Managing a business in Malaysia involves more than just paying wages when they’re due. Employers have legal obligations to keep tax authorities in the loop whenever an employee starts or ends their job at the company. Two key notifications under the Income Tax Act are CP22 and CP22A.
If you’ve ever been confused about how these two forms differ, who needs to submit them, or where to find them, this guide breaks it all down in simple terms.
CP22 Explained: Letting LHDN Know About a New Employee
Form CP22 is how employers tell the Inland Revenue Board of Malaysia (LHDN) that they’ve hired someone new. You can think of it as giving the tax office a heads-up about a fresh employee.
- “Who must submit it? Every employer who hires someone with chargeable income (meaning the person is expected to pay tax). However, there are exemptions — for example, if the employee’s earnings are not taxable, fall below the MTD threshold, or no compensation is involved upon cessation. Employers should always check LHDN’s official guide or reference table to confirm whether submission is required. ”When is it due? Within 30 days after the employee begins work.
- How is it submitted? From September 2024, employers need to file CP22 online using the e-CP22 feature on the MyTax Paper forms are no longer valid.
- What happens if you don’t submit? Fines start at RM200 and go up to RM20,000. In extreme cases, you could face up to six months in jail.
When you submit CP22, you assist LHDN in creating the employee’s tax file and make sure the correct Monthly Tax Deduction (MTD/PCB) gets applied.
CP22A in Focus: Reporting Employee Cessation
While CP22 deals with the start of employment, CP22A is used when an employee leaves. It serves as a tax clearance notification for private-sector employers.
CP22A is necessary in these situations:
- Resignation
- Retirement
- Termination
- Death of the employee
- Permanent departure from Malaysia
Employers need to:
- Submit CP22A no later than 30 days before the worker’s last day, or within 30 days of learning about the worker’s death.
- Hold back final payments like last month’s pay, bonuses, or tips until LHDN gives out the tax clearance letter (SPC).
This step helps the government collect taxes and makes sure no outstanding debts are missed before the worker leaves.
CP22 vs CP22A: How Are They Different?
While both are “notification” forms, they serve very different purposes.
| Aspect | CP22 | CP22A |
| Purpose | Inform LHDN about a new employee | Inform LHDN about an employee leaving (private sector) |
| Timing | Submit within 30 days after start date | Submit at least 30 days before cessation (or within 30 days of death) |
| Employer’s Duty | Ensures proper tax deductions from the beginning | Ensures no outstanding tax at the end |
| Effect | Activates tax file & MTD compliance | Enables tax clearance (SPC) issuance |
Who Needs to Hand in CP22A?
Every private-sector employer must file CP22A when an employee stops working, no matter the reason. This rule applies to SMEs new businesses, and even those who employ foreign employees if they paid taxes.
If an employee’s earnings fall under the Monthly Tax Deduction limit and all deductions are current, exemptions might apply. However, it’s smart to check the latest LHDN guidelines to make sure.
Why CP22 Matters
Some employers don’t give CP22 the attention it deserves thinking it’s just paperwork. But CP22 plays a key role in Malaysia’s tax reporting system:
- It ensures tax records stay correct from the start of employment.
- It allows LHDN to check if MTD gets deducted.
- It stops arguments later if the employee’s income wasn’t reported right.
- It gives employers a clear record of compliance if they face an audit.
In a nutshell, CP22 focuses on making employers, employees, and tax authorities accountable to each other and open about their dealings.
How to Get CP22 & CP22A Forms
These days, you’ll find these forms in digital format. Here’s what you need to do:
1. Sign in to MyTax
- For CP22: Use e-CP22.
- For CP22A: Use the e-SPC
2. Enter the information
- For CP22: Worker’s personal info, company details, start date, and if income is subject to tax.
- For CP22A: Why the job ended last paycheck pending payments, perks, and deductions.
3. Turn it in on time
- CP22: Within 30 days after a new employee begins.
- CP22A: At least 30 days before the job ends, or within 30 days of getting news about a death.
4. Hold off on payments until you get the go-ahead
- For CP22A, don’t release final salary or benefits until LHDN gives you the clearance letter (SPC).
5. Maintain records
- Store digital and physical records to prepare for audits. A payroll system simplifies this process.
Recent Changes You Need to Know
- MyTax and e-SPC are now required: From late 2024, you must use MyTax for CP22 and e-SPC for CP22A. Paper forms are no longer an option.
- Multiple submissions at once: Big companies can now submit CP22A for many employers in one go through e-SPC.
- Correct info matters: Mistakes in NRIC, dates, or amounts can hold up SPC processing causing hassles for you and your staff.
What’s at Stake If You Don’t Follow the Rules?
If you miss the deadline to file CP22 or CP22A, you might face problems like:
- Fines from RM200 to RM20,000
- Possible jail time if you don’t comply or on purpose
- Holding back final pay for employees (in CP22A cases)
- Unwanted audits and damage to your reputation
Following the rules might seem like extra work but ignoring them costs way more in the long run.
How HR & Accounting Software Helps
When you’re dealing with lots of new hires and people leaving, keeping track of CP22 and CP22A deadlines by hand can get tough. This is where digital tools like HRMS & Accounting Software step in:
- Sets up automatic reminders for CP22/CP22A due dates using employee data
- Creates correct payroll reports to submit
- Stores employee info (start date NRIC, quit date) in one place without mistakes
- Helps follow rules for e-SPC batch submissions
By making compliance tasks part of day-to-day payroll work, software cuts down on risks and frees up time.
Wrapping Up
CP22 and CP22A might seem like simple paperwork, but they’re key to Malaysia’s payroll and tax rules. For companies, knowing the right time and way to file them isn’t just about checking boxes — it’s about shielding your business from fines keeping your employees’ taxes straight, and earning their trust.
When you have the right information — and use the right tools like Info-Tech’s budget-friendly HRMS & Accounting Software — following CP22 & CP22A rules doesn’t need to be tough.
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