TAX QUESTIONS? YOU ASK LAH!

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Q: I am a sole proprietor of a legal firm and I have received RM200,000 from an insurance company to cover a compensation claim of RM250,000 by my client. Are the insurance proceeds of RM200,000 subject to tax?

A: Yes, the insurance proceeds of RM200,000 are subject to tax. However, when the proceeds are paid out as compensation to your client as part of the contract, the amount is allowed as a tax deduction against your business income. 

Wishing you plentiful tax savings!

Zen Chow

YYC Tax Guru

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