Prerequisite for a Professional to Carry On or to Practise a Profession
Certain professions require a person to be a member of the professional
body which represents the profession to enable the person to practise and
maintain his profession. Examples of these professions are accountants,
lawyers and engineers.
A professional, due to the nature of his work, may be exposed to the
likelihood of lawsuits for professional negligence for what he had done or
what he had said in the course of carrying out his work.
Tax Treatment on Professional Indemnity Insurance Premium
A practising professional is allowed a tax deduction for PII premium if the
professional carries on a business related to his profession.
Tax Treatment on Insurance Proceeds and Compensation
Where a professional has been allowed a deduction for the PII premium
paid, any proceeds received in connection with the PII will be subject to tax.
The proceeds are taxed under subsection 22(2) of the ITA.
SOURCE : LHDN
