Dear Valued Clients

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Dear Valued Clients Powered By Docstoc
					2 May 2000

Dear Valued Clients

We are now in the midst of the income tax filing period and we would like to take
this opportunity to advise you on the latest developments.

The dateline for the variation of tax payable under the instalment scheme (STTS -
CP200) is over and we have also completed our submission of extension of time
for the filing of income tax returns for the year of assessment 2000 (Preceding
Year Basis).

Now begins the task of completing the accounts and audit and the submission of
income tax returns in accordance with the extension programme and payment of
tax in accordance with the notice of instalment payment (CP 200).

Variation of Tax Payable by Instalments - STTS

Although the deadline for variation has passed the Finance Act 2000 which has
just been gazetted provides for variation up to June 30. Although no written
confirmation has been received from the tax office on this matter we will try to
appeal on your behalf if the need arises.

Payment of Tax by Instalments – Current Year of Assessment

Every taxpayer who has chargeable income is liable to pay tax on an instalment
basis. These instalments are payable for the current year and is based on the
chargeable income for the year 2000.

If you are in business or have income other than employment income you should
have by now received a revised notice (CP 201) setting out your instalment
payment over the year.

The instalment payment schedule should be strictly adhered to until you receive
your Notice of Assessment (Form J) whereupon you will have to settle the tax
payable pursuant to the Form J, less any instalment payments and deductions of
tax made up to the date of the Form J, within thirty (30) days from the date of the
Form J.
The instalment payment should be remitted to the Collections Branch in Kuala
Lumpur or it can be paid at any branch of Bumiputra Commerce Bank Bhd
together with the remittance slip (CP 203). If you are making payment to Kuala
Lumpur please allow time for posting and clearance of your cheque. In such cases
you should allow for at least ten (10) working days before the due date for

If you have not received your notice of instalment payment you should write to the
Collections Branch together with an estimate of tax payable for a notice to be

Income Tax Return – Current Year of Assessment

Income tax returns for the current year of assessment 2000 will be issued
beginning April 2000 and quarterly thereafter. Under the new assessment basis all
income tax returns have to be filed six (6) months after the close of the financial
year of your business. Eg if you close your accounts on March 31 of each year
you will have to file your tax return by September of each year. The tax office has
for the current year allowed a further two (2) months to file your income tax return.

Self Assessment – Estimates of Tax Payable for Companies

Self assessment for companies come into effect from year of assessment 2001.
Companies whose year end is January 31 will be the first to be self assessed.

Under the scheme all companies have to submit an estimate of their tax payable
thirty (30) days before the commencement of the financial year in the prescribed
form (CP 204). The estimate shall not be less than the tax payable in the last
preceding year of assessment.

Payment of tax based on the estimate will commence in the second month of the
financial year (basis period) and will be in equal monthly instalments over the
financial year (basis period). It should be remitted to the Collections Branch in
Kuala Lumpur or it can be paid at any branch of Bank Bumiputra Commerce Bhd
together with the remittance slip (CP 207) not later than the tenth (10) day
following the month.

No notice of assessment will be issued. The tax return will be deemed to be your
notice of assessment and the date will be the day you file your tax return. Any
balance of tax due or in excess of your estimate must also be paid at the same

If the difference in tax due and payable at the time of submission of your tax return
is in excess of thirty per centum (30%) of the estimate of tax payable you will have
to pay a penalty of ten per centum (10%) on the difference. This will also have to
be paid when you file the income tax return.
Variation of Estimates of Tax Payable

In the sixth (6) month of the financial year (basis period) you may vary the
estimate of tax payable. Where the variation results in less tax payable than what
has been paid then no further instalments need be paid. If the variation results in a
higher liability the excess shall be payable by equal monthly instalments over the
remaining months of the financial year (basis period).

The tax office has given a concession for the current year to allow for a variation
to the estimate of tax payable based on the preceding year of assessment.
However any application must be supported by evidence in calculating the
potential tax liability when submitting CP 204.

Field Audit

With the switch to self assessment the tax office has indicated that they will be
shifting their emphasis to audits of businesses. This is carried out through field

Pursuant to Section 82 of the Income Tax Act every business should maintain
books and records to enable income from the business for each year of
assessment to be readily ascertained. It also provides that all these should be
recorded within 60 days of the transaction date.

Therefore we urge every client to look at their accounting system and this include
filing and storage of documents to check whether it complies with the Income Tax
Act, 1965.

If you require our assistance in reviewing your system please do not hesitate to
contact us. We will provide you with our estimate of fees and time to complete the

The tax office has been known to be very strict in allowing expenses for deduction
against income. Therefore proper documentation in support of your claim must be
on file. Also we will be unable to adopt what we previously have been doing which
is when in doubt, claim. Now we have to be absolutely certain that we can obtain
a deduction before making a claim. The tax office are imposing penalties of
between 60 per centum (60%) and one hundred per centum (100%) on claims
disallowed during field audit.

PCB – Monthly Deduction of Salary

This applies to all payments to employees including directors. Although directors
fees and in some instances salaries are paid once a year you have to deduct PCB
in the month the payment is made. Where no payments are made but is credited
to the directors account then PCB should be paid in the month the directors
emoluments are credited to the directors account.
Benefits In Kind

There are many clients who continue to ignore benefits in kind in completing Form
E for employees especially for directors and shareholders. The tax office may then
add back all the expenses claimed in the accounts of the business.

Turnover Period

As a result of very tight deadlines for filing accounts and income tax returns and
the penalties for non compliance we ask for your cooperation in providing us
complete information for the finalisation of accounts and for audit. Further if you
can have your books ready for audit by the end of the second month after your
year end it will be greatly appreciated.

It is our objective to complete each job no later than four (4) months after the
close of the financial year. In this respect we seek your cooperation to achieve our

Licences and Permits

This is May and we would like to remind you that if you have properties you
should have paid your quit rent by now. Also please check that you have renewed
all your necessary local authority and signboard licences and any other licences
or permits to conduct your business. If you have any queries or seek our
assistance please do not hesitate to contact us.

Outstanding Fees

The last two years have been very difficult and we know that you are equally
affected by the downturn in economy. As such we have also extended our credit
period for the payment of fees. We will continue to accommodate request for
delayed settlement of our fees but we hope you will also understand the very
difficult position we are in. We require cash to operate and have almost no trade
financing and all our cost are on a cash basis. Therefore we hope you will
understand when we chase for settlement of our fees. An alternative is to provide
us with staggered payments.

Payment by Credit Card – VISA and MASTERCARD

To facilitate collection of our fees and settlement of fees due to our group of
professional firms you may want to consider paying us using either your VISA or
MASTERCARD credit card. All credit card collections will go to SQ Associates
and your accounts will be credited accordingly with the professional fees paid.

Yours sincerely.

*This is a computer generated letter and requires no signature.