Public Ruling No.4/2012

DEDUCTION FOR LOSS OF CASH AND TREATMENT OF RECOVERIES
LHDN has issued a new  ruling, Public Ruling No.4/2012 'Deduction for loss of cash and treatment of recoveries' on 1 June 2012 to replace the previous ruling, Public Ruling No.5/2005 of the same title. 


The new ruling is a rephrasing and rearranging of the previous ruling whereby both underlines the nature of loss of cash caused by theft, defalcation or embezzlement which are tax deductible as well as how their recoveries through insurance, legal action, etc should be taxed. One key difference is the when the recoveries should be taxed as income.


Previously, recoveries of loss of cash is taxed based on when such recoveries are received. This means the recoveries are taxable when the date the cash (for example from the insurance company) is received. However, the new ruling states that the date the cash is received irrelevant. Recoveries are taxable when they are receivable are deemed to have been received. The revision is in line with the accruals concept.