You walk into the showroom.
The salesman pushes the HP form towards you.
“Boss, company name or personal name?”

You think for a while.
“Personal name is easier lah.”
So, the Alphard is registered under your name.

But the company pays the deposit.
The company pays the monthly instalments.
The company also pays for the petrol, insurance and maintenance.

On Monday, it takes customers to Senai Airport.
On Saturday, it takes your whole family to Desaru.

At year-end, your accountant asks.
“Boss, why is the company claiming a car that is not registered under the company’s name?”

You answer.
“The company is paying for it mah.”

Sounds reasonable.
But LHDN will ask two questions.
Who actually bears the cost of buying the car?
Whose business does the car really serve?

According to IRB Public Ruling No. 5/2014 – Asset ownership and usage rules for claiming capital allowances on business assets,
the owner can be the legal owner,
or the beneficial owner.

The legal owner,
is the name stated on the geran.

The beneficial owner,
is the person who actually incurs the qualifying expenditure,
can produce evidence of payment,
and uses the asset in their own business.

LHDN even provides an example.

Akmal bought a lorry, but registered it under his brother Ahmad’s name.
Akmal made the payments.
The lorry was used in Akmal’s business.

In the end, Akmal could claim the capital allowance.
Ahmad, whose name appeared on the geran, could not claim anything.

So, registering the Alphard under the director’s name,
does not automatically kill the company’s capital allowance claim.

But just because the company makes the payments,
it does not mean the company can automatically claim.
Especially when the HP agreement is signed under your personal name.

To the bank, you are the hirer.
Having the company pay the monthly instalments,
does not automatically make the company the beneficial owner.

The payment records, invoice,
HP agreement, fixed asset register and actual usage,
must all connect properly.

Then, the second question comes.
Assume your Alphard costs RM450,000.
The qualifying expenditure for this passenger car,
is generally capped at only RM50,000.

If it is a cash purchase and all the claim conditions are met.
The first-year capital allowance, comprising Initial Allowance of 20% and Annual Allowance of 20%, is RM20,000.
Over the entire claim period, the maximum is RM50,000.

Your company spends RM450,000.
The tax computation sees only RM50,000.

LHDN will not give you more capital allowance just because your Alphard has power doors, captain seats and an executive lounge.
😂

If you buy it under HP, signing a RM450,000 agreement,
does not mean you can claim everything in the first year.
Only the deposit and the capital portion actually paid each year,
will become qualifying expenditure for that year, subject to the limit.