Borang CP500

Many taxpayers received the Borang CP500 in 2010 requesting them to make instalment payments in 2010. This, it seems, is beacuse these taxpayers received other incomes other than employment (eg. rental, dividends, etc) and declared them in "Other Income" column in 2009's Borang B/BE.

Therefore, the instalments payments under CP500 is the tax for these income from 'other sources', which is crazy beacuse 'other income' received in 2008 may vary very differently from the amount received in 2009.

The Star carried a 'clarification' from the IRB on 23 Feb 2010, which raises more questions and does not clarify much actually.

Tuesday February 23, 2010
Get CP 500 notice cancelled if you don’t earn extra income

PETALING JAYA: If you receive a notice of instalment payment (CP 500) from the Inland Revenue Board, do not panic!

The notice, which states the amount, due date and number of instalments, is meant for taxpayers with earnings other than monthly salaries such as income from business and rentals as well as commissions from multi-level marketing or insurance.

Those with a fixed salary, but without other earnings, should go to the branch handling their income tax files to have the notice cancelled.

IRB public relations officer Masrun Maslin admitted that IRB had received many complaints from taxpayers without side income who were issued with such notices.

“Do not panic. If you do not have any other means of income other than your monthly salary, just go to the branch handling your file for the notice to be cancelled immediately,” he said.

However, he said taxpayers would still have to provide supporting documents such as the EA form to show that they did not have income other than their monthly salaries.

Masrun said taxpayers without side income were being issued with such notices due to possible errors in their income tax return forms. “For instance, they must have wrongly put dividends, bonuses or pensions in the other earnings column instead of the salary column.

“The system automatically captures the data on the other earnings and thus, the taxpayers will be issued the CP 500 notices.”

He said previously, the IRB would look at the list of those eligible for the tax liability on other earnings before issuing the notice.

A complainant who declined to be identified said he was upset upon receiving the notice.
He said he contacted the IRB branch handling his file and was advised to ignore it.

However, he was asked to call the branch again next month to check whether he would still have to settle the instalment payments.

“The officer told me that he had been receiving a lot of queries and complaints pertaining to the notice,” he added.