Key points of this update 本次更新的要点:
1. Insurance premium paid for professional indemnity insurance is tax deductible if the
professional carries on a business related to his professional. 为专业责任赔偿保险支付的保险费可在下列情况下免税专业人士经营与其专业相关的业务。
2. Taxpayer affected includes lawyers, accountants, architects, doctors, pharmacists, engineers, surveyors or any other professions where the status of the profession is recognised by a written law or statute in Malaysia.
3. Compensation received from the insurance company is a taxable income.
4. Compensation paid to the claimant is a tax deductible expense.
Professionals in Professional Practice 专业实践中的专业人员
According to the latest Public Ruling 8/2017, insurance premium paid for professional indemnity insurance (PII) is tax deductible, provided 根据最新的公共法规8/2017，为专业赔偿保险(PII)支付的保险费可扣税，前提是
a. The person claiming the expense must be a professional as defined in the public ruling. 申请费用的人必须是公共法规中定义的专业人士。
b. The person must be carrying a business related to his profession.
Example 1 例子1:
Dr. Wong is a practising as a general practitioner in his own clinic. He is registered with the Malaysian Medical Council (MMC). He has purchased a PII policy to cover himself in the event of lawsuits arising from the carrying of his profession as a doctor. The PII premium paid by Dr. Wong is a tax deductible expense for his business. 王医生在自己的诊所里当全科医生。他在马来西亚医学委员会(MMC)注册。他买了一份PII 保险，以防因从事医生职业而引起诉讼。王博士支付的PII保费是其业务的可扣税开支。
Professionals in Employment 就业专业人员
In the case of a professional who is in employment, the premium paid for PII is not allowed as a deduction against the gross income from that employment. 对于有工作的专业人员，为PII支付的保险费不得从该项工作的总收入中扣除。
Example 2 例子2:
Dr. Aidil is a full-time surgeon employed by a government hospital. He is registered with the MMC and is also a member of the Malaysian Medical Association (MMA). In the year 2017, he purchased a PII policy and paid a premium of RM2,400. Aidil医生是一名受雇于政府医院的全职外科医生。他在MMC注册，也是马来西亚医学协会 (MMA)的成员。2017年，他购买了一份PII保险，并支付了2400令吉的保费。
The PII premium paid for the year 2017 is not eligible for a deduction against Dr. Aidil’s employment income because he is not carrying on a business related to his profession.
Professionals Carrying Other Business 从事其他业务的专业人员
A professional who is not practising his profession but carries on other business, the PII premium is not a tax deductible expense.
Example 3 例子 3:
Felicia is an accountant who does not practise as an accountant but instead is carrying on a full-time direct-selling business. Felicia purchases a PII policy to maintain her professional status as an accountant.
As Felicia is not carrying a business related to her profession as an accountant, she does not satisfy the requirement needed for deduction of PII premium. Thus, the PII premium paid is not allowed as a deduction from the gross income of the direct-selling business.
PII Premium Incurred by the Company 公司产生的PII溢价
Where a particular professional body allows its members to practise the profession in the form of a company and PII is purchased by the company, the PII premium paid by the company is allowed as a deduction against the gross income of the company if the company carries on a business related to that profession. 如果某个专业团体允许其成员以公司形式从事该专业，而PII是由该公司购买的，则如果该公司经营与该专业有关的业务，则该公司支付的PII保费可从该公司的总收入中扣除。
Example 4 例子4:
Senibina Bumi Landskap Sdn Bhd (SBLSB) is a consulting architecture company which provides architectural consultancy and services. The company purchased a PII policy to cover the cost of compensation and defending lawsuits in relation to the construction project of a hotel in Putrajaya. Since SBLSB which carries on an architectural business purchased a PII policy related to the architect profession, the PII premium paid is allowed as a deduction against the gross income of the company’s business. Seni Bina Bumi lands kap Sdn Bhd(sb LSB)是一家建筑咨询公司，提供建筑咨询和服务。 该公司购买了一份PII保单，以支付与普特拉贾亚一家酒店建设项目相关的赔偿和诉讼辩护 费用。由于开展建筑业务的SBLSB购买了一份与建筑师职业相关的PII保险，所支付的PII 保险费可从公司业务的总收入中扣除。
Insurance Proceeds and Compensation 保险收益和赔偿
Where a professional has been allowed a deduction for the PII premium paid, any proceeds received from the insurance company in connection with the PII will be subject to tax.
Whereas compensation paid to the claimant will be allowed as deduction.
Example 5 例子5
Bernard, the sole-proprietor of a legal firm received proceeds amounting to RM200,000 from an insurance company and this amount could not cover the compensation of RM250,000 to be paid to a customer who had made a claim against him. Therefore, Bernard had to bear on his own RM50,000 to cover the shortfall of compensation payment to the claimant.
Proceeds amounting to RM200,000 will be subject to tax. When the proceeds are paid out as compensation to his client, the amount is allowed as a tax deduction. The compensation totalling RM50,000 incurred by Bernard is also allowable as a deduction from the gross income of his business.
For more details, please click here: Public Ruling 8/2017 (PDF)
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Disclaimer: Every effort has been made to provide accurate information. However, the information and regulations contained in this article are subject to changes and amendments by the relevant authority at any time. As such, the information in this article may not be current.
And the information provided in this article is general commentary only and shall not be considered as advice or recommendation. As all tax situations are specific to their facts and will differ from the situations in this article - if you have specific tax questions you should consult a licensed tax agent.