In our “askCA@Thursday” on 19 April 2012, we received a question:
Hi CA, how to set up a non-profit organisation? Any regulation state that the said organisation must form by a team or partner or a sole proprietor can be done? If a non profit organisation, whatever profit must be donate out and how about daily expenses, can us entitle to deduct from the profit before declare. Not sure is it correct to ask at here but. But hope can get advice from you too. Thanks”
Legally in Malaysia, there is no such recognised concept of Non-Profit Organisation. By the same token, it extend to cover Non-Governmental Organisation (NGO) as well as a Charity are all not recognised legal entities in Malaysia. These names are merely a description of its specific purpose and has no legal effect whatsoever if it is used in isolation.

The acceptable legal entities are the usual Sole Proprietorship, Partnership, Company limited by Shares, Company limited by Guarantee, Registered Society, Statutory Body (created by certain legislation) and soon the Limited Liability Partnership.

Whatever the purpose you so desired (non-profit/ non-governmental etc), you need one these legal entities to carry out the activities. The purposes are highlighted in the incorporation documents like the Memorandum of Articles for Company and the Constitution for the Registered Society.

In this capitalist society, there is always a presumption of profit in any activities. Thus, the ‘non-profit’ is just a marking to highlight such difference. By the way, a Non-Profit Organisation is still looking for profit, it is just that such profit is not used for personal gain but for a social cause or a common community benefit or simply put a charity.

As profit only happens after taking care of all expenses, the answer to your question is YES; you are entitled to deduct the expenses.

Thank you Jodie for your question, do let us know if you need further clarification to our answer.