If you earn Business income (people in business), rental income and/or other side income (including those under employment) on top of your normal earnings, don’t be surprised if a CP500 notice suddenly appears in your inbox over the past few weeks.

LHDN has confirmed this clearly:
👉 The rule was always there.
👉 The difference? The system is now enforcing it more actively.

Last time, you may have slipped under the radar.
This year? The system upgraded — and you’ve officially been noticed.

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What Exactly Is CP500?

CP500 is LHDN’s “Notis Bayaran Ansuran” (Instalment Payment Notice).

It applies to individuals with non-employment income, such as:

• Rental income

• Business income / profits

Instead of collecting your tax in one big lump sum during filing season, LHDN collects it in advance, spread across the year.

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How Does CP500 Work?

• LHDN estimates your current year’s tax based on your previous year’s Form B.

• The estimated tax is split into six instalments, payable in:

  • March

  • May

  • July

  • September

  • November

  • January (following year)

• Each instalment must be paid within 30 days of the due date.

• Miss the deadline?
  👉 Automatic 10% penalty on the outstanding amount.

No negotiation. No reminder. The penalty is system-generated.

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Common Misunderstandings About CP500

❌ “CP500 is extra tax on top of my annual tax.”
✅ Wrong.

CP500 is simply an advance payment.

When you file your tax return the following year:

• All CP500 payments are set off against your final tax liability.

Example:

• Actual tax payable: RM12,000

• CP500 paid during the year: RM10,000

• Balance to pay when filing: RM2,000

If you overpaid via CP500, the excess will be refunded after assessment.

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Can You Revise the CP500 Amount?

Yes. If your income is lower this year than last year, you may submit Form CP502 to revise the instalments.

You get two chances:

• By 30 June (first revision)

• By 31 October (second revision)

This is especially relevant if:

• Your tenant moved out

• Rental income dropped

• Business slowed down

⚠️ Important caution
If your revised CP500 is more than 30% lower than your actual tax, LHDN may impose a 10% penalty on the difference.

So revise honestly — not aggressively.

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Who Does NOT Need to Pay CP500?

If you earn employment income only, and your employer already deducts PCB (monthly tax), CP500 does not apply to you.

CP500 targets individuals with:

• Rental income

• Business income

• Other non-employment income

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Key Dates & Reminders

• CP500 notices are usually issued by February each year

• Instalments fall in March, May, July, September, November, January

• Always pay within 30 days to avoid the 10% penalty

• Check your MyTax portal or email regularly

• Keep proper payment records in case LHDN requests proof

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Why CP500 Matters to You

Think of CP500 as a cash flow management tool, not a punishment.

For landlords and business owners with irregular income, paying tax progressively:

• Reduces year-end shock

• Spreads the burden

• Avoids large lump-sum payments during filing season

Receiving a CP500 does not mean:
❌ You’re being taxed twice
❌ You did something wrong

It simply means LHDN wants tax paid progressively, not retrospectively.

The real danger? Ignoring the notice.
Once the 10% penalty kicks in, it’s very hard to reverse.