Introduction
Whether for corporate restructuring or internal alignment, a Change of Accounting Period Malaysia is a common occurrence for many businesses. However, this administrative shift triggers specific statutory obligations under the Income Tax Act 1967. With the release of Public Ruling (PR) No. 4/2025, LHDN has tightened the rules regarding notification timelines and the submission of Form CP204B. Failing to notify the tax authorities correctly can lead to heavy penalties and disrupt your company’s tax instalment schedule.
Who Needs to Comply with PR 4/2025?
The notification requirement for a Change of Accounting Period Malaysia applies to specific taxable entities. According to the latest ruling, if your organization is required to furnish an estimate of tax payable (CP204), you must comply. This includes:
- Companies
- Limited Liability Partnerships (LLP)
- Trust Bodies
- Co-operative Societies
If these entities change their accounting closing date, they are legally mandated to inform the Director General of Inland Revenue (DGIR) via electronic filing.
The “30-Day Rule” for Notification Deadlines
Timing is everything when managing a Change of Accounting Period Malaysia. The deadline for submitting Form CP204B depends on how your accounting period is being adjusted:
- If the Period is Shortened: You must notify LHDN at least 30 days before the end of the new (shorter) accounting period.
- If the Period is Lengthened: You must notify LHDN at least 30 days before the end of the original (old) accounting period.
Failure to meet these specific windows can result in your notification being rejected or penalized.
Tax Estimation (CP204) and Form CP205
A Change of Accounting Period Malaysia directly impacts your monthly tax instalments. Once LHDN receives your Form CP204B, they will process the change and usually issue a Notice of Instalment Payments (Form CP205).
This notice outlines your revised payment schedule. It is vital to monitor these changes, as a longer accounting period may result in more instalment months, while a shorter one could trigger a lump-sum adjustment. Keeping your CP204 in sync with your actual accounting period prevents the 10% penalty for underestimating tax.
Penalties for Non-Compliance
Under Section 120(1)(i) of the Income Tax Act 1967, failing to notify LHDN about a Change of Accounting Period Malaysia is a criminal offense. If convicted, a company or its officers may face:
- Fines: Between RM200 to RM20,000.
- Imprisonment: A term of up to six months, or both.
Beyond the court fines, LHDN may also impose a 10% increase in tax if the failure to adjust your estimate leads to a significant difference between your estimated and actual tax payable.
Key Takeaways
- Mandatory Form: Use Form CP204B via MyTax for all notifications.
- 30-Day Window: Always notify 30 days before the earlier of the two dates (new or old).
- Entity Scope: Applies to Companies, LLPs, Trust Bodies, and Co-operatives.
- High Penalty Risk: Fines can reach RM20,000 for missing the notification deadline.
Frequently Asked Questions (FAQ)
Q1: Can I submit the notification via email or letter?
No. Under PR 4/2025, the notification must be made through the e-filing system (MyTax). Manual letters are no longer accepted for this specific notification.
Q2: What happens if my new accounting period is more than 12 months?
This is considered a “lengthened” period. You must ensure you notify LHDN 30 days before your original year-end. Note that a basis period cannot exceed 12 months for tax purposes, so LHDN will divide your extended period into two separate Years of Assessment.
Q3: Is a newly incorporated company exempt from this notification?
Even a new company must notify LHDN if it decides to change the first accounting period it originally intended to use, provided it falls under the CP204 requirements.
Download the full Public Ruling 4/2025
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