What is CP58 ?
CP 58 form is not a tax filing form. It is an income statement that shows the income of incentives, allowances, bonuses, etc. for agents, dealers and distributors, similar to the EA form received by employee.
Pursuant to Section 83A(1) of the Income Tax Act of 1967, as of January 1, 2012, each company must prepare and provide the CP 58 form to its agents, dealers and distributors (hereinafter referred to as agents) by March 31 of each year in accordance with the format required by LHDN.
Who are required to file CP58 form?
The Inland Revenue Board of Malaysia (IRBM) stipulates that if the company pays more than RM5,000 in cash or non-monetary incentives to the agent during the calendar year, they must prepare the CP58 form for each agent. These forms do not have to be submitted to the tax office, but if the tax office requires all information on the rewards paid, the company must provide all incentive payment information, including awards worth less than RM5,000.
What rewards must be reported?
The agent’s reward payments for achieving performance are mainly divided into two categories: cash reward & non-cash incentives. Cash Reward includes basic allowances, commissions, or bonuses. If the company provides cash incentives to the agent, it must report the actual amount paid in the CP 58 form.
Material non-cash incentives includes incentives, tour packages, tickets accommodation, car, house and so on. For non-cash rewards, the company must prepare the CP 58 form based on the actual cost.
Which rewards do not have to be reported?
Trade discounts and bulk discounts provided by the company
Promotional items or gifts which are not stated in the agency contract
Incentives given for an open invitation to encourage the public or customers to introduce more customers
Provide special discount rates to independent agents
Free items that are not based on performance, such as umbrellas, pens, and calendars
When is the due date to provide CP 58 form?
The Form CP 58 shall be provided to the agent, dealer, or distributor not later than 31 March in the year immediately following the year in which the incentives mentioned above are paid.
What is Depreciation ?
Accumulated depreciation is the total depreciation for a fixed asset that has been charged to expense since that asset was acquired and made available for use. The intent behind doing so is to approximately match the revenue or other benefits generated by the asset to its cost over its useful life
Types of Depreciation ?
It reports an equal depreciation expense each year throughout the entire useful life of the asset until the entire asset is depreciated to its salvage value.
2. Declining Balance
This method where assets are depreciated at a higher rate in the initial years than in the subsequent years. Under this method, a constant depreciation rate is applied to an asset’s (declining) book value each year.
3. Double-Declining Balance
This method is an approach to accounting that involves depreciating certain assets at twice the rate outlined under straight-line depreciation. This results in depreciation being the highest in the first year of ownership and declining over time.
4. Sum-of-the-Years’ Digits (SYD)
Under the SYD method, the depreciation rate percentage for each year is calculated as the number of years in remaining asset life for the same year divided by the sum of remaining asset life every year through the asset’s life.
5. Units of Production
This method requires an estimate of the total units an asset will produce over its useful life. Depreciation expense is then calculated per year based on the number of units produced.
What is Accumulated Depreciation ?
Accumulated depreciation is the total depreciation for a fixed asset that has been charged to expense since that asset was acquired and made available for use.
Presentation of Accumulated Depreciation
Accumulated depreciation appears on the balance sheet as a reduction from the gross amount of fixed assets reported. It might be list in several accumulated depreciation accounts, one for each fixed asset type.