The IRB has finally issued the Third Addendum to Public Ruling No. 1/2006 on 29 July 2009 (view here) to clarify that per diem received is exempted, thus officially reversing their Second Addendum issued on 25 February 2009.
So what happen to all those taxpayers who included per diem received in 2008 in their tax returns ?
Understanding Income Tax issues are already complicated enough for the ordinary taxpayers, the IRB should stop being so frickle minded and make a public ruling without considering the effects on taxpayers and the to reverse it with another public ruling, especially after the tax filing deadline.
Why the fuss with PCB deductions 2009 ?
PCB deductions used to be a simple tax collection process imposed by the IRB. How much is your income for a month, follow the table provided by the IRB, follow the amount of estimated income tax payable and that amount is deducted from your monthly salary and remitted to the IRB.
At the end of the year, you receive the Borang EA from your employer and you calculate how much actual tax you have to pay, taking into account the relieves you have, claims, exemptions, rebates, etc and you fill up the Borang BE, send to the IRB and pay the difference between your actual tax and the total PCB deducted for the year.
If your total PCB deducted for the year is higher, then you get a refund from the IRB.
However, things get really complicated since January 2009. The PCB table is changed, calculation of PCB become totally impossible without a payroll software, TP1, TP2, etc.
Why has the PCB turned into something so complicated ?
The reason is this: The Malaysia IRB wishes to follow its counterpart is Singapore in implementing a system where all salaried employees will not have to file their tax returns (Borang BE) in future.
Refer to the Singapore’s Straits Times report on 7 May 2009 below.
http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_373767.html
The system will make the PCB a Final Tax, as opposed to an Estimated Tax as at now.
We are in the first year that the IRB is gearing towards this system. That is why there are so many teething problems and adjustments needed. How long more before the IRB can fully implement the Final Tax via PCB system is yet to be seen.
At the end of the year, you receive the Borang EA from your employer and you calculate how much actual tax you have to pay, taking into account the relieves you have, claims, exemptions, rebates, etc and you fill up the Borang BE, send to the IRB and pay the difference between your actual tax and the total PCB deducted for the year.
If your total PCB deducted for the year is higher, then you get a refund from the IRB.
However, things get really complicated since January 2009. The PCB table is changed, calculation of PCB become totally impossible without a payroll software, TP1, TP2, etc.
Why has the PCB turned into something so complicated ?
The reason is this: The Malaysia IRB wishes to follow its counterpart is Singapore in implementing a system where all salaried employees will not have to file their tax returns (Borang BE) in future.
Refer to the Singapore’s Straits Times report on 7 May 2009 below.
http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_373767.html
The system will make the PCB a Final Tax, as opposed to an Estimated Tax as at now.
We are in the first year that the IRB is gearing towards this system. That is why there are so many teething problems and adjustments needed. How long more before the IRB can fully implement the Final Tax via PCB system is yet to be seen.
Rebates to be Deducted Monthly ?
The following article appeared in The Star newspaper on 6 August 2009.
Thursday August 6, 2009
Taxpayers can now have rebates deducted monthly
KUALA LUMPUR: The Schedular Tax Deduction (STD) scheme has been reviewed to enable the deduction of rebates and relief to be done on a monthly basis, Inland Revenue Board chief executive officer Datuk Hasmah Abdullah said.
Previously, she said rebates and relief were only taken into account when taxpayers claimed for it when they filed their income tax returns annually.
“By deducting on a monthly basis, we can have real-time payment of taxes due,” she said, adding that this was in line with the agency’s policy to provide the best service to the public by emphasising on accuracy of information.
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If I refer to the Borang TP1 now, there are already columns to state your rebates for :-
1. Zakat paid (Column D1)
2. Fees/Levy for employment permits paid (Column D2)
The only other rebates not stated is the personal rebates for those taxpayers with Chargeable Income of RM35,000 or less.
However, this rebate would have been taken into account when the employers input the data from Borang TP1 into their payroll system. The payroll system would have incorporated the personal rebates into their calculation to generate a new PCB deduction amount.
This is yet another confusing statement made by the IRB and picked up by the media without any substantial impact on the employees.
Thursday August 6, 2009
Taxpayers can now have rebates deducted monthly
KUALA LUMPUR: The Schedular Tax Deduction (STD) scheme has been reviewed to enable the deduction of rebates and relief to be done on a monthly basis, Inland Revenue Board chief executive officer Datuk Hasmah Abdullah said.
Previously, she said rebates and relief were only taken into account when taxpayers claimed for it when they filed their income tax returns annually.
“By deducting on a monthly basis, we can have real-time payment of taxes due,” she said, adding that this was in line with the agency’s policy to provide the best service to the public by emphasising on accuracy of information.
------------------------------------------------------------------------------------
If I refer to the Borang TP1 now, there are already columns to state your rebates for :-
1. Zakat paid (Column D1)
2. Fees/Levy for employment permits paid (Column D2)
The only other rebates not stated is the personal rebates for those taxpayers with Chargeable Income of RM35,000 or less.
However, this rebate would have been taken into account when the employers input the data from Borang TP1 into their payroll system. The payroll system would have incorporated the personal rebates into their calculation to generate a new PCB deduction amount.
This is yet another confusing statement made by the IRB and picked up by the media without any substantial impact on the employees.
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