What Is CP500 & Why Does LHDN Want Your Money in Advance?
What Is CP500 & Why Does LHDN Want Your Money in Advance?
The Complete Guide for Sole Proprietors, Agents and Entrepreneurs
The Complete Guide for Sole Proprietors, Agents and Entrepreneurs
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You’re running a profitable small business or earning side income and suddenly, you receive a CP500 from LHDN demanding tax before you’ve even filed for the year. What gives?
Let’s break down what CP500 really is, who it applies to, and how to stay compliant without getting caught off guard from LHDN.
What Is CP500?
What Is CP500?
CP500 is a tax instalment payment scheme issued by LHDN (Lembaga Hasil Dalam Negeri Malaysia). It applies to individuals who;
Earn non-employment income (not salaried through PCB)
File Form B (business income) instead of Form BE (employment income only)
Have recurring side income or self-employed earnings (above ~RM35,000 chargeable)
📌 It’s not voluntary - LHDN issues it automatically based on your past Form B declaration.
LHDN assumes you will continue earning, and to reduce tax evasion risks, they want advance payments based on estimated income.
Here's How CP500 Works ⬇️
Here's How CP500 Works ⬇️
LHDN issues 5 equal instalments throughout the year
Each amount is based on your last Form B declaration.
You’ll receive the CP500 notice by post or via e-filing MyTax portal.
📌 The 6th instalment is optional (a bonus deduction if you pay it — it reduces your final tax payable in the next year).
You can pay CP500 via;
FPX via MyTax (HASiL)
LHDN payment counters
CIMBClicks, Maybank2u (under bill payments → LHDN/CP500)
JomPAY (check your CP500 form for the biller code)
🔗 Pay here: https://mytax.hasil.gov.my
What if you earn less this year..? (CP502)
What if you earn less this year..? (CP502)
Let’s say you over-reported last year or business slowed down this year - DO NOT just ignore your CP500 form from LHDN.
You must revise your instalment amount using the CP502 form on MyTax, before your 3rd instalment is due (usually in May).
CP500 ↔️ Advance Tax Instalment Notice
CP502 ↔️ To Revise CP500 to a lower amout
...but take note, underestimating without reason can result in penalties or interest on unpaid tax.
Failure of CP500 Payments, will result it...
Failure of CP500 Payments, will result it...
Failure of CP500 payments, will result in;
LHDN will add the unpaid amounts to your final tax payable in your Form B assessment - causing a bigger amount to be paid off.
You may incur a 10% late payment penalty.
You’ll risk audit flagging or losing eligibility for monthly instalments in future years.
Better to pay in smaller instalments than one big lump sum during filing.
Here's How CP500 Timeline Helps Business Owners Tax Filing & Payment
Here's How CP500 Timeline Helps Business Owners Tax Filing & Payment
🔸 Jan to Feb : Receive CP500 form from LHDN either via email or in MyTax Portal.
🔸 Feb to Sept : Payment of 5 instalments.
🔸 Mar to Jun : Prepare and file Form B (of previous year).
🔸July onwards : LHDN issues Notice of Assessment.
🔸 Nov : Pay 6th CP500 bonus deduction, if applicable.
Refund on CP500 from LHDN
Refund on CP500 from LHDN
After filing Form B, you will be given the oppotunity to receive a refund on your CP500 instalment payments if;
Your total tax payable is less than your CP500 total, and
refunds typically process within 30–90 days after assessment, provided your bank account details is linked in your MyTax profile.
How I Help Clients with CP500
How I Help Clients with CP500
As an accountant who works with small business owners, sole proprietors and entrepreneurs:
I track and categorise books every bi-weekly or monthly to ensure CP500 amounts are realistic and relevant to current business operations (income earned).
I help submit CP502 revisions when income drops.
I reconcile CP500 instalments with Form B to ensure no double taxation during year-end Tax Filing.
I clean up ledgers for those who skipped CP500 and now face audit or filing stress.
Key Takeaways
Key Takeaways
CP500 = Advance tax for non-salary income.
CP500 from LHDN is entirely based on what you declared in the previous year.
You can revise it (with CP502) if needed, in May usually.
Better to pay in 5 instalments than stress at year-end, every year!
Skipping this submission and payments with results in additonal late penalties as well as audit risk in year end.
Need Help Managing CP500?
Need Help Managing CP500?
💬 I offer a free 30-minute consultation
Don’t wait until your tax filing becomes a mess. Let’s clean up your records and forecast your real tax obligations.
References & Sources
- LHDN CP500 Guide: https://www.hasil.gov.my
- MyTax Portal: https://mytax.hasil.gov.my
- CP502 Filing: https://ez.hasil.gov.my
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