Q. IF I am paid a fixed monthly travel allowance (with EPF contribution) which covers fuel for travel within Peninsular Malaysia, parking and toll, am I allowed to take advantage of tax exempt benefits? – GOH C.H.
A. YES, with effect from year of assessment 2008, tax exemption is given on petrol card, petrol allowance or travel allowance and toll card for official duties provided by the employer. The tax exemption is up to RM6,000 per annum.
Q. ARE dentures for parents eligible for tax rebate? – Lii
A. THE tax deduction for medical expenses for parents is up to a maximum of RM5,000.
Medical expenses that qualify would cover medical treatment for the parent evidenced by a receipt issued by a medical practitioner. It also includes dental treatment but this is limited to tooth extraction, filling, scaling and cleaning and does not include cosmetic dental treatment expenses such as teeth restoration and replacement involving crowning, root canal and dentures.
Therefore, the expense for your parent’s dentures would not qualify for the tax deduction.
On a separate note, it is important to differentiate that the RM5,000 maximum claim is for a tax deduction (i.e. to be deducted against your total income to arrive at your chargeable income) and not a rebate (i.e. a rebate is deducted from your income tax charge to arrive at your tax payable).
Q. I HAVE two questions:
1) The RM3,000 rebate for purchase of computers every three years. I last purchased a computer in August 2006. Can I purchase a new computer now (March 2009) to enjoy the rebate again or do I have to wait after August 2009 or some other date?
2) My wife and I jointly own two commercial properties which are rented out. My wife is a full-time housewife and has no income. I am at the maximum tax rate currently and on combined assessment filing. Can my wife take up the full rental income or at least 50% of the income and file for separate assessment?
If only 50% of rental income is allowed, do we need to split the property expenses like quit rent, insurance and assessment 50/50 also? – William Tan
A. FIRSTLY, it is important to differentiate a tax deduction from a tax rebate. The RM3,000 maximum claim for the purchase of a personal computer for non-business use is for a tax deduction (i.e. to be deducted against your total income to arrive at your chargeable income) and not a tax rebate (i.e. a rebate is deducted from your income tax charge to arrive at your tax payable).
Prior to year of assessment 2007, a RM500 rebate was given for the purchase of a personal computer used for non-business purposes on a household basis once in every five years of assessment.
Currently, the relief given is a tax deduction for the purchase of a personal computer for non-business use up to a maximum of RM3,000 given on an individual basis once in every three years of assessment.
Since your claim for the RM500 tax rebate was in year of assessment 2006 under the old tax provisions, you will be entitled to claim the RM3,000 tax deduction for another computer purchase anytime after the new tax provision took effect from year of assessment 2007. Therefore, you may purchase a new computer now (March 2009) and claim the RM3,000 tax deduction. Provided the existing law on the tax deduction does not change, your next qualifying purchase would be in year of assessment 2012.
2) Since your two properties are jointly owned, each of you would declare half the rental income equally in your respective tax return. Any expenses expended to generate the rental income from the jointly-owned properties (for example, property quit rent and assessment, insurance and repair and maintenance) must also be split equally to be deducted against the rental income.
Your wife may elect for a separate assessment to report her half share of the net rental against her personal tax relief.
Q. UNTIL last year, taxpayers could claim back excess tax paid on dividends received in 2007. Is this still possible in 2009? – Taxpayer
A. WHETHER you are still able to claim back the excess tax paid on dividends in year of assessment 2008 and 2009 would depend on the type of dividend that you receive from the company i.e. whether it is a franked (or tax deducted) dividend or exempt dividend.
With effect from year of assessment 2008 under the single-tier system, there is no further need for the company to deduct tax when paying dividends and any dividends distributed by the company will be exempt from tax in the hands of the shareholders.
However, transitional provisions in the tax legislation allow two options for companies with a credit balance in their section 108 accounts as of Dec 31 2007 when they want to pay dividends to the shareholders:
>The company can continue to use such credits in the section 108 account to pay franked dividends to shareholders up to Dec 31, 2013 or until the section 108 credits are exhausted, whichever comes earlier.
>Alternatively, the company may at any time make an irrevocable election to forgo the right to distribute franked dividends and pay dividend under the single-tier system.
The company, upon paying the dividend, is required to furnish the shareholders with a certificate warrant which will state whether tax has been deducted from the dividend or whether it is tax exempt pursuant to the single-tier system. If it is franked dividends, you can continue to claim back the excess tax paid, if any.
Q. I AM a sole proprietor. I draw a monthly salary from my business net EPF deduction of 11%. My business pays the employer’s portion of EPF contribution (12%). I understand the 12% EPF contribution for its proprietor is not a tax-deductible expense for the business. For my personal computation of tax payable, can I utilise the 11% deduction as a tax relief lumped together with my insurance premium giving a maximum relief of RM6,000? – Lim Jun Kean
A. THE 11% employee portion of EPF contribution is considered as part of your gross salary and subject to income tax (in addition to the sole proprietor business profit) on you. You are however entitled to claim the 11% EPF deduction as part of the maximum RM6,000 together with the life insurance premium tax relief in your personal tax return.
Q. I GET newspapers delivered to my home for which I get a monthly bill. Can I claim this as a deduction under reading materials?
Also, my mother has undergone ayurvedic treatment. Can I claim deduction under parents’ medical expenses? The expense is supported by official bills and receipts – S.Thiruchelvam
A. AN amount of up to a maximum of RM1,000 is deductible in respect of the purchase of books, magazines, journals or other similar publications (in hard copy or electronic form) for the purposes of enhancing knowledge of the individual, spouse or child. However, newspapers and banned reading materials are specifically excluded. Therefore, you cannot make a claim on your newspaper bills.
Medical expenses that qualify for the tax deduction for medical expenses for parents of up to a maximum of RM5,000 would include medical treatment evidenced by a receipt issued by a medical practitioner registered with the Malaysian Medical Council.
Unless the ayurvedic practioner is registered with the Malaysian Medical Council, the medical expenses will not qualify.
Q. I AM a retiree with no regular source of income except for dividends on investment in shares. Since the amount of yearly dividends I receive is less than RM30,000, I regularly claim RM4,000 to RM5,000 tax rebate under section 110 (dividends). Lately, I have received many Tier 1 dividends which do not indicate the amount of tax paid on behalf of the shareholders. Being a retiree, can I claim the tax rebate? If not, then all shareholders including retirees are paying the corporate tax of 25% on their dividends received. With the banks’ savings and FD interest rate of 2% to 3% per annum, how are the retirees going to survive? I hope you can assist by bringing up the plight of the retirees during the next budget dialogue. – Lim
A. WITH effect from year of assessment 2008, the single-tier system took effect. Under this system, there is no need for the company to deduct tax when paying dividends and any dividends distributed by the company will be exempt from tax in the hands of the shareholders.
However, transitional provisions in the tax legislation allow two options for companies with a credit balance in their section 108 accounts as at Dec 31, 2007 when they want to pay dividends to the shareholders:
>The company can continue to use such credits in the section 108 account to pay franked dividends to shareholders up to Dec 31, 2013 or until the section 108 credits are exhausted whichever comes earlier.
>Alternatively, the company may at any time make an irrevocable election to forgo the right to distribute franked dividends and pay dividend under the single-tier system.
If the dividends you receive indicate that no tax has been deducted, these dividends would be either exempt dividends or dividends paid under the single-tier system. In both cases, the dividends are exempt from tax in your hands and you are not entitled to claim the section 110 tax credits on such dividends.
You are correct in saying that retirees are one of the most-impacted group as a result of the single-tier system since under the previous full imputation system, you are able to get tax refund from claiming the section 110 tax credit due to your lower personal tax rate compared to the company tax rate. This has been brought to the attention of the relevant authorities in the dialogues and discussions by the professional bodies.
Q. I READ in the papers that the recent mini budget has increased the current RM6,000 tax relief per year of service to RM10,000 for retrenched workers. Is there a limit on the number of years and does it apply for voluntary separation and early retirement? – Worried Worker
A. THE tax exemption on compensation for loss of employment received by employees (including payment pursuant to a separation scheme where employees are given an option for an early termination of an employment contract) is increased from the current RM6,000 to RM10,000 per completed year of service with the same employer or with companies in the same group. It covers the voluntary separation scheme but does not cover early retirement.
There is no limit on the number of years of service. However, please note that the RM10,000 exemption is applicable on the number of completed years of service.
In addition, the increased tax exemption is only applicable on payments made in respect of individuals who have ceased employment on or after July 1, 2008. If the individual has ceased employment on or after July 1 2008, and tax clearance has been issued by the IRB with the RM6,000 tax exemption (prior to the mini budget announcement on March 10 2009), the individuals can make an appeal to the IRB for a reduced assessment.
Q. MY wife and I have a combined assessment. However, my wife was retrenched from her company on Dec 7. She has not found a new job and has had no income since then. Do I still continue to submit the combined tax assessment for 2008 and subsequent years despite her not earning any income? – Ismail
A. YOU should fill code 4 – “Diri sendiri, isteri tiada punca pendapatan” under Part A5 – “Jenis Taksiran” in your tax return. If your wife has received the year of assessment 2008 tax return, she should complete and file a “Nil” return to the IRB, together with a cover letter stating that she has no income in 2008.
Q. I OWN five units of properties with three units in joint names with my spouse and the others solely owned by me. My question is, every month my spouse will collect the rental on my behalf, and she also troubleshoots if there are problems with the houses. Since she uses her own transport, makes telephone calls, pays parking and toll fees, goes to the bank etc. can I pay her a salary for her help? My spouse is a housewife – Sam
A. THE tax law allows you to claim a deduction for expenses that you have expended to generate the rental income from your properties. These may include quit rent, assessment, insurance, repairs and maintenance, housing loan interest taken on the properties and rent collection fee paid to an estate agent.
As your wife is a “related party” and not a registered real estate agent, there could be more scrutiny by the IRB on the claim for the fee paid to her. For example, whether the fee payment is at market rate, whether the fee is commensurate with the services provided or is it excessive, etc. If a fee is paid to your wife, she will have to report the income in her tax return.
Q. I WRITE academic books and earn a few thousand from the payment of royalty. Actually, I am not selling the books or doing any business from the sale of the books. The publisher does all the marketing and selling. I just do the writing. Every year I report the income from the royalty together with my salary from the Government minus some of the expenses. My questions are:
(a) Presently I am given the OG or the B form. Should I be using the SG form instead because I am not doing any business?
(b) How is the RM20,000 exemption considered in a case like mine? – Anonymous
A. THE IRB have treated your royalty income as a business source and issued you a Form B (under an OG tax reference number). On the basis that you receive the royalty income and presumably claim some direct expenses against it, the tax treatment of your royalty income would essentially be the same whether it is reported under a Form B or Form BE. The tax filing deadline if the royalty is treated as a business source under Form B is June 30 whereas if it is a non-business source, the deadline is April 30.
There is a specific provision in the tax legislation to exempt RM20,000 royalty income or payment in respect of the publication of, or the use of or the right to use any literary work. You should exclude the RM20,000 exempt royalty income and declare the net (after deducting related expenses) balance of royalty income in your tax return.
Q. I WAS told by the officers at IRB that filling the HK-3 forms this year will be simple. I only have to fill in according to what is required by that form. Firstly, I don’t have to submit the dividend vouchers to the Income Tax office, together with the Borang BE.
Secondly, according to the instructions accompanying the borang BE, I have to correct/adjust for the Z, X and Y column. Is this correct? – K T KHOO
A. YES, you need to only submit worksheet HK-3 and are not required to submit the dividend vouchers in order to claim a tax refund on your dividend income.
If you are submitting your tax return via e-Filing, the computer system will calculate the re-grossing of the net dividends automatically. However, if you are submitting the hard copy of your return, you will need to compute the re-grossing yourself and complete the worksheet accordingly.
Q. YOU mentioned about investing in the National Education Savings Scheme (SSPN). What is this, and how does one apply for it? I’m a single father with two school-going boys. What can I do to reduce my tax deduction? – Andrew
A. FULL details regarding the National Education Savings Scheme (SSPN) can be found at http://www.ptptn.gov.my/ website for National Higher Education Fund Corporation.
Q&A with the Income Tax Department
TECHNICAL ISSUES
The following are some of the questions raised and answers given by the Lembaga Hasil Dalam Negeri (LHDN / IRB) during one of its Tax Seminars on the additional tax exemptions given to individuals. The original answer is in Bahasa Malaysia while the English translation is provided by me.
1. Does this exemption apply to petrol claim (reimbursement basis) ?
Jawapan
Penerimaan tuntutan bayaran balik bagi tugas rasmi yang dijalankan oleh pekerja bagi pihak majikannya tidak tertakluk kepada cukai pendapatan.
Answer
Reimbursements received for official purposes by an employee is not subject to tax.
2. Extend to fixed transport allowance?
Jawapan
Pengecualian diberi kepada elaun perjalanan, kad petrol atau elaun petrol
Answer
Exemption is given for travelling allowances, petrol cards or petrol allowances.
3. Extend to the BIK on petrol provided by the employer together with car?
Jawapan
Manfaat petrol dikecualikan jika majikan boleh menentukan tujuan dan amaun petrol diberi sama ada bagi tujuan perjalanan antara rumah ke pejabat (pengecualian sehingga RM2,400) atau bagi melaksanakan suatu pekerjaan (pengecualian sehingga RM6,000).
Jika majikan tidak dapat menentukan amaun bagi kedua-dua tujuan tersebut, maka pengecualian diberi sehingga RM6,000 setahun.
Answer
BIK on petrol is exempted if the employer can determine the purpose and amount of petrol given whether for travelling between home and work (exemption up to RM2,400) or for official duties (exemption up to RM6,000). If the employer is not able to determine the amount for the two purposes separately, then the exemption is given up to RM6,000 a year.
4. Travelling allowance RM8400, can it be automatically assumed RM2400 is for home to work place & RM6000 is for official duties?
Jawapan
Tidak boleh. Majikan perlu menentukan amaun dan jenis peruntukan yang diberi (sama seperti di atas).
Catatan: bagi persoalan 3 dan 4, jawapan yang diberi adalah tertakluk kepada keputusan selanjutnya (jika ada) dan akan dimasukkan dalam pindaan kepada Ketetapan Umum Manfaat Berupa Barangan dan Ketetapan Umum Perkuisit.
Answer
No. The employer has to determine the amount and type of allowance given (as explained above).
Note : for questions 3 & 4, answers given are subject to further decisions (if any) and will be included in amendments to the Public Ruling on Benefits-in-kind and Public Ruling on Perquisites.
5. Can the employee claim an abatement on the amount in excess of RM6,000 p.a? Does he need to maintain a travel log for the excess amount only or for the entire amount?
Jawapan
Bagi tuntutan elaun perjalanan yang melebihi RM6,000.00 pekerja perlu menyimpan kesemua rekod (bukan setakat lebihan sahaja) bagi tujuan audit.
Answer
For travelling allowances amounting to more than RM6,000, the employees have to keep all records (not only the excess amount only) for the purpose of auditing.
6. If the employee is given a car allowance of RM500 per month to cover petrol, road tax, insurance & maintenance costs, can the whole amount be exempted from tax?
Jawapan
Elaun kereta tidak dikecualikan
Answer
Car allowances are not exempted (i.e. they are taxable).
7. Employee received car allowance but actually he is not expected to travel for official duties qualify for exemption RM6,000?
Jawapan
Elaun kereta tidak dikecualikan
Answer
Car allowances are not exempted (i.e. they are taxable).
8. Employee change employment during the year & received RM2,400 from each employer for travel between home & office, what amount to be exempted?
Jawapan
Pengecualian diberi terhad kepada RM2,400 setahun kepada seorang pekerja tanpa melihat kepada bilangan majikan.
Answer
Tax exemption is given subject to RM2,400 a year for each individual without taking into account the number of employers .
9. Employees are given toll card (e.g. Touch n’ Go), not only for toll charged but also for other type of payment, what is the amount to be exempted?
Jawapan
Hanya kadar tol sahaja dikecualikan.
Tiada pengecualian bagi Touch n’ Go yang juga digunakan untuk lain-lain
bayaran.
Answer
Only the tolls incurred is exempted.
No exemption is given for Touch n’ Go that is used for other payments.
10. Allowance or fees for parking-exempted?
Jawapan
Elaun letak kereta atau kadar letak kereta dikecualikan bagi pekerja yang menerima peruntukan elaun tersebut sebagai sebahagian daripada penggajiannya.
Answer
Parking allowances or parking fees are exempted for employees who received these allowances as part of their remuneration from employment.
11. If exempted, does it extend to parking fee at LRT stations or limit at the office only?
Jawapan
Pengecualian diberi kepada pekerja yang diperuntukkan elaun meletak kereta dengan suatu amaun tetap oleh majikannya. Tanpa pengecualian, elaun tersebut merupakan sebahagian daripada pendapatan penggajian bagi pekerja tersebut. Pengecualian bukan merupakan satu potongan dalam menentukan pendapatan larasan/berkanun penggajian. Oleh itu, bayaran meletak kereta di kawasan pejabat atau di stesen LRT tidak menjadi isu.
Answer
Tax exemptions are given to employees who are paid a fixed amount of parking allowances by his/her employer. Without this exemption, this allowance would have been part of his/her remuneration. Exemption is not given as a deduction to arrive at the adjusted/statutory income. Therefore, payments made for parking whether at the office or at the LRT stations are not an issue.
12. What would be a reasonable amount to be paid to employee?
Jawapan
Majikan perlu menentukan suatu amaun yang munasabah.
Answer
The employers have to determine an amount which is suitable.
13. Can the employer pay the employee a daily allowance to subsidize their food costs?
Jawapan
Pengecualian hanya diberi kepada pekerja yang diperuntukkan elaun makan oleh majikan secara tetap, tanpa mengambilkira elaun tersebut diberi secara bulanan atau harian.
Answer
Tax exemption is only given to the employees who are given a fixed food allowances by their employers, without taking into account whether they are paid monthly or daily.
14. Does this exemption extended to ‘per diem’ which is paid to the employee to cover this meals while working outstation/overseas?
Jawapan
Tidak.
Answer
No.
(The IRB came out with a new Public Ruling later to exempt 'per diem'. See here.)
15. What if the per diem amount also covers laundry & phone calls?
Jawapan
Tidak berkenaan
Answer
Not applicable
16. Is there any limitation to the amount which can be paid as meal allowance?
Jawapan
Majikan perlu menentukan suatu amaun yang munasabah.
Answer
The employers have to determine an amount which is suitable.
17. What is the definition of childcare? Babysitter, kindergarten, maid etc
Jawapan
Pengecualian diberi kepada pekerja yang diperuntukkan elaun penjagaan anak oleh majikannya. Kepada siapa bayaran tersebut dibuat oleh pekerja tidak menjadi isu.
Answer
Tax exemption is given to employees who are given child care allowances by their employers. To whom these payments are eventually paid by the employees is not an issue.
18. Any age limit on the child to qualify for childcare?
Jawapan
12 tahun ke bawah
Answer
12 years and below
19. Any limitation on entitlement to exemption of childcare allowance? i.e if the husband gets an exemption on the childcare allowance received, can his wife also qualify for an exemption on the childcare allowance for the same child?
Jawapan
Pengecualian diberi secara individu terhad kepada RM2,400 setahun.
Answer
Tax exemption is given to each individual subject to RM2,400 a year.
20. Would this exemption apply to maid allowance provided by the employer?
Jawapan
Elaun Pembantu Rumah tidak dikecualikan
Answer
Maid allowance is not exempted.
21. Can a single employee with an adopted child quality for the exemption?
Jawapan
Pengecualian diberi kepada pekerja yang diperuntukkan elaun penjagaan anak oleh majikannya. Anak adalah sebagaimana ditakrifkan di bawah Seksyen 48, ACP 1967.
Answer
Tax exemption is given to an employee who is given child care allowances by his/her employer. ‘Child’ is as defined under Section 48, Income Tax Act, 1967.
22. Does this exemption extend to telephone allowance or limited to actual
bills only?
Jawapan
Pengecualian tidak terpakai kepada pekerja yang diperuntukkan elaun tetap telefon.
Answer
Tax exemption is not applicable to employees who are given fixed telephone allowance.
23. How about other related charges i.e registration, access fee, etc? Does this exemption extend to these items?
Jawapan
Ya.
Answer
Yes.
24. Does this exemption extend to goods & services of companies within a group or limited to the goods & services provided by the direct employer only?
Jawapan
Majikan tidak dipanjangkan kepada kumpulan syarikat
Answer
Employer is not extended to Group companies.
25. How to determine the loan amount? Is it based on outstanding loan balance or the original loan amount?
Jawapan
Pengecualian ke atas subsidi faedah bagi pinjaman perumahan, kenderaan bermotor dan pendidikan dikira menggunakan formula berikut:
A X B / C
Dimana;
A = perbezaan antara amaun faedah yang perlu ditanggung oleh
pekerja dengan amaun faedah yang kena bayar oleh
Pekerja dalam tempoh asas bagi suatu tahun taksiran.
B = jumlah agregat baki amaun principal pinjaman perumahan,
kenderaan bermotor dan pendidikan yang diambil oleh
pekerja atau RM300,000 dalam tempoh asas bagi suatu
tahun taksiran yang mana lebih rendah.
C = jumlah agregat amaun principal pinjaman perumahan,
kenderaan bermotor dan pendidikan yang diambil oleh
pekerja.
Answer
Tax exemption on subsidies for interest on housing loan, motor vehicles and education is calculated using the following formula :-
A X B / C
Where
A = difference between the amount of interest to be borne by the employee and the amount of interest to be payable by the employee
B = aggregate balance of loan or RM300,000, whichever is lower
C = total aggregate amount of principal loan
Note : For example,
Total loan taken = RM400,000 (Principal amount)
Balance loan = RM250,000 (Outstanding amount)
Total interest charged by bank = RM5,000
Total interest paid by employee = RM3,000
Total interest subsidised by employer = RM2,000
Tax exempt amount = (RM5,000 – RM2,000) X RM250,000 = RM1.667
RM450,000
Amount taxable = RM333 (RM2,000 – RM1,667)
26. Loan for education - for employee only or can extend for their children?
Jawapan
Untuk pekerja sahaja.
Answer
For employees only.
27. Would pickup trucks (e.g Toyota Hilux, Suzuki Equator, etc) qualify as passenger motor vehicles?
Jawapan
Pengecualian diberi kepada subsidi bagi pinjaman kenderaan selain daripada kenderaan yang dilesenkan oleh pihak berkuasa, yang berkaitan dengan pengangkutan perdagangan barangan atau penumpang bagi tujuan komersial.
Answer
Tax exemptions are given for subsidies on loans for motor vehicles other than those licensed by the relevant authorities which are related to transportation of commercial goods or passengers for commercial purposes.
28. Does traditional medicine extend to treatments by bomoh & sinseh?
Jawapan
Perubatan tradisional berhubung dengan pengecualian yang diberikan, bermaksud perubatan yang diberi oleh pengamal perubatan yang berdaftar dengan badan berikut:
a. Rawatan Tradisional Melayu
Persatuan Perubatan Tradisional Melayu Malaysia (PUTRAMAS)
b. Rawatan Tradisional India
Pertubuhan Perubatan Tradisional India Malaysia (PEPTIM)
c. Rawatan Tradisional Cina
- Federation of Chinese Physicians and Chinese-Dealers Associations of Malaysia (FCPMDM)
- Federation of Chinese Physicians & Acupuncturist Associations of Malaysia (FCPAAM)
- Chinese Physician’s Associations of Malaysia (MCPA)
Answer
Traditional medication in respect of exemptions given means medications provided by practitioners registered with the following bodies :-
a. Malay Traditional Medications
Persatuan Perubatan Tradisional Melayu Malaysia (PUTRAMAS)
b. Indian Traditional Medications
Pertubuhan Perubatan Tradisional India Malaysia (PEPTIM)
c. Chinese Traditional Medications
- Federation of Chinese Physicians and Chinese-Dealers Associations of Malaysia (FCPMDM)
- Federation of Chinese Physicians & Acupuncturist Associations of Malaysia (FCPAAM)
- Chinese Physician’s Associations of Malaysia (MCPA)
29. Pekerja menerima anugerah Pekerja Contoh bagi bulan Oktober dan juga menerima anugerah bagi Kehadiran Penuh bulan November. Adakah penerimaan anugerah secara bulanan ini boleh dikecualinan cukai sehingga RM2,000 mulai tahun 2008?
An employee receives award for “Employee of the Month” in October and also receives award for “Full Attendance” in November. Are such monthly receipts exempted from tax up to RM2,000 from 2008 ?
Jawapan
- Anugerah Pekerja Contoh, Anugerah Kehadiran Penuh (tiada cuti sakit) boleh dikategorikan sebagai Anugerah Khidmat Cemerlang bagi tujuan pengecualian di bawah perenggan 25C, Jadual 6 ACP 1967
- Pekerja layak dikecualinan cukai sehingga RM2,000 mulai tahun 2008 atas jumlah (RM) anugerah-anugerah yang diterimanya.
Answer
- Awards for “Employee of the Month” and awards for “Full Attendance” can be categorised as Service Excellence Awards for the purpose of exemption under para 25C, Schedule 6, ITA 1967
- The employee is entitled to tax exemption of up to RM2,000 with effect from 2008 on total (RM) awards received by him/her.
The Star - Steps to Lessen the Pain
The following article was published in The Star newspaper on 15 Mar 2009. It is reproduced here for your reference.
Invest in government saving bonds or securities
Investments in government saving bonds or government-backed securities typically yield a higher annual return rate compared with interest income derived from savings or fixed deposits. Additionally, income received by the taxpayers from such investments is generally tax exempt.
Consider splitting your passive income to your loved ones
If you are deriving rental income and you are at a higher marginal tax rate than your spouse, you may wish to consider transferring the property as a gift to your spouse or your child above the age of 21 to achieve a lower tax on the rental income (see boxed example).
"CAN Malaysians actually pay less tax without breaking the law?
According to the experts, an individual taxpayer can consider the following measures to reduce the tax impact:
Maximise claims of personal reliefs, allowable deductions and rebates
This is by far the easiest way for Malaysians to minimise their tax liabilities under the current economic climate. It is wise for all taxpayers to familiarise themselves with the key reliefs/deductions that would help to minimise their tax liabilities for the year ahead.
This includes keeping a checklist on the various reliefs, deductions and rebates available to all individual taxpayers and practising the shoe-box mentality religiously, that is, by keeping a record of all receipts and documentary evidence to support the reliefs/deductions or rebates claimed during the year.
Some common reliefs that are often missed out are insurance premiums for education or medical benefits (RM3,000), purchase of sports equipment (RM300), and the relief on purchase of computers every three years (RM3,000).
According to the experts, an individual taxpayer can consider the following measures to reduce the tax impact:
Maximise claims of personal reliefs, allowable deductions and rebates
This is by far the easiest way for Malaysians to minimise their tax liabilities under the current economic climate. It is wise for all taxpayers to familiarise themselves with the key reliefs/deductions that would help to minimise their tax liabilities for the year ahead.
This includes keeping a checklist on the various reliefs, deductions and rebates available to all individual taxpayers and practising the shoe-box mentality religiously, that is, by keeping a record of all receipts and documentary evidence to support the reliefs/deductions or rebates claimed during the year.
Some common reliefs that are often missed out are insurance premiums for education or medical benefits (RM3,000), purchase of sports equipment (RM300), and the relief on purchase of computers every three years (RM3,000).
Separate assessment over combined assessment
It is necessary for spouses to decide whether to be assessed separately or elect for a combined assessment.
Where a joint assessment is elected, the total income of the wife is aggregated with the total income of the husband and the wife shall be treated as having no chargeable income for the particular year of assessment.
The combined total income will be assessed on the husband and the tax liability would be determined based on the applicable graduated tax rates and personal reliefs claimed by the husband.
Under a separate assessment, husband and wife will be treated as separate taxpayers who are then able to utilise the graduated tax rates individually and maximise their claims for personal reliefs and allowable deductions on an individual basis.
The rule of thumb is: If the spouse’s income is less than RM3,000 for the tax year, then it is worth considering a combined assessment.
It is necessary for spouses to decide whether to be assessed separately or elect for a combined assessment.
Where a joint assessment is elected, the total income of the wife is aggregated with the total income of the husband and the wife shall be treated as having no chargeable income for the particular year of assessment.
The combined total income will be assessed on the husband and the tax liability would be determined based on the applicable graduated tax rates and personal reliefs claimed by the husband.
Under a separate assessment, husband and wife will be treated as separate taxpayers who are then able to utilise the graduated tax rates individually and maximise their claims for personal reliefs and allowable deductions on an individual basis.
The rule of thumb is: If the spouse’s income is less than RM3,000 for the tax year, then it is worth considering a combined assessment.
Make charitable donations to approved institutions
Making charitable donations is not only good for the community but also good for one’s tax return as taxpayers can claim a deduction for donations made to approved institutions for up to 7% of their aggregate income in the relevant year.
Meanwhile, Muslim taxpayers would be able to reduce their tax liability by contributing to zakat which is rebated against the tax payable.
Making charitable donations is not only good for the community but also good for one’s tax return as taxpayers can claim a deduction for donations made to approved institutions for up to 7% of their aggregate income in the relevant year.
Meanwhile, Muslim taxpayers would be able to reduce their tax liability by contributing to zakat which is rebated against the tax payable.
Maximise allowable deductible expenses on rented properties
Taxpayers can also maximise their tax savings on rented properties by claiming allowable deductible expenses against income received from these rented properties.
These allowable deductible expenses include, among others, repairs and maintenance costs incurred on the property, quit rent and assessment paid and loan interest paid (corresponding to the rental period) on the mortgage taken out on the property.
Taxpayers can also maximise their tax savings on rented properties by claiming allowable deductible expenses against income received from these rented properties.
These allowable deductible expenses include, among others, repairs and maintenance costs incurred on the property, quit rent and assessment paid and loan interest paid (corresponding to the rental period) on the mortgage taken out on the property.
Invest in government saving bonds or securities
Investments in government saving bonds or government-backed securities typically yield a higher annual return rate compared with interest income derived from savings or fixed deposits. Additionally, income received by the taxpayers from such investments is generally tax exempt.
Consider splitting your passive income to your loved ones
If you are deriving rental income and you are at a higher marginal tax rate than your spouse, you may wish to consider transferring the property as a gift to your spouse or your child above the age of 21 to achieve a lower tax on the rental income (see boxed example).
Investing in the EPF Annuities Scheme
The EPF Annuities scheme will give an additional RM1,000 tax relief to taxpayers in addition to the maximum RM5,000 relief for EPF deductions. The scheme allows contributors to put part of their EPF deductions in it. This will be returned as a form of pension and cannot be withdrawn upon retirement.
The EPF Annuities scheme will give an additional RM1,000 tax relief to taxpayers in addition to the maximum RM5,000 relief for EPF deductions. The scheme allows contributors to put part of their EPF deductions in it. This will be returned as a form of pension and cannot be withdrawn upon retirement.
Investing in the National Education Savings Scheme (SSPN)
Investing in SSPN also allows further relief of up to RM3,000. So if a parent were to invest in education insurance and the fund, that would mean total tax relief of RM6,000.
The SSPN account provides a number of benefits to depositors, including eligibility to apply for National Higher Education Corporation (PTPTN) loans with minimum savings of RM20 in their SSPN accounts, free insurance coverage of up to RM50,000 for depositors who have a minimum deposit of RM1,000, dividends and tax exemption on dividends."
Investing in SSPN also allows further relief of up to RM3,000. So if a parent were to invest in education insurance and the fund, that would mean total tax relief of RM6,000.
The SSPN account provides a number of benefits to depositors, including eligibility to apply for National Higher Education Corporation (PTPTN) loans with minimum savings of RM20 in their SSPN accounts, free insurance coverage of up to RM50,000 for depositors who have a minimum deposit of RM1,000, dividends and tax exemption on dividends."
The Star Q&As - 22/03/09
The following article was published in The Star newspaper on 22 Mar 2009. It is reproduced here for your reading.
Your tax queries answered
Yes to golf balls and shuttlecocks but no to swimsuits and sports shoes. These are among many specifications related to tax exemption. What makes the cut and what doesn’t, who qualifies and who doesn’t are among the many questions from our readers in response to Sunday Star’s stories last week on how to maximise one’s claims when filing tax returns.
THANKS to the assistance of tax consultant company PremierOne, our readers’ questions have been answered. Below are some of the e-mailed questions. Due to space constraints, the rest will be answered next week.
Q. I AM really confused as to what type of insurance premiums are deductible for life insurance and medical insurance reliefs. I noticed that insurance policies nowadays have both life insurance and medical rolled into one. What is the Inland Revenue Board’s (IRB) new guidelines dated June 6, 2005, on this matter? Where can I get these guidelines? – JOHN LIM
A. THE total tax deduction for life insurance premiums and contribution to an approved pension/employees provident fund is up to a maximum of RM6,000. The total tax deduction for insurance premium for education and medical benefits is up to a maximum of RM3,000.
If you are holding a policy that provides both life insurance and medical coverage, you can request from your insurance company (through the agent that services you) a statement that will show a breakdown of the premium paid in respect of each of the coverage. From these breakdown amount, you may claim a tax deduction for the life insurance premium (together with your EPF contribution) up to a maximum of RM6,000. The medical premium may be claimed (together with the education policy premium, if any) as a tax deduction up to a maximum of RM3,000.
The IRB has issued two Public Rulings and two addenda on the computation of income tax for individuals, including the one you mentioned dated June 6, 2005 (Public Ruling no. 2/2005). The public rulings set out the IRB director-general’s interpretation on the particular tax matters and are issued to provide guidance for the public and IRB officers. All the public rulings can be found and downloaded from the IRB website at www.hasil.org.my under Law and Regulations/Public Rulings.
Q. MY wife and I each bought a personal computer last year and would like to claim the RM3,000 rebate for each computer under our individual names. However, we were told that we are only allowed to claim one personal computer as the rebate is based on family usage and not individual usage.
Can you please clarify this point? Are my wife and I allowed to claim the rebate totalling RM6,000 for both of us as we each bought a new personal computer last year? Our taxes are filed separately. – FAN TEN YAU
A. THE current tax deduction for the purchase of a personal computer for non-business use of up to a maximum of RM3,000 is given on an individual basis once in every three years of assessment.
It is important to note that the RM3,000 maximum claim is for a tax deduction (i.e. to be deducted against your total income to arrive at your chargeable income) and not a rebate (i.e. a rebate is deducted from your income tax charge to arrive at your tax payable). Prior to year of assessment 2007, the relief given was a RM500 rebate given on a household basis once every five years.
In your case, where you and your wife elect for a separate assessment, each of you are eligible to claim a maximum deduction of RM3,000 for your respective purchase to be evidenced by a receipt for the respective claim.
Q. DUE to the increase in petrol/diesel price, other things also increase in price. In order to lighten our expenses, our company pays a monthly allowance, called child transport allowance, for those who have school-going children. This allowance varies depending on the number of children going to school. Can we claim tax exemption on this allowance? – JENNY
A. PURSUANT to the Budget 2009 announcement last year, allowance or subsidies received by employees from their employer for childcare in respect of children will be exempted from income tax with effect from year of assessment 2008. The exemption is restricted to RM2,400 per annum.
Although the relevant statutory order on the allowance is yet to be gazetted to date, the IRB has issued a second addendum to Public Ruling no. 1/2006 (dealing with perquisites from employment) which states that the child must be 12 years of age and below and must be a legitimate child, stepchild or legally adopted child.
The examples given in the ruling sets out situations where the allowance was given to employees for childcare centre, hiring a helper and employing a household domestic maid. Whilst the examples given may not be exhaustive, it is uncertain whether an allowance for child transportation would qualify, until further clarifications from the IRB.
Q. EFFECTIVE from year of assessment 2008, taxpayers are given a relief of up to RM300 yearly for the purchase of sports equipment.
Equipment that are entitled to this relief are those used for sporting activities as defined under the Sports Development Act 1997. I would be pleased if you could provide some examples of the sports equipment that will be entitled to this relief.
It is interesting to note that in the guidebook for the year of assessment 2008 (Buku Panduan Borang B 2008 – pdf version), it is mentioned that sports shoes are excluded.
This may seem as an anomaly as a pair of running shoes may be a major “equipment” used in athletics, a sport defined under the Sports Development Act 1997. – FOOK
A. A TAX deduction is allowed for an amount limited to a maximum of RM300 in respect of expenses expended for the purchase of sports equipment for any sports activity as defined under the Sports Development Act 1997, as evidenced by receipts issued.
The term sports activity is listed in the First Schedule of the Sports Development Act 1997 and ranges from athletics, badminton, canoeing, fencing, golf, recreational, sepak takraw, table tennis to watersport, etc.
You are correct to point out that whilst equipment with short lifespan e.g. golf balls and shuttlecocks have been accepted by the IRB in the Buku Panduan, certain sports attire have specifically been excluded e.g. swimsuits and sports shoes.
Q. MY company, X Sdn Bhd, was formed some time in mid-2006. There are only two directors in the company with equal sharing of the company shares. No profit was made in 2006. However, there was profit at the end of financial year 2007 and dividend was declared and distributed to the shareholders in July 2008.
I would like to know if I am eligible to claim for the difference in the taxed amount as my personal marginal tax is lower than the company tax, which is 20%. Or is it that the dividend distributed is under single-tier tax system of which I don’t even need to declare in the EA and BE form?
My accountant informed me that since the company is new, it should directly be under the new tax system. Is this true? – DARREN
A. IT is not correct to say that since the company is “new”, it would automatically be under the single-tier system.
The single-tier system took effect from year of assessment 2008 onwards. Under this system, there is no need for the company to deduct tax when paying dividends and any dividends distributed by the company will be exempt from tax in the hands of the shareholders.
However, transitional provisions in the tax legislation allow two options for companies with a credit balance in their section 108 accounts as at Dec 31, 2007 when they want to pay dividends to shareholders:
The company can continue to use such credits in the section 108 account to pay franked dividends to shareholders up to Dec 31, 2013 or until the section 108 credits are exhausted whichever comes earlier (subject to certain conditions e.g. dividends must be paid in cash and in respect of ordinary shares.) For small and medium companies, the tax on dividends paid to the shareholders is deducted from the section 108 credit balance based on the highest tax rate for the year of assessment (e.g. 27% for year of assessment 2007).
Alternatively, the company may at any time make an irrevocable election to forgo the right to distribute franked dividends by filing a Form R50 to the IRB and pay dividends under the single-tier system.
Since your personal marginal tax bracket rate is lower than the company tax rate, provided you have sufficient tax credits in the company section 108 accounts, it is more beneficial for the company to declare and pay franked dividends under the transitional provisions, instead of paying single-tier exempt dividend.
Please note that the company, upon paying the dividend, is required to furnish the shareholders with a certificate stating the gross dividend, tax deducted from the dividend and net dividend paid out.
Q. I SEEK further clarification on my following concerns:
i) Travel allowance from home to work place of up to RM2,400: Does this apply to all employees who drive to work daily or only to those provided with such an allowance by the company? If I drive a company car, am I entitled to this exemption?
ii) Telephone and mobile usage: Does this again apply to all who use their mobile phone for company business? Totally or partly?
iii) I drive a company car and use company registered mobile phone. These are translated into income of RM3,000 and RM600 respectively as taxable income. Am I entitled to these extra exemptions? – C.C. YAP
A. THE tax exemption for travel allowance of up to RM2,400 a year is only applicable if you receive such travel allowance from your employer i.e. if your employer provides you such travel allowance, the allowance is not taxable to you. It does not apply to employees where no travel allowance is provided by their employers, though they drive to work.
Similarly, the tax exemption applies where your employer provides you the telephone and mobile phone or pays the bills for the telephone or mobile phone registered in the name of the employee or employer.
You are entitled to the tax exemption on the RM600 mobile phone benefits provided by your employer.
In relation to the company car, we understand that the IRB is currently considering whether to include the benefit value of motor vehicle (in your case the RM3,000) as part of the exempt allowance of up to a maximum of RM2,400 per annum. We anticipate the IRB to issue further guidelines on this.
Q. I WOULD like to know which column in E-filing to fill in details of parking allowance, purchase of own company goods at discounted price and handphone/Internet/phone bills. Are those exempted from tax in YA2008? If so, where do I fill them in as I can’t seem to find an appropriate column to put those in? – ERIC
A. WITH effect from year of assessment 2008 parking allowance, telephone and mobile phone bills, and Internet subscription paid by employers are exempted from income tax.
The purchase of the company’s own goods at discounted price is also an exempted benefit-in-kind, up to a maximum of RM1,000 per year.
Such exempted allowances and benefits-in-kind are not required to be reported in your Form BE or under e- Filing.
Please note that Part G of the Form EA for year ended Dec 31, 2008 provided by your employer would specify the total amount of such exempted allowances/benefits-in-kind/ perquisites.
Q. HOW could we in the private sector cut on our taxes as we fall in the maximum taxable bracket as compared to our peers in the government sector who earn the same and pay less tax as lots of the allowances are non taxable?
A. PURSUANT to the 2009 Budget announcement, with effect from year of assessment 2008, the Government has allowed tax exemptions on various allowances and benefits provided by employers to their employees.
Some examples include subsidised interest given by employers for housing, education or car loan up to RM300,000; travel and petrol allowance for travelling from work to home of up to RM2,400 per year; travel and petrol allowance and toll rate for official duties of up to RM6,000 per year; and allowance for meal, parking and childcare, etc.
Q. I WISH to know whether I can claim on the following:
i) I spent a total of RM7,820.50 for both check-ups and delivery at a hospital for the birth of my son under Section D7 up to maximum RM5,000; and
ii) Cukai Seksyen 110 (lain-lain) dividend received from public listed shares. – CHONG SAU CHAN
A. THE deduction claim under Part D7 is in relation to expenses expended for a complete medical examination which is up to a maximum of RM500. The total deduction for medical expenses on serious diseases under Part D6 is limited to a maximum of RM5,000 and this includes the RM500 for complete medical examination (under Part D7).
The expenses you incurred for check-ups relating to your pregnancy and delivery of your son is not claimable since it does not fall within the two categories of expenses.
If the dividend warrant that you received from the public listed shares shows a gross dividend amount, tax deducted from the dividend and net dividend paid out, it means that the company has to opt to continue using its section 108 tax credits balance to pay franked dividends under the transitional provisions instead of electing to pay exempt dividends under the single-tier system.
Therefore, you should declare the dividend at gross in your tax return: for example, if in 2008 you received net dividend of RM74, you should declare RM100 (and not RM74) as dividend income in your return. However, you can deduct the section 110 tax credits of RM26 against your total tax. Any excess credit will be refunded to you.
Q. I RETIRED in 2007. I have no employment income for YA 2008. My wife is still working. I have a child currently receiving college education. My questions are:
i) Since I have no income for YA 2008, can I elect for combined assessment so that my spouse can claim additional RM3,000 personal relief? Do I have to file separate forms officially to inform the IRB?
ii) Can my spouse claim the child relief as well as all the insurance premiums paid for life and medical policies?
iii) I understand that retirement gratuities received due to medical reason is exempted from income tax. Where do we disclose the amount received as there is no mention in the Borang BE?
iv) Will the retirement gratuities received due to medical reason be taxed if the person later decides to take up a new employment or start a business? – FRANCIS
A. SINCE you have retired and have no income for year of assessment 2008 and if you have received your tax return Form BE from the IRB, you should complete and file a “Nil” return to the IRB, together with a cover letter stating that you have no income for 2008. Your wife should fill code 4 = “Diri sendiri, suami tiada punca pendapatan” under Part A5 – “Jenis Taksiran” in her tax return. Your wife can claim the additional RM3,000 relief for you (as husband).
ii) Yes, your wife can elect to claim the child relief. Your wife is also entitled to a claim up to a maximum of RM3,000 for insurance premium paid for her and/or your medical policies as well as a claim up to a maximum of RM6,000 (together with her EPF contributions) for insurance premium paid for her and/ or your life policies.
iii) Sum received by way of gratuities on retirement from an employment, if the director-general of the IRB is satisfied that the retirement is due to ill-health, is exempted from income tax. In practice, your employer would have issued you a Form CP22A (notification of cessation of employment) and you should have obtained a tax clearance from the IRB before your employer released the gratuity sum to you.
There is no requirement to declare the exempted gratuity amount in your Form BE.
iv) There is no specific provision in the tax legislation to cover this position. However, the legislation clearly provides that the director-general of the IRB must be satisfied that the retirement is due to ill-health. Where this criterion has been met, the gratuity would not be taxable. Whether the subsequent taking up of another employment or starting a business may lead to a review by the IRB will depend on the prevailing facts and circumstances.
Q. MY company is giving fuel card worth RM300 per month and mobile phone benefit of RM120 per month. This will not be included in the salary slip, so how do I fill up the EA form?
Also, how do I fill up for goods that I buy at discounted value for RM1,000?
And what is the tax relief for EPF Annuities scheme? – ANG
i) The fuel card of RM300 per month and mobile phone of RM120 per month provided by your company is exempted from income tax with effect from year of assessment 2008. There is no requirement to declare the exempt income in the Form EA or the Form BE.
ii) The purchase of company goods at discounted value up to a maximum of RM1,000 is exempted and not required to be disclosed in the Form EA or Form BE.
iii) The tax relief for EPF Annuities scheme is up to a maximum of RM1,000 per annum.
Q. I HAVE two questions. Can I claim maternity expenses in 2008 if the expenses were borne by myself and not by my company?
I have a parent in a nursing home. Can I claim the nursing home expenses borne by myself? It is the monthly sum paid to the nursing home for the care of my parent – LINDA
A. TAX deduction for medical expenses expended on own self, spouse or child of up to a maximum of RM5,000 is available only if it is in respect of treatment of serious diseases (see box for definition).
Since maternity expenses do not fall within this definition, it is not claimable as a tax deduction.
For your second question, tax deduction for medical expenses expended for own parents is up to a maximum of RM5,000.
Medical expenses that qualify for deduction would include medical care and treatment provided by a nursing home for your parents. You must keep the receipt(s) from the nursing home certifying that nursing home care was provided to your parents as evidence for your claim.
Q. ONE of the points you highlighted in your article “How to pay Less Tax” (Sunday Star, March 15) was that medical benefits exempted from tax include expenses on traditional medicines such as ayurvedic and accupunture. And you mentioned that it is for the year of assesment 2008.
I would appreciate it if you could elaborate on this a little more. As I am taking my son for ayurvedic treatment, can I put it in?
My husband and I are paying for the treatment from our own savings and we are not asking our employer to cover it as a benefit. So, can we put it in our income tax form? What is the maximum amount we can claim and where do we put it? – TAX QUERY CITIZEN
A. MEDICAL benefits which include expenses on traditional medicines such as ayurvedic and acupuncture that are exempted from tax for employees applies only where such benefits are provided by employers.
In your case, since you (and not your employer) are paying for your son’s ayurvedic treatment, this exemption is not applicable to you.
In order to claim the tax relief for medical expenses for your son of up to a maximum of RM5,000, the expenses have to be expended on “serious diseases” (see definition in box). In addition, you are required to obtain a receipt or certificate from a medical practitioner who is registered with the Malaysian Medical Council.
Unless your son’s ayurvedic treatment is for a serious disease and the ayurvedic practitioner is registered with the Malaysian Medical Council, the expenses will not be deductible.
What is serious disease?
Serious diseases is defined to include AIDS, Parkinson’s disease, cancer, renal failure, leukaemia and other similar diseases such as heart attack, pulmonary hypertension, chronic liver disease, fulminant viral hepatitis, head trauma with neurological deficit, brain tumour or vascular malformation, major burns, major organ transplant and major amputation of limbs.
Your tax queries answered
Yes to golf balls and shuttlecocks but no to swimsuits and sports shoes. These are among many specifications related to tax exemption. What makes the cut and what doesn’t, who qualifies and who doesn’t are among the many questions from our readers in response to Sunday Star’s stories last week on how to maximise one’s claims when filing tax returns.
THANKS to the assistance of tax consultant company PremierOne, our readers’ questions have been answered. Below are some of the e-mailed questions. Due to space constraints, the rest will be answered next week.
Q. I AM really confused as to what type of insurance premiums are deductible for life insurance and medical insurance reliefs. I noticed that insurance policies nowadays have both life insurance and medical rolled into one. What is the Inland Revenue Board’s (IRB) new guidelines dated June 6, 2005, on this matter? Where can I get these guidelines? – JOHN LIM
A. THE total tax deduction for life insurance premiums and contribution to an approved pension/employees provident fund is up to a maximum of RM6,000. The total tax deduction for insurance premium for education and medical benefits is up to a maximum of RM3,000.
If you are holding a policy that provides both life insurance and medical coverage, you can request from your insurance company (through the agent that services you) a statement that will show a breakdown of the premium paid in respect of each of the coverage. From these breakdown amount, you may claim a tax deduction for the life insurance premium (together with your EPF contribution) up to a maximum of RM6,000. The medical premium may be claimed (together with the education policy premium, if any) as a tax deduction up to a maximum of RM3,000.
The IRB has issued two Public Rulings and two addenda on the computation of income tax for individuals, including the one you mentioned dated June 6, 2005 (Public Ruling no. 2/2005). The public rulings set out the IRB director-general’s interpretation on the particular tax matters and are issued to provide guidance for the public and IRB officers. All the public rulings can be found and downloaded from the IRB website at www.hasil.org.my under Law and Regulations/Public Rulings.
Q. MY wife and I each bought a personal computer last year and would like to claim the RM3,000 rebate for each computer under our individual names. However, we were told that we are only allowed to claim one personal computer as the rebate is based on family usage and not individual usage.
Can you please clarify this point? Are my wife and I allowed to claim the rebate totalling RM6,000 for both of us as we each bought a new personal computer last year? Our taxes are filed separately. – FAN TEN YAU
A. THE current tax deduction for the purchase of a personal computer for non-business use of up to a maximum of RM3,000 is given on an individual basis once in every three years of assessment.
It is important to note that the RM3,000 maximum claim is for a tax deduction (i.e. to be deducted against your total income to arrive at your chargeable income) and not a rebate (i.e. a rebate is deducted from your income tax charge to arrive at your tax payable). Prior to year of assessment 2007, the relief given was a RM500 rebate given on a household basis once every five years.
In your case, where you and your wife elect for a separate assessment, each of you are eligible to claim a maximum deduction of RM3,000 for your respective purchase to be evidenced by a receipt for the respective claim.
Q. DUE to the increase in petrol/diesel price, other things also increase in price. In order to lighten our expenses, our company pays a monthly allowance, called child transport allowance, for those who have school-going children. This allowance varies depending on the number of children going to school. Can we claim tax exemption on this allowance? – JENNY
A. PURSUANT to the Budget 2009 announcement last year, allowance or subsidies received by employees from their employer for childcare in respect of children will be exempted from income tax with effect from year of assessment 2008. The exemption is restricted to RM2,400 per annum.
Although the relevant statutory order on the allowance is yet to be gazetted to date, the IRB has issued a second addendum to Public Ruling no. 1/2006 (dealing with perquisites from employment) which states that the child must be 12 years of age and below and must be a legitimate child, stepchild or legally adopted child.
The examples given in the ruling sets out situations where the allowance was given to employees for childcare centre, hiring a helper and employing a household domestic maid. Whilst the examples given may not be exhaustive, it is uncertain whether an allowance for child transportation would qualify, until further clarifications from the IRB.
Q. EFFECTIVE from year of assessment 2008, taxpayers are given a relief of up to RM300 yearly for the purchase of sports equipment.
Equipment that are entitled to this relief are those used for sporting activities as defined under the Sports Development Act 1997. I would be pleased if you could provide some examples of the sports equipment that will be entitled to this relief.
It is interesting to note that in the guidebook for the year of assessment 2008 (Buku Panduan Borang B 2008 – pdf version), it is mentioned that sports shoes are excluded.
This may seem as an anomaly as a pair of running shoes may be a major “equipment” used in athletics, a sport defined under the Sports Development Act 1997. – FOOK
A. A TAX deduction is allowed for an amount limited to a maximum of RM300 in respect of expenses expended for the purchase of sports equipment for any sports activity as defined under the Sports Development Act 1997, as evidenced by receipts issued.
The term sports activity is listed in the First Schedule of the Sports Development Act 1997 and ranges from athletics, badminton, canoeing, fencing, golf, recreational, sepak takraw, table tennis to watersport, etc.
You are correct to point out that whilst equipment with short lifespan e.g. golf balls and shuttlecocks have been accepted by the IRB in the Buku Panduan, certain sports attire have specifically been excluded e.g. swimsuits and sports shoes.
Q. MY company, X Sdn Bhd, was formed some time in mid-2006. There are only two directors in the company with equal sharing of the company shares. No profit was made in 2006. However, there was profit at the end of financial year 2007 and dividend was declared and distributed to the shareholders in July 2008.
I would like to know if I am eligible to claim for the difference in the taxed amount as my personal marginal tax is lower than the company tax, which is 20%. Or is it that the dividend distributed is under single-tier tax system of which I don’t even need to declare in the EA and BE form?
My accountant informed me that since the company is new, it should directly be under the new tax system. Is this true? – DARREN
A. IT is not correct to say that since the company is “new”, it would automatically be under the single-tier system.
The single-tier system took effect from year of assessment 2008 onwards. Under this system, there is no need for the company to deduct tax when paying dividends and any dividends distributed by the company will be exempt from tax in the hands of the shareholders.
However, transitional provisions in the tax legislation allow two options for companies with a credit balance in their section 108 accounts as at Dec 31, 2007 when they want to pay dividends to shareholders:
The company can continue to use such credits in the section 108 account to pay franked dividends to shareholders up to Dec 31, 2013 or until the section 108 credits are exhausted whichever comes earlier (subject to certain conditions e.g. dividends must be paid in cash and in respect of ordinary shares.) For small and medium companies, the tax on dividends paid to the shareholders is deducted from the section 108 credit balance based on the highest tax rate for the year of assessment (e.g. 27% for year of assessment 2007).
Alternatively, the company may at any time make an irrevocable election to forgo the right to distribute franked dividends by filing a Form R50 to the IRB and pay dividends under the single-tier system.
Since your personal marginal tax bracket rate is lower than the company tax rate, provided you have sufficient tax credits in the company section 108 accounts, it is more beneficial for the company to declare and pay franked dividends under the transitional provisions, instead of paying single-tier exempt dividend.
Please note that the company, upon paying the dividend, is required to furnish the shareholders with a certificate stating the gross dividend, tax deducted from the dividend and net dividend paid out.
Q. I SEEK further clarification on my following concerns:
i) Travel allowance from home to work place of up to RM2,400: Does this apply to all employees who drive to work daily or only to those provided with such an allowance by the company? If I drive a company car, am I entitled to this exemption?
ii) Telephone and mobile usage: Does this again apply to all who use their mobile phone for company business? Totally or partly?
iii) I drive a company car and use company registered mobile phone. These are translated into income of RM3,000 and RM600 respectively as taxable income. Am I entitled to these extra exemptions? – C.C. YAP
A. THE tax exemption for travel allowance of up to RM2,400 a year is only applicable if you receive such travel allowance from your employer i.e. if your employer provides you such travel allowance, the allowance is not taxable to you. It does not apply to employees where no travel allowance is provided by their employers, though they drive to work.
Similarly, the tax exemption applies where your employer provides you the telephone and mobile phone or pays the bills for the telephone or mobile phone registered in the name of the employee or employer.
You are entitled to the tax exemption on the RM600 mobile phone benefits provided by your employer.
In relation to the company car, we understand that the IRB is currently considering whether to include the benefit value of motor vehicle (in your case the RM3,000) as part of the exempt allowance of up to a maximum of RM2,400 per annum. We anticipate the IRB to issue further guidelines on this.
Q. I WOULD like to know which column in E-filing to fill in details of parking allowance, purchase of own company goods at discounted price and handphone/Internet/phone bills. Are those exempted from tax in YA2008? If so, where do I fill them in as I can’t seem to find an appropriate column to put those in? – ERIC
A. WITH effect from year of assessment 2008 parking allowance, telephone and mobile phone bills, and Internet subscription paid by employers are exempted from income tax.
The purchase of the company’s own goods at discounted price is also an exempted benefit-in-kind, up to a maximum of RM1,000 per year.
Such exempted allowances and benefits-in-kind are not required to be reported in your Form BE or under e- Filing.
Please note that Part G of the Form EA for year ended Dec 31, 2008 provided by your employer would specify the total amount of such exempted allowances/benefits-in-kind/ perquisites.
Q. HOW could we in the private sector cut on our taxes as we fall in the maximum taxable bracket as compared to our peers in the government sector who earn the same and pay less tax as lots of the allowances are non taxable?
A. PURSUANT to the 2009 Budget announcement, with effect from year of assessment 2008, the Government has allowed tax exemptions on various allowances and benefits provided by employers to their employees.
Some examples include subsidised interest given by employers for housing, education or car loan up to RM300,000; travel and petrol allowance for travelling from work to home of up to RM2,400 per year; travel and petrol allowance and toll rate for official duties of up to RM6,000 per year; and allowance for meal, parking and childcare, etc.
Q. I WISH to know whether I can claim on the following:
i) I spent a total of RM7,820.50 for both check-ups and delivery at a hospital for the birth of my son under Section D7 up to maximum RM5,000; and
ii) Cukai Seksyen 110 (lain-lain) dividend received from public listed shares. – CHONG SAU CHAN
A. THE deduction claim under Part D7 is in relation to expenses expended for a complete medical examination which is up to a maximum of RM500. The total deduction for medical expenses on serious diseases under Part D6 is limited to a maximum of RM5,000 and this includes the RM500 for complete medical examination (under Part D7).
The expenses you incurred for check-ups relating to your pregnancy and delivery of your son is not claimable since it does not fall within the two categories of expenses.
If the dividend warrant that you received from the public listed shares shows a gross dividend amount, tax deducted from the dividend and net dividend paid out, it means that the company has to opt to continue using its section 108 tax credits balance to pay franked dividends under the transitional provisions instead of electing to pay exempt dividends under the single-tier system.
Therefore, you should declare the dividend at gross in your tax return: for example, if in 2008 you received net dividend of RM74, you should declare RM100 (and not RM74) as dividend income in your return. However, you can deduct the section 110 tax credits of RM26 against your total tax. Any excess credit will be refunded to you.
Q. I RETIRED in 2007. I have no employment income for YA 2008. My wife is still working. I have a child currently receiving college education. My questions are:
i) Since I have no income for YA 2008, can I elect for combined assessment so that my spouse can claim additional RM3,000 personal relief? Do I have to file separate forms officially to inform the IRB?
ii) Can my spouse claim the child relief as well as all the insurance premiums paid for life and medical policies?
iii) I understand that retirement gratuities received due to medical reason is exempted from income tax. Where do we disclose the amount received as there is no mention in the Borang BE?
iv) Will the retirement gratuities received due to medical reason be taxed if the person later decides to take up a new employment or start a business? – FRANCIS
A. SINCE you have retired and have no income for year of assessment 2008 and if you have received your tax return Form BE from the IRB, you should complete and file a “Nil” return to the IRB, together with a cover letter stating that you have no income for 2008. Your wife should fill code 4 = “Diri sendiri, suami tiada punca pendapatan” under Part A5 – “Jenis Taksiran” in her tax return. Your wife can claim the additional RM3,000 relief for you (as husband).
ii) Yes, your wife can elect to claim the child relief. Your wife is also entitled to a claim up to a maximum of RM3,000 for insurance premium paid for her and/or your medical policies as well as a claim up to a maximum of RM6,000 (together with her EPF contributions) for insurance premium paid for her and/ or your life policies.
iii) Sum received by way of gratuities on retirement from an employment, if the director-general of the IRB is satisfied that the retirement is due to ill-health, is exempted from income tax. In practice, your employer would have issued you a Form CP22A (notification of cessation of employment) and you should have obtained a tax clearance from the IRB before your employer released the gratuity sum to you.
There is no requirement to declare the exempted gratuity amount in your Form BE.
iv) There is no specific provision in the tax legislation to cover this position. However, the legislation clearly provides that the director-general of the IRB must be satisfied that the retirement is due to ill-health. Where this criterion has been met, the gratuity would not be taxable. Whether the subsequent taking up of another employment or starting a business may lead to a review by the IRB will depend on the prevailing facts and circumstances.
Q. MY company is giving fuel card worth RM300 per month and mobile phone benefit of RM120 per month. This will not be included in the salary slip, so how do I fill up the EA form?
Also, how do I fill up for goods that I buy at discounted value for RM1,000?
And what is the tax relief for EPF Annuities scheme? – ANG
i) The fuel card of RM300 per month and mobile phone of RM120 per month provided by your company is exempted from income tax with effect from year of assessment 2008. There is no requirement to declare the exempt income in the Form EA or the Form BE.
ii) The purchase of company goods at discounted value up to a maximum of RM1,000 is exempted and not required to be disclosed in the Form EA or Form BE.
iii) The tax relief for EPF Annuities scheme is up to a maximum of RM1,000 per annum.
Q. I HAVE two questions. Can I claim maternity expenses in 2008 if the expenses were borne by myself and not by my company?
I have a parent in a nursing home. Can I claim the nursing home expenses borne by myself? It is the monthly sum paid to the nursing home for the care of my parent – LINDA
A. TAX deduction for medical expenses expended on own self, spouse or child of up to a maximum of RM5,000 is available only if it is in respect of treatment of serious diseases (see box for definition).
Since maternity expenses do not fall within this definition, it is not claimable as a tax deduction.
For your second question, tax deduction for medical expenses expended for own parents is up to a maximum of RM5,000.
Medical expenses that qualify for deduction would include medical care and treatment provided by a nursing home for your parents. You must keep the receipt(s) from the nursing home certifying that nursing home care was provided to your parents as evidence for your claim.
Q. ONE of the points you highlighted in your article “How to pay Less Tax” (Sunday Star, March 15) was that medical benefits exempted from tax include expenses on traditional medicines such as ayurvedic and accupunture. And you mentioned that it is for the year of assesment 2008.
I would appreciate it if you could elaborate on this a little more. As I am taking my son for ayurvedic treatment, can I put it in?
My husband and I are paying for the treatment from our own savings and we are not asking our employer to cover it as a benefit. So, can we put it in our income tax form? What is the maximum amount we can claim and where do we put it? – TAX QUERY CITIZEN
A. MEDICAL benefits which include expenses on traditional medicines such as ayurvedic and acupuncture that are exempted from tax for employees applies only where such benefits are provided by employers.
In your case, since you (and not your employer) are paying for your son’s ayurvedic treatment, this exemption is not applicable to you.
In order to claim the tax relief for medical expenses for your son of up to a maximum of RM5,000, the expenses have to be expended on “serious diseases” (see definition in box). In addition, you are required to obtain a receipt or certificate from a medical practitioner who is registered with the Malaysian Medical Council.
Unless your son’s ayurvedic treatment is for a serious disease and the ayurvedic practitioner is registered with the Malaysian Medical Council, the expenses will not be deductible.
What is serious disease?
Serious diseases is defined to include AIDS, Parkinson’s disease, cancer, renal failure, leukaemia and other similar diseases such as heart attack, pulmonary hypertension, chronic liver disease, fulminant viral hepatitis, head trauma with neurological deficit, brain tumour or vascular malformation, major burns, major organ transplant and major amputation of limbs.
Checklist to Ensure You Make Maximum Claims Allowed
To make sure that you have not missed out any claims which you are entitled to, please go through the following check list before submitting your Borang BE 2008.
1. Choose Separate Assessment if your spouse has income of RM3,000 or more in a year (as a general rule of thumb)
2. Profession subscriptions
Ensure subscriptions paid to professional bodies related to your job are deducted from Employment Income before filling up item C1. (Eg. Accountants, Engineers, Lawyers, Architects, Doctors)
3. Dividends
Ensure that all dividends received are included. As dividends are taxed at source at 26%, make sure that you declare them in item C2 and claim Section 110 Set off in item E10.
Two exceptions here :-
i) If the dividend received are ‘single tier dividends’, then there’s no need to declare.
ii) If your final tax rate is 27%, then you may have lost your dividend vouchers and forgot all about them. You save the difference of 1%.
4. Interests from bank accounts (Savings, fixed deposits, etc)
These would have been either taxed at source or tax- exempt. No need to declare.
5. Donations or Gifts to the government
As these are not common, I will not discuss them here. Go through the items from C8 – C15.
6. Parent’s Medical Expenses Paid
Keep receipts – Maximum RM5,000
7. Purchase of Equipment for Disabled parents, spouse, children or self
Maximum – RM5,000
8. Disabled persons – Self
Additional RM6,000 relief
9. Own Educational Course Fees Paid
Maximum – RM5,000
10. Medical Expenses for Serious Deceases – Self, spouse or children
Maximum RM5,000
11. Fees paid for Full Medical Examination
Maximum RM500
12. Purchase of books, magazines & journals
Maximum RM1,000 (School books, cookery books, etc. It does not matter who they are for)
13. Purchase of personal computer
Maximum RM3,000 if you have not made a claim in 2007 & 2006
14. Net contribution to SSPN
Maximum RM3,000
15. Purchase of sports equipment
Maximum RM300
16. Husband/Wife Relief
If not assessed separately, RM3,000
17. Disabled Husband/Wife
Additional RM3,500
18. Children Relief
Below 18 years old – RM1,000 each
Above 18 years old and studying in tertiary level – RM4,000 each
Disabled children – Additional RM4,000 on top of the above
19. Life Insurance premium and EPF paid (Self and spouse)
Total maximum RM6,000. If separate assessment, husband and wife claim in own form.
20. Medical and Education Insurance (Self, spouse or children)
Maximum RM3,000
All the claims which are not specific to any person, eg. sports equipment, books, SSPN, children, etc. can be claimed by either husband or wife. Therefore, put those claims on the person who is in a higher tax bracket.
21. Tax Rebate
If your Chargeable Income in Item E3 is RM35,000 or less, you are entitled to RM350 tax rebate (Item E4)
1. Choose Separate Assessment if your spouse has income of RM3,000 or more in a year (as a general rule of thumb)
2. Profession subscriptions
Ensure subscriptions paid to professional bodies related to your job are deducted from Employment Income before filling up item C1. (Eg. Accountants, Engineers, Lawyers, Architects, Doctors)
3. Dividends
Ensure that all dividends received are included. As dividends are taxed at source at 26%, make sure that you declare them in item C2 and claim Section 110 Set off in item E10.
Two exceptions here :-
i) If the dividend received are ‘single tier dividends’, then there’s no need to declare.
ii) If your final tax rate is 27%, then you may have lost your dividend vouchers and forgot all about them. You save the difference of 1%.
4. Interests from bank accounts (Savings, fixed deposits, etc)
These would have been either taxed at source or tax- exempt. No need to declare.
5. Donations or Gifts to the government
As these are not common, I will not discuss them here. Go through the items from C8 – C15.
6. Parent’s Medical Expenses Paid
Keep receipts – Maximum RM5,000
7. Purchase of Equipment for Disabled parents, spouse, children or self
Maximum – RM5,000
8. Disabled persons – Self
Additional RM6,000 relief
9. Own Educational Course Fees Paid
Maximum – RM5,000
10. Medical Expenses for Serious Deceases – Self, spouse or children
Maximum RM5,000
11. Fees paid for Full Medical Examination
Maximum RM500
12. Purchase of books, magazines & journals
Maximum RM1,000 (School books, cookery books, etc. It does not matter who they are for)
13. Purchase of personal computer
Maximum RM3,000 if you have not made a claim in 2007 & 2006
14. Net contribution to SSPN
Maximum RM3,000
15. Purchase of sports equipment
Maximum RM300
16. Husband/Wife Relief
If not assessed separately, RM3,000
17. Disabled Husband/Wife
Additional RM3,500
18. Children Relief
Below 18 years old – RM1,000 each
Above 18 years old and studying in tertiary level – RM4,000 each
Disabled children – Additional RM4,000 on top of the above
19. Life Insurance premium and EPF paid (Self and spouse)
Total maximum RM6,000. If separate assessment, husband and wife claim in own form.
20. Medical and Education Insurance (Self, spouse or children)
Maximum RM3,000
All the claims which are not specific to any person, eg. sports equipment, books, SSPN, children, etc. can be claimed by either husband or wife. Therefore, put those claims on the person who is in a higher tax bracket.
21. Tax Rebate
If your Chargeable Income in Item E3 is RM35,000 or less, you are entitled to RM350 tax rebate (Item E4)
The Star - Steps to lessen the pain
The Star newspaper published an article on 15 March 2009 on steps which a taxpayer should take into consideration when filing their tax returns.
However, this is only for general reading. As each individual's case is different, care must be taken to ensure that the steps taken suits one's tax situation.
The full article can be accessed here.
However, this is only for general reading. As each individual's case is different, care must be taken to ensure that the steps taken suits one's tax situation.
The full article can be accessed here.
Mini Budget - How does it affect your tax ?
How does the mini budget announced by the DPM on 10 Mar 2009 affect us as salaried employees ? Basically, not much.
There are only 2 relevant issues as far as personal tax is concerned.
- Tax exemptions for retrenchment benefits
Under the present law, if you are retrenched and receives retrenchment benefits, you are allowed exemption of RM6,000 on your retrenchment benefits for each completed year of service. This amount has been increased to RM10,000 if you were retrenched on or after 1 July 2008. - Relief for interest on residential housing loans to set off against personal income. If you are buying a residential property and the Sales & Purchase Agreement is dated from 10 March 2009 to 31 Dec 2010, the housing loan interests that you pay can be set off against your personal income, up to a maximum of RM10,000 each year over 3 years from the first year housing loan is paid. The property must also not be rented out.
The other issues which might be of interest, but not tax related are :-
- If you wish to pursue your studies at Master or Ph. D level, the government will subsidise the fees of up to RM10,000 and RM20,000 respectively. These courses must be enrolled in local universities. Full details can be obtained from the Ministry of Higher Education by clicking here.
- If you are retrenched, you can apply to your bank to withhold your housing loan payment to the banks for 1 year.
This is just s delay of payment. The longer you delay the payment, the more interest you will have to pay at the end, although it does provide a breather space for those who cannot fork out the instalment payments now. - If you have extra money, you can buy government bonds for 3 years which give 5% interest per year. The details of this are not yet finalised. Considering housing loans are relatively cheap now (some are offering BLR-2.2%) At the BLR rate at 5.95 now, it may be more beneficial to invest in this bond than to repay the housing loan.
- If you want to change cars, buy a Proton or a Perodua and trade in you old cars (must be more than 10 years old) and get a rebate of RM5,000.
Borang BE 2008 - Personal Information
- Nama – Write your full name as per I/C
- No. Rujukan Cukai – Write down your Income Tax File Number. This usually starts with either SG or OG. “SG” refers to “Salaries Group” meaning your income is mainly from salaried. “OG” refers to “Others Group”
- No. K/P Baru – Write down your New I/C number
- No K/P Lama – Write down your old I/C number
- No. Polis – If you are a police officer, you will have a special ‘Police Identification No.’
- No. Tentera – If you are in the Armed Forces, you will have a special ‘Armed Forces Identification number’
- No. Passport Semasa – The passport number that you are having now. Your passport number will be given to the Immigration Department to stop you from leaving the country if you have defaulted on Income Tax
- No. Pasport Terakhir Didaftar Dengan LHDNM – Your old passport number registered with the IRB
Borang BE 2008 - Section A (Personal details)
A1. Warganegara / Citizenship
Write down your citizenship (‘MY’ for Malaysia). For other countries, please refer to pages 131 – 135 in http://www.hasil.gov.my/cP/upload/Form/Nyata/Buku%20Panduan%20B%202008.pdf
A2. Jantina / Gender
1 - for male
2 - for female
A3. Status pada 31-12/2008 / Status as at 31-12-2008
1 - for Single
2 - for Married
3 - for Widowed
4 - for Dead
A4. Tarikh Kahwin/Cerai/Mati / Date of marriage/divorce/death
Write down the date of marriage/divorce/death
A5. Jenis Taksiran / Type of Assessment
1 for Joint assessment under the husband’s name
2 for Joint Assessment under the wife’s name
3 for Separate Assessment
4 for Individual Assessment where the husband/wife has no taxable income
A6. Ketetapan Umum Dipatuhi / Public Ruling Observed
1 for Yes
2 for No.
What are Public Rulings ? They are rulings issued by the IRB to explain how certain incomes are taxed by the IRB. They are very technical and very detailed and can be confusing. They can be viewed at http://www.hasil.gov.my/english/eng_NO4_5_2.asp
There is only “Yes” and “No” to choose from. You cannot choose “No” because that would be telling the IRB that you have not complied to their rulings. If you put “Yes”, that would imply that you have read and understood all the rulings, which is something not quite possible for non-technical people. There are some experts who advise that we leave this item “Blank” without filling up just to ensure that we are not caught unaware of things we do not know. There is no right or wrong to this practice.
A7. Alamat Surat-menyurat / Correspondance Address
A8. No. Telefon / Telephone Number
A9. No. Majikan / Employers Number
This can be found at the top left hand corner of your Form EA or EC. The number starts with an “E”.
A10. E-mel / E-mail address (if any)
A11. Nama bank / Name of Bank
A12. No. Akaun bank / Bank account number
Information on A11 & A12 is mainly for the IRB to make payment to your bank account directly if there is any overpayment of tax and for repayment cases.
Borang BE 2008 - Section B (Details of husband/wife)
B1. Nama Suami/Isteri / Name of Husband/Wife
B2. No. Rujukan Cukai / Income Tax File number
For explanation on “SG” or “OG”, please refer to item 2 on Personal Information.
Under "Separate Assessment", the wife will have a different Income Tax File number from her husband.
Under "Combined Assessment", the wife’s Income Tax file number is the same as the husband’s except the last digit is 1 instead of 0. (for 1st wife)
For eg. Husband’s file No. SG12345678-90(0)
1st. wife’s file No. SG12345678-90(1)
2nd. wife’s file No. SG12345678-90(2)
B3. No. K/P Baru / New I/C No.
B4. No. K/P Lama / Old I/C No.
B5. No. Polis / Police Identification No. (if applicable)
B6. No. Tentera / Armed Forces Identification No. (if applicable)
B7. No. Pasport / Passport No.
Borang BE 2008 - Section C (Statutory & Total Income)
C1. Employment Fill up your total employment income shown in the ‘Total’ row just before item ‘D’ in your Form EA. If you have any claimable expenses which has not been taken into account by your employer, you may deduct them from this total figure and put the net amount. The claimable deductions include :- i) Any subscriptions paid to professional bodies related to your job or profession, eg. Malaysian Institute of Accountants, Architects Board, Engineers Board, etc. ii) Additional travelling expenses on top of the exemptions of RM6,000 for official purposes, supported by receipts and evidence of travel C2. Dividends List your dividends received in 2008 in the Work Sheet enclosed with the Form BE (HK-3). Put the total Gross Dividend marked “X” in here. For tax-exempt dividends, they are not required to be listed. Note that only Dividends received from companies only be listed. Dividends received from Unit Trust companies are to be declared in C6 (Other income) C3. Interests or Discounts This does NOT included the interests from banks’ savings or fixed deposit accounts. They are already taxed at source or exempted. C4. Rent, royalty and premium i) Rent - Net rental only needs to be reported. Keep a record of gross rent received less allowed expenses. If rental loss, put ‘0’. What expenses can be claimed from rental income ? ii) Royalty – Please note that some royalties are tax-exempt. iii) Premium – Not common C5. Pension, annuity and other scheduled payment i) Pension - derived from Malaysia due to ill health or retirement upon reaching the age of 55 years is exempted ii) Annuity – Annuity income from estates of deceased persons or trust funds iii) Other scheduled payments – Others not mentioned above C6. Other income or profits Other income which is taxable only. This include Dividends received from Unit Trust companies. Method of calculation is the same as dividends received from companies. C7. Aggregate income Total of C1 to C6 C8. Donations to government or local government C8A. Donations to approved institution or organisations. In order to know if your donation is to an approved institution or organisation, please check the official receipts if it is stated that it is exempted from tax under Sec.44(6) of the Income Tax Act, 1967. Alternatively, the IRB's website has a list of all approved donations. C9. Donations or contributions to approved sports organisations. C10. Donations to approved projects Total amount can be claimed from C8A to C10 is subject to a maximum of 7% of Aggregate Income (C7). (Increased to 10% from 2009.) C11. Gift of artefacts, manuscripts or paintings C12. Donations to libraries (maximum RM20,000) C13. Donations or gifts for public amenities for the disabled C14. Donations or gifts to any medical bodies approved by the Ministry of Health (maximum RM20,000) C15. Gift or paintings to the Balai Seni Lukis Negara/National Art Gallery C16. Total Income (self) C7 less C8 to C15 C17. Income aggregated from husband or wife for combined assessment Only if you have opted for combined assessment. C18. Total combined income C16 + C17
Borang BE 2008 - Section D (Personal Reliefs)
D1. Personal Relief – RM8,000 fixed.
D2. Parents’ medical expenses – Maximum RM5,000
Payments made for the medical treatment of parents must be supported by invoices and receipts. This can either be outpatient treatments or hospitalisation.
If payment is shared by a number of children, then each children can claim his/her share provided he/she can show proof that he/she has incurred such payment. To be on the safe side, get the hospital to “Certify True Copy” on photocopies of invoices and receipts.
D3. Basic supporting equipment for own usage, wife/husband, children or parents who are disabled. – RM5,000
To be eligible to claim, the claim must be supported by invoices and receipts. There must be a confirmation from the relevant authorities (eg. The Social Welfare Dept) to certify the disability of the person affected.
D4. Disabled individuals – RM6,000
This is in addition to the Personal Relief in D1. Again, certification by the relevant authority is required.
D5. Own study fees – Maximum RM5,000
Fees expended for courses at institute of higher learning in Malaysia or any institution or professional body in Malaysiar ecognised by the government or approved by the Ministry of Finance
i) For studies up to tertiary level in the field of law, accounting, technical, vocational, industrial, scientific, information and technology and Islamic financing
ii) For Masters level and above, any subject
Note for tax planning : If you need to pay RM10,000 for a course, try to spread out so that you pay RM5,000 in Dec and RM5,000 in Jan the following year, in that case, you will be able to claim the full RM10,000 in 2 years.
D6. Medical expenses incurred for chronic or serious diseases for self, husband/wife or children (Note that parents are not included) – Maximum RM5,000
Chronic or serious diseases include AIDS, Parkinson’s syndrome, cancer, renal failure, leukaemia, heart attacks, pulmonary hypertension, chronic heart diseases, fulminant viral hepatitis, neurological deficit head trauma, brain tumour, etc.
Note : Get the medical doctor to certify that it is a serious disease. Receipts must be kept to justify claim.
D7. Full medical examination for self, husband/wife or children (Note that parents are not included) – Maximum RM500
Only FULL medical examinations can be claimed. If you just do a blood test, this is not included.
The total claim for D6 and D7 must not exceed RM5,000.
D8. Purchase of books/magazines/journals (Note that newspaper is not included) – Maximum RM1,000
All original book receipts are acceptable. The IRB had stated that even receipts issued by road-side book sellers are valid.
D8A. Purchase of personal computer – Maximum RM3,000
You can only claim this relief once every 3 years.
D8B. Net savings in the National Education Savings Scheme (SSPN) – Maximum RM3,000
Net savings refers to the amount deposited minus amount withdrew during the year.
D8C. Purchase of sports equipments for sports activities under the Sports Development Act – Maximum RM300.
Note not all sports are eligible. Refer to "Purchase of Sports Equipment for Tax Deductions"
D9. Husband/wife relief – Maximum RM3,000
For ex-husband or ex-wife, if the actual alimony paid is less than RM3,000 a year, then the amount claim is restricted to the actual amount paid.
D10. Disabled husband/wife – RM3,500
D11. Child relief
D11a – Children below 18 years of age – RM1,000 per child
D11b – Children above 18 years of age
- RM1,000 if the child is studying full time
- RM4,000 if the child is studying full time at diploma level and above in Malaysia
- RM4,000 if the child is studying full time at degree level and above overseas.
D11c – Disabled child – RM5,000
- RM9,000 if the child is 18 years of age and above and studying as D11b above
Why is there a 50% column ? This is only for cases where husband and wife wishes to claim half the child relief, for example for divorced parents where each bears half of the children’s expenses.
D12. Life Insurance & EPF – Maximum RM6,000
Only life insurance and EPF is included in this category. For medical insurance, you can claim under D13.
D13. Education and Medical Insurance – maximum RM3,000
This include medical and educational insurance for self, husband/wife and children.
Borang BE 2008 - Section E (Tax Payable)
E1. Total Chargeable Income
C18 – D14. If the amount is negative, write ‘0’
E2. Calculation of Income Tax Payable
(Refer to the Income Tax Rates Table on Page 10)
For example, if you the amount in E1 is RM45,678, then you fall under Category FG.
E2a. First RM35,000, tax is RM1,525
E2b. Tax on balance of RM10,678 – Rate 13% = RM1,388.14
Note that Income Tax is calculated to 2 decimal points.
E3. Total Income Tax Payable
E2a + E2b
LESS : Tax Rebates
E4. Individual Tax Rebates
This is applicable if your chargeable income in E1 is not more than RM35,000
E5. Husband/Wife’s Tax Rebate
This is applicable if your chargeable income in E1 is not more than RM35,000 AND you have claimed Husband/Wife Relief in D9.
Not applicable if you chose separate assessment in A5.
E6. Zakat or Fitrah
Only Zakat or Fitrah paid in Malaysia is approved.
E7. Fee or Levy paid for Employment Pass
If you are a foreigner and is a tax resident under Section 7 of the Income Tax Act, then you are eligible to claim the fees or levy paid to the Immigration Department.
E8. Total Rebates
Total of E4 to E8
E9. Total Income Tax Chargeable
E3 – E8
LESS :
E10. Section 110 Set-off (Dividends)
When calculating Dividend Income in C2, you would have used the Work Sheet HK-3 to obtain the Total Gross Dividend marked ‘X’ in the HK-3, The figure in the column marked ‘Y’ is to be put in this column.
E11. Section 110 Set-off (Others)
If you received dividends from Unit Trust companies and declared them in C6, then the Section 110 set off from these dividends is included here.
E12. Section 132 Relief
This refers to foreign income received which are already taxed in the foreign country, where Malaysia has a Double Taxation Agreement with that country. Eg. dividend income from Singapore Public Listed companies.
E13. Section 133 Relief
This is similar to E12 except that the foreign country does NOT have a Double Taxation Agreement with that country.
E14. TAX PAYABLE
E9 - (E10 + E11 + E12 + E13). If negative, write ‘0’ and write the amount (without the negative sign) in E15.
E15. OR : TAX REPAYABLE
If E14 is negative, the figure, without the negative sign, should be written here.
C18 – D14. If the amount is negative, write ‘0’
E2. Calculation of Income Tax Payable
(Refer to the Income Tax Rates Table on Page 10)
For example, if you the amount in E1 is RM45,678, then you fall under Category FG.
E2a. First RM35,000, tax is RM1,525
E2b. Tax on balance of RM10,678 – Rate 13% = RM1,388.14
Note that Income Tax is calculated to 2 decimal points.
E3. Total Income Tax Payable
E2a + E2b
LESS : Tax Rebates
E4. Individual Tax Rebates
This is applicable if your chargeable income in E1 is not more than RM35,000
E5. Husband/Wife’s Tax Rebate
This is applicable if your chargeable income in E1 is not more than RM35,000 AND you have claimed Husband/Wife Relief in D9.
Not applicable if you chose separate assessment in A5.
E6. Zakat or Fitrah
Only Zakat or Fitrah paid in Malaysia is approved.
E7. Fee or Levy paid for Employment Pass
If you are a foreigner and is a tax resident under Section 7 of the Income Tax Act, then you are eligible to claim the fees or levy paid to the Immigration Department.
E8. Total Rebates
Total of E4 to E8
E9. Total Income Tax Chargeable
E3 – E8
LESS :
E10. Section 110 Set-off (Dividends)
When calculating Dividend Income in C2, you would have used the Work Sheet HK-3 to obtain the Total Gross Dividend marked ‘X’ in the HK-3, The figure in the column marked ‘Y’ is to be put in this column.
E11. Section 110 Set-off (Others)
If you received dividends from Unit Trust companies and declared them in C6, then the Section 110 set off from these dividends is included here.
E12. Section 132 Relief
This refers to foreign income received which are already taxed in the foreign country, where Malaysia has a Double Taxation Agreement with that country. Eg. dividend income from Singapore Public Listed companies.
E13. Section 133 Relief
This is similar to E12 except that the foreign country does NOT have a Double Taxation Agreement with that country.
E14. TAX PAYABLE
E9 - (E10 + E11 + E12 + E13). If negative, write ‘0’ and write the amount (without the negative sign) in E15.
E15. OR : TAX REPAYABLE
If E14 is negative, the figure, without the negative sign, should be written here.
Borang BE 2008 - Section F - H
Section F : Tax Status for the Year of Assessment 2008
F1. Tax Payable
From E14.
LESS :
F2. Scheduler Tax Deductions (STD) paid in 2008 (Item D[1]) in your Form EA.
Include those of your husband/wife if you had chosen ‘Combined Assessment’ in A5 and has declared his/her income in C17.
F3. Balance of Tax Payable
F1 – F2
The balance of tax payable must be settled before 30 April 2009. You can make payment at any payment counter at Public Bank or CIMB Bank. Fill up the details using the payment slip CP501 attached in the Form BE.
F4. OR : Tax Overpaid
F2 – F1.
Section G : Prior Years Income Not Reported Previously
G1. – G5
If you are a salaried employee, this will be shown in Item F in your Form EA. Just copy exactly the same thing to here.
Section H : Estate Administrator’s Information
If the person named in the Form BE is deceased, you have to fill up the details of the authorised administrator of the estate.
F1. Tax Payable
From E14.
LESS :
F2. Scheduler Tax Deductions (STD) paid in 2008 (Item D[1]) in your Form EA.
Include those of your husband/wife if you had chosen ‘Combined Assessment’ in A5 and has declared his/her income in C17.
F3. Balance of Tax Payable
F1 – F2
The balance of tax payable must be settled before 30 April 2009. You can make payment at any payment counter at Public Bank or CIMB Bank. Fill up the details using the payment slip CP501 attached in the Form BE.
F4. OR : Tax Overpaid
F2 – F1.
Section G : Prior Years Income Not Reported Previously
G1. – G5
If you are a salaried employee, this will be shown in Item F in your Form EA. Just copy exactly the same thing to here.
Section H : Estate Administrator’s Information
If the person named in the Form BE is deceased, you have to fill up the details of the authorised administrator of the estate.
Borang BE 2008 - Declaration
Declaration
If you are filling the Form for yourself, then write down your details and put ‘1’ in the box just above the ‘Date’.
If you are filling up the form on behalf of another person, the you should write down your details but put ‘2’ in the column just above the “Date’.
Remember that the deadline for filing Form BE is 30 April 2009. So do not date the declaration later than this date.
Tax Agent’s Details and Signature of Person Preparing This Form
If you are using an approved tax agent to help you to fill up this form, then your tax agent will complete this section and sign.
If you are filling the Form for yourself, then write down your details and put ‘1’ in the box just above the ‘Date’.
If you are filling up the form on behalf of another person, the you should write down your details but put ‘2’ in the column just above the “Date’.
Remember that the deadline for filing Form BE is 30 April 2009. So do not date the declaration later than this date.
Tax Agent’s Details and Signature of Person Preparing This Form
If you are using an approved tax agent to help you to fill up this form, then your tax agent will complete this section and sign.
What expenses can be claimed from rental income ?
Rental income is taxed based on the net amount derived at by deducting from the gross rental income from the year ‘allowable expenses’
Allowable expenses include :-
Allowable expenses include :-
- Brokerage fees paid to brokers to secure the tenant
- Monthly maintenance fees paid to property management bodies
- Quit rent and assessment
- Insurance paid for that property
- Repais and maintenance on the property
- Interest paid to bank for loan taken to finance the property for rent
- Legal fees and stamp duties paid for RENEWAL of tenancy agreement. Note that the first fees paid for the first time is not allowed.
- Furniture or fittings REPLACED during the year. Please note that the initial purchase of furniture or fittings are not allowed.
- lf you have more than 1 properties, pay off your loan for the property that you are not renting first, then only pay off the property that you are staying in.
- If you rent out fully furnished properties, you can furnish it with cheap furniture first. Replace them with new or more expensive furniture during the tenancy and claim the replacement cost.
Subscribe to:
Posts (Atom)
