PETALING JAYA: As Malaysians prepare to usher in 2026, filing income tax returns is once again on the to-do list for many.
However, some salaried employees who only earn a monthly income and already have monthly tax deductions (PCB), have been surprised to receive a CP500 notice from the Inland Revenue Board (LHDN), requiring them to pay estimated tax instalments for 2026.
The CP500 is a tax instalment scheme for individuals who have non-employment income such as business, rental and royalty income, with deductions under CP500 at the beginning of each year considered a payment in advance towards the final tax bill issued by LHDN at year end.
Typically, these taxpayers are required to make up to six bi-monthly instalments starting March each year.
However, a 28-year-old pharmaceutical employee from Shah Alam, who only wanted to be known as Lee, said she was puzzled by the notice as she has no other source of income apart from her salary.
“I already have PCB deducted every month. I don’t understand why I was issued a CP500 and asked to pay instalments.
“I’m not sure what to do, maybe just pay it first. What I earn is barely enough. I don’t understand how they detected a supposed side income,” she added.
Lee said that after checking with her friends, she was told the notice could have been triggered by a mistake in how her bonus was categorised or reported in her tax filing.
“I think I better make a trip to the LHDN office one of these days,” she said.
Similar concerns were raised by others in response to a Facebook post by chartered accountant firm Syafiq Suhaimi & Co, which discussed the notice.
One user, Ctz Rahim, did not know how to respond.
“I’m just employed, but I received a CP500 for 2026. How do I inform the LHDN that I don’t own any business?” he wrote.
Another user, Hafiz G. Hassan, said he also received the CP500 notice despite only earning a monthly salary and filing annual tax declarations.
Responding to queries, the firm advised affected taxpayers to submit a revised CP500 form to the LHDN or visit the nearest LHDN office to request a cancellation.
“Ensure there is proof of submission or proof of your visit to the LHDN so that will be easier to refer to the case later if the matter is not resolved,” the firm said.
Tax expert Datin Christine Koh said salaried employees who already have PCB deductions and are due for tax refunds do not need to make additional payments under CP500.
“For individuals with only employment income and PCB deductions, the instalment amount can be revised to zero.
“Taxpayers should still write in with a clear explanation and supporting evidence where possible.”
She cautioned that failure to respond could result in a 10% penalty for non-payment.
Tax lawyer S. Saravana Kumar from Rosli Dahlan Saravana Partnership, said the CP500 is commonly issued to business owners, the self-employed and influencers who do not have employers to deduct PCB on their behalf.
“If you believe the estimated amount is incorrect or you have no additional income, the law allows you to write to LHDN to amend or cancel it. You must inform them accordingly,” he added.
On why some salaried individuals receive CP500 notices despite having no side income, Saravana Kumar said taxpayers should seek clarification directly from LHDN.
“While it may seem odd, the best course of action is to clarify the matter,” he said.
When contacted, LHDN chief executive officer Datuk Abu Tariq Jamaluddin said he would direct his officers to look into the matter. - Star
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