Faced Issues Like Failed Tax Deductions The RM12,000 "Save" That Turned Into a Nightmare
Don’t Let Your Mobile Number Be a Tax Liability: Why It’s Time to do Ownership Transfer Personal Numbers to Your Company’s Name Now
Mobile bill causing tax headaches or e-invoicing worries? Here discover why and how the Ownership Transfer from personal to company name, avoid tax scrutiny, ensure business compliance, and optimize tax deductions.
Ownership Transfer your mobile line to your company before tax season & avoid penalties!
Many Malaysian business owners, especially those running trading companies, often try to be smart about expenses. Take Mr. Lim, for instance. He runs a pretty successful trading business. Like many, he started using his personal mobile number for work. As his business grew, he needed more lines for his sales team.
Now, usually, a person can only register a few lines under their own name – say, five Maxis or Celcom lines. But Mr. Lim, thinking he was jimat (saving money) and avoiding the “hassle” of corporate accounts, simply got those first five lines under his own name. When he needed more, he just asked his loyal staff and even some family members to register new lines under their personal names, then handed the phones to his other employees. Simple, right? The company paid all the bills, around RM100 per line per month. With 10 lines, that’s RM12,000 a year in mobile expenses. And yes, his company dutifully claimed all RM12,000 as a business expense every year.
Everything seemed fine, until LHDN came knocking for an audit.
When the LHDN officer looked at the expense claims for those mobile bills, they noticed something crucial. These RM12,000 in bills weren’t under Mr. Lim’s company name. They were under various personal names – Mr. Lim’s, his staff’s, his family’s.
Mr. Lim argued, But tuan, these lines are 100% for the business! My sales team uses them every day!
The LHDN officer simply pointed to the tax rules. For an expense to be tax deductions, it must be “wholly and exclusively incurred for the purpose of the business.” And if it’s under a personal name, LHDN views it as a “personal expense” first. It becomes incredibly difficult to prove otherwise, especially when it’s not just one, but multiple lines scattered under different individuals.
The verdict? LHDN didn’t see it as a “smart saving” or a simple oversight. They flagged it as tax evasion. The RM12,000 claimed was disallowed. But it didn’t stop there. According to the advice from his accountant and auditor (who probably turned pale when they saw the audit findings), Mr. Lim’s company was slapped with a penalty of up to 10 times the amount of tax evaded.
That seemingly small RM12,000 a year in phone bills that the company tried to claim, suddenly exploded into a shocking over RM120,000 in fines!
This painful lesson hit Mr. Lim hard. That “SAVE” move to avoid the initial paperwork of setting up proper company lines cost his business a fortune and a major headache with LHDN. It was a stark reminder that in business, especially with e-invoicing just around the corner, proper documentation and clear ownership of assets are not just about compliance; they’re about survival.
If mobile phone expenses are submitted as company deductions—but bills are issued under different individuals (not company or directors) —LHDN may deem this as incorrect tax returns under Section 113(1)(a).
• Penalty: Up to RM10,000, plus 200% of the undercharged tax amount
Only payment of monthly bill for internet subscription registered under own name is eligible for claiming lifestyle relief, hence prepaid plan is not eligible.
Business lines under personal names risk losing critical contacts and incur tax penalties. Keep your business safe—transfer to Maxis Business Postpaid lines today!
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