Self-employed tax deductions
How business expenses differ from personal reliefs for someone who works for themselves.
Year of Assessment 2026. Last checked: 31 Oct 2026
Two steps, not one deduction
Public Ruling No. 5/2022, published 9 December 2022, explains the computation of total income and chargeable income of a resident individual who derives income from business, employment and other sources. HASiL, Public Ruling No. 5/2022
Subsection 33(1) of the Income Tax Act 1967 says the adjusted income of an individual from a source, for a basis period for a year of assessment, is the gross income from that source less all deductible expenses wholly and exclusively incurred in the production of gross income from that source, under the general and specific provisions of the Act. HASiL, Public Ruling No. 5/2022
Chargeable income is a later step. The same ruling computes it as total income less the allowable deductions under sections 45A, 46, 46B, 47, 48 or 49. HASiL, Public Ruling No. 5/2022
A resident individual who is assessed in their own name may claim the deductions under sections 45A to 49. HASiL, Public Ruling No. 5/2022
Expenses wholly and exclusively incurred
For a business source, Public Ruling No. 5/2022 says the general provision of subsection 33(1) allows these expenses, among others. HASiL, Public Ruling No. 5/2022
- Wages and salary of an employee.
- Interest on a loan or overdraft taken and used solely for the business, or solely to buy assets held or used in the business.
- Rent of land or a building, or part of one, occupied for the business.
- The cost of repairing premises, plant, machinery or fixtures, and of renewing, repairing or altering an implement, utensil or article used in the business. The ruling excludes the cost of reconstructing or rebuilding premises, buildings, structures or works of a permanent nature, or any plant, machinery or fixtures.
- Other deductions as may be prescribed.
Section 34 is a special provision on top of subsection 33(1). The ruling includes, among those deductions, trade bad debts written off as irrecoverable and specific doubtful trade debts estimated to be irrecoverable. A general provision for doubtful debts, and bad debts that are not trade debts, are not deductible. It also includes an employer’s contribution to a scheme approved by the Director General in respect of an employee. An approved scheme, as the ruling quotes section 2, is the Employees Provident Fund, a private retirement scheme, or any pension or provident fund, scheme or society approved by the Director General under section 150. The amount allowed is the contribution or 19% of the employee’s remuneration, whichever is less. HASiL, Public Ruling No. 5/2022
Section 40 says an adjusted loss from a business arises when the allowable expenses exceed the gross income of the business. That loss can be deducted from the aggregate income of the other sources in the current year. If expenses exceed the gross income of a source that is not a business, that loss is not deducted against any other source and is not carried forward. The ruling says that loss is disregarded. HASiL, Public Ruling No. 5/2022
Qualifying expenditure for Schedule 2, 3 or 4 is not allowed when computing adjusted income. The ruling computes statutory income from a business as adjusted income, plus balancing, agriculture and forest charges, less the Schedule 3 allowance. HASiL, Public Ruling No. 5/2022
What section 39 does not allow
In computing adjusted income from each source, section 39 of the Income Tax Act 1967 disallows some expenses. Public Ruling No. 5/2022 lists these among them. HASiL, Public Ruling No. 5/2022
- Domestic or private expenses.
- Expenses that are not wholly and exclusively expended for the purpose of producing the gross income.
- Capital withdrawn, or any sum used or intended to be used as capital. The ruling’s examples are payments to buy fixed assets or private assets such as a private residence, cars and shares.
- A payment to any pension, provident, savings, widows, widowers and orphans fund, or other similar fund or society, that is not an approved scheme.
- Rent of a motor vehicle, other than one licensed for commercial transportation, above RM 50,000. If the vehicle is brand new, not reconditioned, has not been used for any purpose before the rental, and its total cost does not exceed RM 150,000, rent above RM 100,000 is disallowed. The total deduction for that vehicle in that year of assessment and later years must not exceed RM 50,000 or RM 100,000, as the case may be.
- An amount equal to 50% of entertainment expenses, including sums paid to employees to provide entertainment. Entertainment under provisos (i) to (viii) of paragraph 39(1)(l) is fully allowed.
The ruling points to Public Ruling No. 4/2015, Entertainment Expenses, for the further explanation of that 50% rule and the provisos. HASiL, Public Ruling No. 4/2015
The same paragraph of Public Ruling No. 5/2022 also lists further items, including withholding tax that was not paid to the Director General within the specified time, a timber licence, an employee’s leave passage, limited liability partnership remuneration, goods and services tax, and a payment to a Labuan entity. The conditions for each item are in the ruling. HASiL, Public Ruling No. 5/2022
Personal reliefs are a later step
Public Ruling No. 5/2022 still names Public Ruling No. 5/2021 for the detail of sections 45A to 49. On the public-rulings index, No. 4/2024 of the same Part I series is marked as replaced by No. 7/2025, published 5 December 2025. HASiL, Public Ruling No. 5/2022 HASiL, public rulings index
Public Ruling No. 7/2025 says its objective is to explain the tax treatment from Year of Assessment 2025 of gifts or contributions, and of the tax deductions a resident individual may claim in computing chargeable income. It says an individual may claim the deductions under sections 45A to 49. HASiL, Public Ruling No. 7/2025
HASiL’s individual tax-relief page shows “Last updated on: 26/06/2026”. Its first table is headed Year of Assessment 2025. The page has no Year of Assessment 2026 heading. HASiL, individual tax relief
This page does not restate those amounts. The Year of Assessment 2026 list used on this site is the relief guide.
Related guides
HASiL sources
Keep the two claims apart when you file
The relief guide has the Year of Assessment 2026 list.
Last updated