These 4 deductions can quietly change your year end tax outcome if they are missed.
1 Bad debts
2 Capital allowance
3 Staff training costs
4 Withholding tax
1. Bad Debts
Bad debts are one of the most common deductions SMEs “think they have”, but often cannot support when year end filing starts.
The issue is usually not the debt itself, but the process behind it. Many businesses carry overdue receivables for months without reviewing the ageing early, so the problem is only discovered at the last minute. Others decide to write off, but have no clear evidence trail showing the debt is genuinely uncollectible and that reasonable recovery steps were taken.
Another frequent gap is using a general provision or “estimate” for doubtful debts instead of making a specific write off, which can weaken the position when the claim is reviewed.
A practical year end check is to treat this like an internal clean up exercise before you file. Start by reviewing your aged debtors list and flagging items that have been outstanding for an extended period. From there, identify specific trade debts that are truly uncollectible, not just slow paying customers.
Finally, make sure the write off is properly approved and documented, with a clear supporting trail such as customer correspondence, follow up reminders, collection actions, legal letter where relevant, and internal approval records. When these steps are done properly, your filing becomes cleaner, the claim is more defensible, and you reduce the risk of avoidable adjustments after submission.
Capital Allowance
Capital allowance is often missed not because the business did not buy assets, but because the asset trail was never properly maintained from day one.
We commonly see fixed asset purchases being recorded as day to day expenses, with no fixed asset register update, which makes it difficult to identify what should be claimed later.
Another frequent gap is that the “date put to use” is not tracked, even though this timing matters in determining when an asset becomes eligible for claim. The thirdissue is incomplete supporting details, such as missing invoices or unclear asset descriptions, which results in the claim being skipped entirely during tax computation because it cannot be substantiated.
A clean year end approach is to treat capital allowance as a documentation exercise, not a last minute calculation. Start by updating your fixed asset register for the year, including all purchases and disposals. Then confirm which assets qualify and are used for business operations, so the claim aligns with actual usage.
Finally, prepare the supporting pack early, including invoices, payment proofs, delivery, and disposal documents for any assets sold or written off. When these basics are in place, capital allowance claims become clearer, more defendable, and far less likely to be reduced or delayed during review.
Staff Training
Staff training costs are commonly deductible, but they are also one of the easiest items for SMEs to miss at year end because the supporting trail is often incomplete.
In practice, the issue is rarely the payment itself, it is the documentation behind it. Training fees are frequently booked without keeping the key documents that explain what the training was, who attended, and how it relates to the business.
Another common problem is that training expenses are mixed with non-training items such as meals, travel, accommodation, or event packages under a single invoice, which makes the claim harder to justify when reviewed.
Lastly, the business purpose is often not recorded at the point of approval, so by the time tax filing happens, no one can clearly link the cost back to a role, skill requirement, compliance need, or operational objective.
A simple year end review can prevent this from becoming a missed claim. Start by listing all training fees paid during the year, then link each item to the specific staff involved and the business purpose, for example mandatory compliance training, system training, role specific upskilling, or operational capability improvement.
From there, prepare a clean document pack for each training item, typically covering the invoice, payment proof, agenda or course outline, and attendance evidence. When these elements are in place, the training cost is easier to support, easier to classify correctly, and far less likely to be excluded during computation or challenged later.
Withholding Tax
Withholding tax is one of the areas that SMEs most commonly miss because the payment can look “routine” in the accounts, even though it carries a specific compliance treatment.
This typically happens when overseas payments are not reviewed at year end, especially for items such as foreign consultants, overseas directors, software subscriptions, technical services, royalties, facebook or google ads, or other cross-border services.
When the nature of the payment is not assessed properly, the business may apply the wrong withholding tax treatment, use an incorrect rate, or assume that no withholding tax applies.
A practical approach is to make withholding tax a standard review step rather than an “ad-hoc” check. Start by keeping a record of all overseas payments, then confirm the correct withholding tax treatment and applicable rate based on the payment type and recipient profile.
Finally, compile the key documents early, such as contracts, invoices, payment proof, and any treaty-related documentation, so the position is supported and consistent with your records. Withheld amounts must be remitted to LHDN within one month from the date of payment or crediting to the recipient.
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