An owner of a car accessories and car parts company was fined RM37,000 by the magistrate’s court for 6 counts of failing to keep his business records as required by the Income Tax Act 1967.
He was found to have breached the requirements in regards to keeping records pertaining to the business income or losses including sales ledgers, general ledgers, payment vouchers and receipts and payment between the 2010 and 2015 years of assessment.
The owner, Mr. Tang was ordered to pay the fine or face a jail term of 12 months.
Comments by StanleyCo:
1. S.82(1) requires every person (companies included) to keep and retain in safe custody sufficient records for a period of seven years.
2. General requirements:
A person should keep records including a cash book, a sales ledger, a purchases ledger and a general ledger. The type of books of account that should be kept will depend on the nature and the size of the business or activity. The following requirements should be complied with:
a. The books of account should be written up at regular intervals. Appropriate entries for each transaction should be recorded as soon as possible (in any case not later than 60 days after the transaction).
b. Supporting documents such as invoices, bank
c. Receipts issued should be serially numbered. Where the gross takings for a year exceeds RM150,000 from the sale of goods or RM100,000 from the performance of services, receipts issued must be serially numbered.
d. A valuation of the stock in trade or work in progress should be made at the end of each accounting period and the appropriate records maintained.
These books and other records in manual or electronic form should be sufficient to explain the transactions and to enable a true and fair profit and loss account or income and expenditure account and a balance sheet to be prepared.
3. Companies Act 2016 has similar requirements as Income Tax Act. Accounts have to be kept in accordance to the law and approved accounting standards (accounting standards applicable to Malaysian entities could be found here: www.masb.com.my). And every
transaction shall be entered into the accounts and other records within sixty days from transaction date. And the responsibility for keeping accounts and financial statements falls on the Directors and Managers of a company. Failure to comply could entail a maximum
penalty of RM500,000 and/or imprisonment of not exceeding 3 years.
4. The Royal Malaysia Custom Department (RMCD) also requires accounting records to be kept in accordance to the law and RMCD’s requirements. Details could be found in Part V of Goods and Services Act 2014 and the directives issued by RMCD. Failure to comply could entail a maximum fine of RM50,000 and/or imprisonment of not exceeding 3 years.
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.