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IT’S upon us again - the deadline for filing the 2013 income tax returns for employees is April 30, 2014.
At this time every year, I tend to reminisce about the time of cherry
blossoms in Japan when I had my secondment stint with our Tokyo office.
Just like how we busied through the audit season then, I see the same
scurry in collating income information from our clients here to prepare
their income tax returns, chasing them for responses to our reminders
just to meet the deadline.
Why? We fear the penalties for late submission of the tax return and/or late payment of taxes.
So, before filing your returns, go through this checklist to avoid those costly errors.
1. Are you taxable for the 2013 income?
If an individual earns an annual employment income of RM26,501 (after EPF deduction), he would have to register a file.
Registration for an income tax reference number can be made at any IRB
branch or you can enquire at the Customer Service Centre at
1800-88-5436. A penalty equal to three times the amount of the tax
(which is before any set-off, repayment or relief under the Income Tax
Act) is payable if a person defaults in furnishing a tax return.
2. Are all of my allowances taxable?
See graphic below.
3. Will all my income be taxed in Malaysia, even those that I earned overseas?
All income accrued in or derived from Malaysia will be subject to
Malaysian income tax. Income which you have received in Malaysia from
outside Malaysia is exempted from Malaysian income tax if it is not
income in connection with your employment in Malaysia.
4. What should I refer to when declaring my income?
You should have received your 2013 EA Form from your employer by now.
The EA Form summarises your annual remuneration received in 2013. If you
have other income from overseas companies, for example share incentive
benefit received in connection with your employment in Malaysia, you
would also need to declare the income. A letter from the overseas
company confirming the said income is required.
5. How do I declare my income?
The IRB encourages all taxpayers to submit the income declaration via
e-filing of the income tax return. More details on e-filing can be
obtained fromhttps://e.hasil.gov.my.
You do not need to submit the EA Form, receipts or letter of
confirmation but you need to keep these records for a period of seven
(7) years in case of a tax audit.
6. Can I deduct my donations from my income?
Yes, as long as the donations are made to charitable organisations
approved by the Inland Revenue. However, the amount is limited to 7% of
your aggregate income.
To check if the charitable organisation you are donating to is approved by the IRB, visit www.hasil.gov.my and search for “List of Institutions under Section 44(6) ITA 1967 “.
7. Are there any other tax reliefs to note?
While much of the income tax relief types remain unchanged for the 2013
tax return filing, here are a few notable reliefs which have been added,
removed, altered or have new conditions attached to them. Visit www.hasil.gov.my to see the comprehensive list of tax reliefs one can enjoy.
a) Special tax relief
For those earning an aggregate income of up to RM96,000, they will be
able to enjoy a special tax relief of RM2,000. This relief is only
applicable for Year Assessment 2013.
b) Personal computer
Tax relief for personal computers will not cover tablets and handphones
effective from Year of Assessment 2013. You can still enjoy a tax relief
of up to RM3,000 for purchase of personal computers made once every
three years.
c) Broadband Internet
Tax relief for broadband Internet will no longer be available.
d) Interest on home financing
Home owners who purchased their property with the sales and purchase
agreement signed between March 10, 2009 and December 31, 2010 will have
the last chance to enjoy tax relief on interest expended to finance the
said property for the first three consecutive years.
A tax relief of up to RM10,000 can be enjoyed by two or more individuals
who are eligible to claim relief for the same property subject to the
following conditions:
> The taxpayer is a Malaysian citizen and a resident;
> The taxpayer is limited to one residential unit; and
> The residential property is not rented out.
8. What form should I use?
Since the April 30 deadline applies only to employees, you choose one of the following forms:
(a) Form BE (e-BE) – a resident employee who does not carry on business
(b) Form M (e-M) – a non-resident employed with no business income. If
you are a knowledge worker, you would use the form affixed with “T” in
either of the Form B or M. More details of the form can be obtained
from www.hasil.gov.my
9. What is important to note when I claim the tax reliefs?
a) You must be a tax resident. In order to qualify as one, you must be
present in Malaysia for at least 183 days in the year 2013.
Full details on the definition of tax residence can be found onwww.hasil.gov.my/pdf/pdfam/PR6_2011.pdf.
b) Reliefs apply to expenses you have incurred in 2013 only.
c) Ensure that you keep the receipts of purchases or proofs of payments.
Make copies especially for thermal receipts as the prints will not
last.
d) All receipts and proof of purchases need not be submitted at the time
of filing the income tax return. However, you have to maintain these
records for at least seven (7) years following the end of the year of
assessment.
10. Is my monthly tax deduction (MTD) a final tax?
Not necessarily so. You would still need to determine your total tax
liability after taking into account the income, reliefs and rebates and
compare it against the total tax which has been withheld and remitted to
the IRB.
Any shortfall will have to be paid to the IRB no later than April 30, 2014. E-bayaran facility (https://epayment.hasil.gov.my/fpx/one.php) is available. Where there is excess tax withheld, a tax refund will be made to you.
The IRB is encouraging employers to implement a “Monthly Tax Deduction
(MTD) as final tax” system from 2014. The employee will still be
ultimately responsible to ensure that all income is not under-declared
and deductions over-claimed so that a penalty (up to as high as double
the amount of tax undercharged arising from an incorrect return
submitted) can be avoided.
Here are two bonus takeaways for 2013 tax return filing:
> The tax rates will be reduced by 1% for the chargeable income bands from RM2,501 to RM50,000.
> The IRB has also committed to refund within:
(i) 30 days from the date of submission if the submission is done within the due date through e-filing
(ii) Three months from the date of submission if the submission is done manually, within the due date.
A compensation of 2% where the amount refunded is made after:
(a) 90 days from the due date for electronic filing; or
(b) 120 days from the due date for manual filing
The above 10 questions should guide you to avoid costly mistakes in this
tax season. By April 30, 2014, you should have e-filed your tax return
and settled your final taxes (if any). Remember also to keep the
acknowledgment receipt of e-filing and payment of taxes. As proof,
nothing’s better than something in black and white.
> Ang Weina is a Tax Partner at Deloitte Malaysia’s tax practice.
She has more than 20 years experience with Deloitte in Singapore, Japan
and Malaysia dealing in mobility, rewards and talent issues ranging
from tax compliance and immigration matters of employees and employers
to advisory on mobility policy, equity incentive design and payroll
compliance review.
The comments and opinions here are personal viewpoints of the author
and are not reflective of Deloitte’s perspective on the subject matter.
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