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Accrued Director Fee and Tax Treatment

Prior to year of assessment 2015, directors fees are taxable in the hands of the directors when they are paid.

However, with Section 29(4) and (5) enacted into the Income Tax Act, effective from year of assessment 2015 the following principle shall apply:

Where the director fee first becomes receivable in the relevant period, that amount will be deemed to be obtainable on demand in the following basis period and be treated as an assessable income in that period.


CO A SDN BHD’s financial year end is 31 December every year. On 1 Jan 2018, the Board of Directors approved a director fee of RM100,000 payable to the Director, VICTOR CHOONG in respect of financial year ended 31 Dec 2017.

VICTOR CHOONG owns 51% of the ordinary shares in CO A SDN BHD and has effective control over the company. As such, the transaction is deemed as a controlled transaction.

The RM100,000 director fee was paid to VICTOR CHOONG on 10 Jan 2020.


1. Pursuant to Section 29(4), the director fee which was declared in year 2018, if remained unpaid, would be deemed to have been receivable on demand in the following basis year i.e. year 2019. And as such it would be an assessable income of VICTOR CHOONG in year 2019.

2. CO A SDN BHD must include this RM100,000 director fee in the Form EA (2019) of VICTOR CHOONG. And deduct and remit the Monthly Tax Deduction (PCB) to the IRBM by 15 Jan 2020.

3. VICTOR CHOONG must report this director fee income in respect of year 2019 in his Form BE (2019) or Form B (2019) even though he has only received the fee on 10 Jan 2020.


All Directors’ salaries, fees, commission and remuneration are subject to monthly tax deduction (PCB). This include director fees which are approved once a year. Failing which, would entail penalty from the IRBM.


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