The Inland Revenue Board (IRB) has introduced critical updates to the Notice of Instalment Payments (CP500) process, offering significant relief and a transitional period for individual taxpayers in 2026. These changes are essential for professionals and employees to understand to ensure efficient tax management and avoid future compliance issues.
Key Penalty Concessions and Transitional Period Following the Prime Minister’s 2026 New Year message, the IRB announced a transitional period for Year of Assessment (YA) 2026. During this time, no penalties will be imposed on individuals receiving employment and non-employment income (such as rent or royalties) for the non-payment of CP500 instalments. While payments are voluntary during this period, the IRB encourages them to reduce outstanding tax liabilities during final filing.
Guidelines for Employment-Only Income Earners Taxpayers whose sole source of income is employment are not required to comply with CP500 payments under this concession. If such individuals received a notice, it likely stemmed from reporting errors in previous tax returns where employment income was misclassified as non-employment sources like dividends or rents. These taxpayers are advised to update their YA 2025 reporting to prevent future automated notices.
Amending Instalment Amounts Taxpayers wishing to revise their CP500 estimates based on their projected YA 2026 tax can submit Form CP502. The first amendment must be submitted by June 30, 2026, and a second by October 31, 2026. Accurate reporting remains vital, as a 10% tax increase may apply if the amended estimate is more than 30% lower than the actual tax payable