How did Form CP58 come about?
With effect from 1st January 2012, the new Section 83A of the Income Tax Act 1967 (ITA 1967) imposes the responsibility to companies to issue a form CP 58 on any incentives (whether in monetary form or otherwise) to its agents, dealers or distributors. Agent, dealer or distributor is defined in Section 83A (4)of ITA 1967 to mean “any person who is authorized by a company to act as its agent, dealer or distributor, and who receives payment (whether in monetary form or otherwise) from the company arising from sales, transactions or schemes carried out by him as an agent, dealer or distributor.”
For e.g. If you have part timers on a commission basis, you will need to prepare CP58.
When do I need to prepare Form CP58?
To ease some administrative burden, the IRBM had announced that from 31 December 2012 onwards, the form CP 58 only need to be prepared for those recipients where the monetary and non-monetary incentive payment exceeds RM5,000 per annum. For non-monetary incentives such as motor vehicle or house, the actual value/amount incurred by the payer company will be the incentive deemed received by the recipient.
What incentives are excluded?
- Trade discounts and bulk discounts;
- Promotional items / gifts received which are not stipulated in the contract;
- Incentives given for an open invitation to encourage the public/ customers to introduce more customers;
- Special treatment in the form of preferential rate given to an independent agent who buys and sells goods on his own accord. He is a customer to the producers/wholesalers, except that he enjoys preferential rate due to his purchasing power
- Credit rebate – i.e. Company selling products to supermarkets, sundry shops, minimarkets etc. Company gives customers a credit rebate (credit notes to offset their account) when they make a prompt payment & hit the yearly target/quota;
- Handling fees (i.e. loading and unloading of goods or luggage, etc) – i.e. company is in air transport business and sells air tickets to travelers. Company sub-contracts its ground handling services to an agent. The agent solely provides ground-services and does not sell air tickets to travelers. The agent is merely a sub-contractor to the company and merely receives handling fees; and
- Items such as umbrellas, pens, calendars etc. given to all agent, dealers and distributors which are not based on performance.
What is the deadline for Form CP58?
Not later than 31st March.