# Basis Periods and Changing Your Accounting Date

> How section 21A fixes a company's first basis period, why a first-year Sdn Bhd can have no year of assessment at all, and what to file when the accounting date moves.

- Category: taxation
- Language: en
- Status: published
- Updated: 2026-07-20
- Canonical: https://negaraku.md/en/taxation/basis-period-and-accounting-date

---

A Sdn Bhd incorporated in March that closes its first accounts on 30 June the
following year has **no year of assessment for its first calendar year**. No basis
period, no Form C, no chargeable income. Directors who have been told a company
files every year find this alarming; it is simply how section 21A works.

## How is the first basis period fixed?

Section 21A(4) gives three outcomes, restated with worked examples in Public
Ruling No. 8/2014.

| First accounts | Statute | Result |
| --- | --- | --- |
| Less than 12 months, ending in the same calendar year operations began | s.21A(4)(a) | That period is the basis period for the first year of assessment |
| Any length, ending on a day in the following calendar year | s.21A(4)(b) | That period is the basis period for the **second** year of assessment, and there is **no basis period for the first** |
| More than 12 months, ending in the third calendar year | s.21A(4)(c) | That period is the basis period for the **third** year of assessment, and there are no basis periods for the first two |

Example 4 of the ruling gives an LLP with first accounts from 1 November 2013 to
30 April 2015 **no basis period for YA2013 or YA2014**, and an 18-month basis
period for YA2015.

That is why overlapping basis periods have largely disappeared. Before the current
s.21A(4) took effect for first accounts closing in 2014, a company could have two
basis periods covering the same months, apportioned under s.42(2). Today you get a
**missing year of assessment** instead of an overlap, so there is nothing to file
for the skipped year — and LHDN's filing programme confirms that a company which
has not commenced operations need not submit Form CP204 either.

## What happens when the accounting date changes?

Section 21A(3) applies where a company has made up 12 months of accounts ending on
a day in a basis year and then **fails to make up accounts ending on the
corresponding day** in the following year. That year is the **failure year**, and
the Director General may direct the basis periods for the failure year, or for
that year and the following one, in periods of any length.

Paragraph 5.2 says the period the taxpayer actually made up is generally accepted,
provided there is **no missing year of assessment** and **no two sets of accounts
closing in the same year of assessment**. Four patterns follow.

| Change of date | Basis period for the failure year |
| --- | --- |
| Shortened, ending in the same year (28 Feb to 31 Dec) | **22 months** — the stub and the following full year are combined, since the stub alone would leave two closings in one year of assessment |
| Shortened, ending in the following year (31 Dec to 30 Apr) | The 4-month period stands, as it closes in a year of its own |
| Lengthened into the following year (31 Jul to 31 Oct) | The 15-month period stands |
| Lengthened across two years of assessment (1 Jan 2014 to 31 Jan 2015) | **Split** into 7 months for YA2014 and 6 for YA2015 |

On that last pattern the ruling fixes the tie-breaker: where the division is
uneven, **any fraction of a month falls in the first basis period**.

## What must you file, and when?

The notification is **Form CP204B**, and its timing is statutory, not
administrative. Section 21A(3A) requires it:

- **30 days before the end of the new accounts**, where the new accounts close
  *before* the old corresponding day; or
- **30 days before the corresponding day**, where the new accounts close *after*
  it.

Missing it is not a paperwork failure. Section 112(3A) provides that any penalty
already imposed under s.112(3) on the basis of the old accounting period **remains
recoverable**, and s.107C(11B) says the same for any increase under section 107C.
Failing to notify does not reset penalties computed against the deadline you have
now abandoned.

## Common mistakes

- **Assuming every company files in its first calendar year.** Where the first
  accounts close in year two, there is no basis period for year one at all. A nil
  Form C for a year that does not exist creates a record LHDN has to unwind.
- **Changing the year end and telling only the auditor.** CP204B is a separate
  statutory notification with its own 30-day clock in s.21A(3A).
- **Assuming a stub period always stands alone.** Where a shortened period would
  put two closings in one year of assessment, the ruling combines them — which is
  how a 22-month basis period arises.
- **Splitting a long period evenly.** The uneven months go to the first basis
  period, not the second.

## What's next

Every other corporate deadline follows from the basis period — the CP204 estimate
30 days before it begins, instalments from the second month, and Form C seven
months after it closes. If the change produced a long or short basis period,
revisit the CP204 estimate too, since instalments are divided by the number of
months in the basis period.

## Sources

- Public Ruling No. 8/2014 — Basis Period of a Company, Limited Liability Partnership, Trust Body and Co-operative Society — https://www.hasil.gov.my/wp-content/uploads/PR_8_2014.pdf (LHDN)
- Income Tax Act 1967 (Act 53), reprint as at 21 May 2024 — sections 21A, 77A, 107C and 112 — https://www.hasil.gov.my/wp-content/uploads/20240521-akta-cukai-pendapatan-1967-akta-53.pdf (LHDN)
- Change In Accounting Period — https://www.hasil.gov.my/en/syarikat/pertukaran-tarikh-penutupan-akaun-syarikat/ (LHDN)

---
Source of truth: https://github.com/negaraku-md/NegaraKu.md
License: CC BY-SA 4.0