Tax season is definitely the busiest period where most of us are scrambling to file our taxes, and therefore must not be taken lightly. E-filing may seem straightforward, but there are actually underlying guidelines and clauses for each item.
A minor mistake may cost you a penalty up to RM10,000, on top of paying up to 200% of the underpaid tax. Ensure you read up on the guidelines listed on LHDN website or alternatively, you can hire an accountant to help you with it.
Regardless whether you are a resident or non-resident in Malaysia, any income derived from Malaysia is subjected to income tax and you are responsible to get your tax filed prior to due date. Generally, you need to first determine which category you belong to based on your tax residency and source of income.
Below shows the type of Income Tax Return Form (ITRF) that is applicable to you:
To get professional help on filing your taxes, check out quotations from freelance accountants here.
Tax reliefs are applicable to both business owners and employees and are especially important to help reduce your chargeable income. Let’s talk about some of the common tax reliefs that are applicable for most of us.
Private Retirement Scheme (PRS)
Despite the unattractive return of PRS, it is still a smart move to invest into one for tax relief of RM 3,000. If your chargeable income is RM 60,000, you get to save RM 480 (16% of RM 3,000). This means you are actually already gaining 16% for your PRS. The higher your chargeable income is, the more % you earn from this!
Life and Medical Insurance
Boost your insurance coverage up to the maximum bracket of RM 6,000 for EPF & Life Insurance and RM 3,000 for Education and Medical Insurance. The amount of tax you can save from this is also a gain or a discount to your insurance.
If you have a child, an alternative would be to save in Skim Simpanan Pendidikan Nasional (SSPN) as you are entitled for a RM 6,000 tax relief. Both husband and wife are allowed to open 2 separate SSPN accounts for the same child. On top of that, you can also claim deduction for your child’s care centre or kindergarten fees up to RM 1,000.
You are entitled for a RM 2,500 relief in this category which includes purchase of sports equipment, computer, smartphones, books & journals (hardcopy or electronic) and even printed newspapers. Gym memberships and monthly internet subscription are also deductible under this category. If you are not able to maximize this relief, do ensure you buy more books for yourself or as gifts for next year’s filing.
To promote health awareness, you are also able to get tax relief of RM 500 for a complete medical examination for self, spouse and child, as well as a RM 1,000 relief on breastfeeding equipment. If you are paying for your parents’ medical expenses, you can also claim up to RM 5,000.
Below is the complete list of tax reliefs you are entitled for tax deduction:
For those of you who are employed, you can click here for a comprehensive tax filing checklist to aid in filing your taxes this season. Don’t forget that the deadline to submit the physical form is on 30th April, but if you are submitting it through e-Filing, you get an extension until 15th May.
On the other hand, tax filing for business owners and entrepreneurs are much more comprehensive and complicated compared to employees. It is strongly advisable to engage an accountant to file your taxes and you will save yourself from a lot of trouble.
A friend of mine had some accounting knowledge from college and she thought she could file her own taxes. However, a few mistakes that she made cost her double of her supposedly tax payment. Don’t save that small fee to engage a professional or you may end up paying much more. After all, they are the experts in this area.
Kaodim has some professional accountants you can hire for your tax filing. Get quotations from certified accountants for free.
Disclaimer: This does not constitute tax advice and you are advised to consult a professional.
written by June Lum (FINPosts)