If you are a salaried employee and recently received a CP500 notice for tax instalments, you might be wondering why. The Inland Revenue Board of Malaysia (LHDN) has good news for you.
On 5 January 2026, LHDN announced that it will not impose penalties on individuals who do not pay their CP500 instalments for the Year of Assessment (YA) 2026. This provides some breathing room for taxpayers to get their affairs in order.
Why Did I Receive a CP500 Notice?
Usually, CP500 notices are for individuals with business income. However, LHDN's big data system is now able to detect when salaried individuals have other income sources. If you have income from rent, freelance work, interest, or royalties alongside your salary, this is likely why you received the notice.
What Does "No Penalty" Mean for Me?
This concession for YA 2026 means you will not be fined for failing to make the instalment payments listed on your CP500.
But, the tax on your non-salary income is still payable. It is a good idea to continue making voluntary payments if you can. This will help reduce the final amount of tax you need to pay when you file your tax return (BNCP) for YA 2026.
What Should I Do Now?
1.Review Your Income: Check that you have declared all your income sources correctly in your past tax filings. Accurate reporting for YA 2025 can prevent you from receiving a CP500 in the future.
2.Consider Amending: If you believe the CP500 amount is incorrect, you can apply to amend it using Form CP502. The first amendment must be submitted by 30 June 2026, and the second by 31 October 2026.
3.Keep Good Records: This is a good time to get organised. Keep clear records of all your income and expenses to make future tax filing smoother.
Need help understanding your tax obligations or the CP500 notice? Our team is here to provide clarity.
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