Many landlords and business owners are asking the same question in recent months:

“Why only now? I never received CP500 before — suddenly this year LHDN issued one.”

If you earn rental income, business income, or both, receiving a CP500 notice may come as a surprise. However, this is not a new tax rule.

According to the Inland Revenue Board of Malaysia (LHDN), CP500 has always applied to individuals with non-employment income. What has changed is enforcement and system visibility. As LHDN strengthens data matching and compliance monitoring, more taxpayers — especially landlords — are now being captured under the CP500 instalment scheme.

For employers, directors, and business owners managing personal income alongside payroll responsibilities, understanding CP500 is critical to avoid penalties and compliance issues.

This guide explains what CP500 is, why landlords are being targeted now, how it works, and what actions to take.

What Is CP500?

CP500, officially known as Notis Bayaran Ansuran, is a tax instalment payment scheme issued by LHDN.

It applies to individual taxpayers who earn income other than employment income, including:

• Rental income from properties

• Business or sole proprietorship profits

• Freelance, commission, or professional income

Unlike salaried employees — whose tax is deducted monthly via PCB (Potongan Cukai Bulanan) — these income types do not have automatic tax deductions. CP500 ensures tax is collected progressively throughout the year, rather than in one large payment during filing season.

Why Are Landlords Suddenly Receiving CP500 Notices?

Many landlords assume that receiving CP500 means a new tax rule has been introduced. That is incorrect.

LHDN has clarified that:

• The CP500 requirement has always existed

• Rental income has always been taxable

• CP500 is issued based on past tax filings (Form B)

What’s different now is enforcement efficiency.

With improved system integration, rental declarations, banking data, and property records are now more accurately matched. As a result, landlords who previously flew under the radar are now being formally issued CP500 instalment notices.

In short:
You’re not being taxed more — you’re being tracked better.

How CP500 Works

Once CP500 is issued, LHDN will:

1. Estimate your current year’s tax based on the previous year’s assessment

2. Divide the estimated tax into six instalments

3. Set fixed payment deadlines across the year

CP500 Instalment Schedule

Payments are due every two months:

• 30 March

• 30 May

• 30 July

• 30 September

• 30 November

• 30 January (following year)

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

⚠️ Late payment triggers an automatic 10% penalty on the unpaid amount.

CP500 Is Not an Extra Tax (Common Misunderstanding)

One of the biggest misconceptions is that CP500 is an additional tax on top of annual income tax.

That is not true.

CP500 is simply an advance payment of your income tax. When you file your tax return:

• CP500 payments are offset against your final tax payable

• Overpayments are refunded

• Underpayments are settled during filing

Example:

• Final tax payable: RM12,000

• CP500 paid during the year: RM10,000

• Balance to pay during filing: RM2,000

CP500 does not increase your tax — it spreads the payment timeline.

Can CP500 Instalments Be Revised?

Yes. If your income has decreased, you can apply to revise your CP500 amount using Form CP502.

There are two revision windows:

• First revision: By 30 June

• Second revision: By 31 October

This is especially relevant for landlords if:

• A tenant has moved out

• Rental income dropped

• Business income slowed

Important Compliance Warning

If your revised instalment amount ends up being more than 30% lower than your actual tax payable, LHDN may impose a 10% penalty on the shortfall.

Revisions should be realistic, supported, and submitted early.

Who Does NOT Need to Pay CP500?

CP500 does not apply if:

• You earn only employment income

• Your employer deducts tax via PCB

• You have no rental, business, or freelance income

However, once any non-employment income exists, CP500 may be issued — even if you are also a salaried employee or company director.

Key CP500 Compliance Dates Employers Should Track

• February: CP500 notices usually issued

• March – January: Six instalment payments

• 30 days grace period: After each due date

• 30 June / 31 October: CP502 revision deadlines

Employers managing directors’ remuneration, rental income, or side businesses should ensure these dates are not overlooked.

How to Check and Pay CP500

CP500 status and payments can be managed via:

• MyTax Portal (LHDN)

• FPX online banking

• Selected bank counters

• LHDN payment centres

Always retain payment records and monitor instalment status through MyTax for compliance tracking.

Why CP500 Matters for Employers and Business Owners

For landlords and business owners, CP500 serves one purpose:
preventing a large, unexpected tax bill during filing season.

When managed properly, CP500:

• Improves cash flow planning

• Reduces year-end tax shock

• Minimises compliance risks

The real compliance risk lies in ignoring the notice, missing instalments, or assuming it does not apply.

Once penalties are imposed, they are difficult to reverse.

Final Takeaway for Employers

CP500 is not new, and it is not optional.

As LHDN tightens enforcement, landlords and business owners should expect:

• Greater visibility of rental income

• More consistent issuance of CP500

• Stricter penalty enforcement

Early planning, timely payment, and proper revision requests are the only ways to stay compliant.

For employers juggling payroll, tax reporting, and personal income obligations, compliance discipline is no longer optional — it’s essential.