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The deadline for filing the income tax return form with the Inland Revenue Board of Malaysia (LHDN) this year is approaching fast. Every salaried or self-employed individual should be aware of the deadline, which falls on April 30 every year.
Paying taxes is your duty as a citizen and contributes to the growth and progress of the country. Here are a few tips and reminders to remember before you file your tax return this year.
Types of income that are taxable
Your salary is not the only income that you should be paying taxes on. Dividends, rent, royalties, and premiums are also taxable types of income.
Find out what your income tax rate is
The income tax rate varies depending on your chargeable income. For assessment year 2013 and 2014, a two per cent tax rate is applied to a chargeable income starting at RM5,001 up to RM10,000. The rate can go as high as 26 per cent for those whose chargeable income exceeds RM100,000.
Know about your tax exemptions
Some types of income are exempted from taxes and the list of tax exemptions can be a little lengthy. The tax exemption that would apply to most people would be medical and dental benefits.
These tax exemption benefits also include maternity expenses and traditional medicine. Other types of income that are exempted from tax include pensions received after the compulsory age of retirement, or awarded due to ill health and scholarships.
Take advantage of tax relief
Expenses that qualify for tax relief can be deducted from your chargeable income.
There are quite a number of these expenses, including education fees, medical expenses for serious diseases, and insurance premium for education or medical benefit. Broadband subscription fees under your name is also eligible for tax relief.
Take advantage of convenient ways to pay your taxes
LHDN has made it easier for citizens to pay taxes by providing an array of convenient methods for payment. You have the option to pay over the counter of major banks in Malaysia, including CIMB, Maybank, and Affin Bank. You can also pay your taxes via ATM of the Public Bank, Maybank, and CIMB.
You can even choose to pay taxes over the Internet through the websites of appointed agent banks.
Grace period for submitting your income tax return form
For income tax return forms furnished through e-filing, there’s a grace period of 15 days after the due date. The grace period for forms delivered via post is three working days after the due-date for submission.
Keep pertinent records for seven years
You’re required to keep the supporting documents related to the income tax return form that you submitted for up to seven years, in case an audit is made.
The pertinent documents to keep include the EA/EC Form, original dividend vouchers, and insurance premium and medical receipts if you used these to claim tax relief.
Review tax contributions made by your employer on your behalf
Your employer deducts a certain amount from your salary under the Potongan Cukai Bulanan (PCB) system.
The amount deducted should be remitted to the government as your payment for your tax liability.
To make sure that your employer remits your payments to the proper authorities, you can review your EA/EC form, which is supposed to be provided by your employer every February.
The tax that your employer relays to the authorities is based on your EPF, marital status, and the number of children you have, so you need to make sure that tax reliefs or deductions have been applied.
This content is created by Floyd Sijmons for the readers of Borneo Post. Sijmons is the CEO of CompareHero, the most extensive Malaysian financial comparison platform today. He believes in the value of saving Malaysians time and money by giving them information they need to compare financial products in the market. For more information, visit CompareHero.my.