What you need to know about your income tax

As I’ve mention on my old post, I’ve escaped to pay income tax for 2016 after do e-filling at LHDN. But it doesn’t mean I could be happy. There’s also possibility I need to pay in the future too.

In this article I want to share about income tax. As a Malaysian citizen we need to pay income tax. This is now done ‘ Pay As You Earn’ (PAYE) under the Schedule Tax Deduction Scheme. Your income tax is deducted from your monthly salary and sent directly to the Inland Revenue Board (IRB) by your employer.

However, this does not mean that you will not pay any more taxes at the end of the year when the IRB assesses your total income earning. It is your responsibility to declare all your sources of income to the IRB and pay the appropriate amount of tax. Sources of income that are taxable include :

  • Salary and wages
  • Commissions
  • Bonus
  • Gratuity
  • Allowances (in cash or otherwise)
  • Directors’ fees
  • Pension and annuity
  • Dividend and interest income
  • Rental,royalty and premium income

 

You are strongly advised to budget an amount from your monthly salary for income tax payment, in case the amount you actually have to pay at the end of the year is more than the amount that being deducted from your monthly salary.

LHDN know how much you earn from the PAYE deduction made against your monthly salary. In addition your employer must provide your name, address and income details such as allowances or commissions, to the LHDN monthly in the Earning Advise (EA) or EC form.

Other than EA or EC from submitted by your employer, there is also the self-assessment tax form that you must submit to the LHDN in which you have to declare all other souces of income. Currently, LHDN using e-Filling system for you to declare your income and some expenses that you can claim.

The self-assessment tax system is your responsibility to calculate your own tax liability. You must complete in at the LHDN system at www.hasil.gov.my. If you want to know more about self-assessment, just go nearest LHDN office.

If you own a business, you will need to pay taxes for the profit that you make from the business. It is then advisable to have a tax consultant to advise you on proper tax planning based on the appropriate business entity such as sole proprietary, partnership or private limited company.

 

It is important for you to complete your tax before half year. You need to prepare your budget and always put the expenses receipt in safe place.

 

 

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