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CP58 Form: What is it and who should prepare it?

An income statement called CP58 displays all earnings in the form of cash and non-cash benefits. Allowances and bonuses are two instances of monetary incentives. While homes, automobiles, and plane tickets are instances of non-financial rewards. The business provides CP58 forms to its sales distributors, dealers, and agents. It resembles an EA Form that is given to employees in the private sector in certain ways.


CP58 form is not tax filing form. It is an income statement that shows the income of incentives, allowance, bonuses, etc.


Notes: It does not include those who are running a business or who are participants in a partnership. This rule also applies to foreign companies and foreign branches operating in Malaysia.


Who are required to file CP58 form?

According to the IRBM (Inland Revenue Board of Malaysia)/LHDN (Lembaga Hasil Delam Negeri), that companies who reimburse their agents with more than RM 5,000 in cash or non-monetary incentives during the course of the year must provide them with a CP58 form. Agents who get annual incentives of less than RM 5,000 will only form upon request.


The CP58 is not required to be submitted to IRBM/LHDN. Therefore, it is frequently disregarded and forgotten. But if the tax office ask to see a full account of all the awards and incentives that have been issued to your agents, CP 58 comes in handy. The business must maintain the original CP58 form for 7 years to conduct tax audits. Each of the agents, dealer, and distributor should receive a copy.



What Rewards must be reported?

Cash rewards and non-cash incentives make up the majority of the agent’s performance-based compensation.


Basic allowance, commissions, and bonuses are all considered Cash Reward. If the business offers the agent financial incentives, it is required to declare the exact sum paid on the CP58 form.


Material non-cash incentives include gifts, vacation packages, travel arrangements, a car, a house, and others. The business must create the CP58 form for non-cash rewards depending on the actual cost.



Which rewards do not have to be reported?

  • The company offers trade discount and bulk discount

  • Gifts or promotional product that are not specified in the agency contract.

  • Incentives provided for an open invitation to entire members of the public or existing customers to refer more people.

  • Offer independent agents extra discount.

  • Payment for subcontract.

  • Handling charge

  • Credit reduction

  • Free gifts like pencils, calendars, and umbrellas that are not based on performance


CP58 Deadline

The final date for the company to send Form CP58 is 31 March in the year immediately following the year the incentives are paid.



Do you need to fill out Form CP58?


There are two situations:


Situation A:

  1. The company sells an item at RM 10

  2. Then, the agent sells the item to the buy at RM 10

  3. The buyer then pays RM 10 to the company ‘s bank account.

  4. There is no extra charge for the buyer.

  5. The company pays the agent incentive

  6. In this situation, the company must prepare Form CP58.



Situation B:

  1. The company sells an item to the agent at RM 10.

  2. The agent sells to a buyer at RM 15.

  3. The buyer pays RM 15 to the agent.

  4. There is an extra charge for the buyer.

  5. The company does not pay the agent incentive, therefore no need for Form CP58

  6. The extra charge does not need to be included in Form CP58.



What happens if you fail to provide From CP58?


According to Section 120(1)(b) of the Income Tax Act, a paying corporation is in violation if it neglects to prepare From CP58.


They could receive an RM200 to RM20,000 fine, up to six months in jail or both.


Ref: No.67-2022


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