KUALA LUMPUR (Jan 5): Taxpayers issued with instalment payment notices (CP500) will not be penalised in 2026, the Inland Revenue Board (IRB) said on Monday. CP500 applies to individuals with non-employment income such as rental or freelance earnings, including those who also have salaried income.

The 2026 relief gives those with both salaried and non-salaried income more time to comply, sans penalty.

In a statement, the IRB said the move follows the government’s decision to grant a transition period for individuals who earn income from both employment and non-employment sources — such as rental, interest and royalties — to comply with CP500 requirements for the year of assessment (YA) 2026.

While no penalty will be imposed during this period, the IRB said taxpayers are encouraged to make voluntary CP500 instalment payments to reduce any remaining tax payable when filing their income tax return form (BNCP).

“Taxpayers who only have employment income are not required to comply with the CP500 instalment payment instruction. However, they are advised to ensure accurate income reporting in their YA 2025 BNCP to avoid receiving CP500 notices in future,” it said.

The IRB added that it will contact affected taxpayers to clarify any error in income reporting in previously submitted tax returns.

Taxpayers who wish to revise their CP500 instalment amounts via Form CP502, based on estimated income and tax payable for YA 2026, must submit their first revision by June 30, 2026, and their second revision by Oct 31, 2026.

“The IRB encourages taxpayers to report income accurately and correctly in the BNCP to ensure more efficient and orderly tax administration. The IRB remains committed to strengthening support and guidance for taxpayers to facilitate the transparent and efficient fulfilment of tax obligations,” it added.