travel expenses, material expenses, and legal and financial expenses. A trader in practice benefits from a tax deduction on the PII premium if the trader carries out an activity related to his profession. Example 4Dr. Steven, a partner in a dental practice company, operates with his partners from a clinic. He is registered with the Malaysian Dental Council (MDC) and holds an annual internship certificate.
While the DGIR seems to be under the misconception that insurance payments for PII policies are typically routed by law firms or professionals against whom claims have been made, this should not affect the content of Public Judgment No. 8/2017, which is now more favorable to bar association members and other professionals. Business insurance is considered an „eligible expense“ – a significant cost factor that helps keep your business running smoothly, on which you do not pay taxes. Therefore, when calculating your taxable profit for your tax return, you can deduct business expenses from your income, e.B. professional liability insurance. The Director General of the Tax Administration (DGIR) had considered that the proceeds of the insurance and the compensation paid to a claimant under the professional liability insurance („PII“) would be taxable as income of the member of the Bar Association against whom the claim was made. 4. The indemnity paid to the claimant is a tax-deductible expense. Dr.
Wong practices as a general practitioner in his own clinic. It is registered with the Malaysian Medical Council (MMC). He acquired an IPI policy to protect himself in the event of a dispute arising from the practice of his profession as a doctor. The PII premium paid by Dr. Wong is a tax-deductible expense for his business. 3. The indemnity received from the insurance company is taxable income. In the case of an employed professional, the premium paid for PII is not allowed as a deduction from the gross income of that job. Senibina Bumi Landskap Sdn Bhd (SBLSB) is an architectural consulting firm that provides architectural advice and services. The company acquired an IPI policy to cover the cost of compensating and defending lawsuits related to the construction of a hotel in Putrajaya. Since SBLSB, which operates an architectural firm, has acquired a IPI policy related to the architectural profession, the IPI premium paid is eligible as a deduction from the gross income of the business.
Disclaimer: Every effort has been made to provide accurate information. However, the information and rules contained in this Article may be amended and supplemented at any time by the competent authority. Therefore, the information in this article may not be up to date. . Dr. Aidil is a full-time surgeon employed in a public hospital. He is registered with the MMC and a member of the Malaysian Medical Association (MMA). In 2017, he purchased a PII policy and paid a premium of RM2,400. Since Felicia does not carry out any activity related to her profession as an accountant, she does not fulfil the conditions for deduction of the PII premium.
Therefore, the PII premium paid is not allowed as a deduction from the gross income of the direct selling business. . Full Income Tax Document (LHDN) on Professional Liability, click here So, yes, retroactive date is a technical term for the industry, but one that small business owners need to understand. Do you know to what extent your IP policy covers you for the work done? If the answer is no, you may want to check your policy with your insurer for reassurance. The terms of the settlement agreement are favorable to the members. .