Check how much income tax you’ll pay with the latest tax rates and compare it to what you have paid last year.
The most important part of income tax is knowing how much you owe the Inland Revenue Board. The second most important part is knowing which tax reliefs apply to you; especially as new reliefs are included while old ones get removed every year.
Here, we will run down the basics of what you need to know to get through tax season.
Any individual earning a minimum of RM34,000 after EPF deductions must register a tax file. This translates to roughly RM2,833 per month after EPF deductions, or about RM3,000 net. It should be noted that this takes into account all your income, and not only your salary from work.
While you must file your taxes, you may not necessarily have to pay anything due to tax reliefs and rebates.
The RM6,000 tax relief for serious medical treatment has been extended to cover IVF and fertility treatments. Additionally, the tax relief for parents with children in kindergartens and childcare centres has been increased from RM1,000 to RM2,000.
Additionally, the tax rate on those earning more than RM2 million per year has been increased from 28% to 30%.
There are 21 tax reliefs available for individual taxpayers to claim. You just need to be aware of these reliefs and make a point of keeping the receipts when you expend money in these areas. Some of the easiest tax reliefs to leverage are:
As of 2014, Malaysians no longer need to submit tax returns and can use Monthly Tax Deduction as their final tax payment. MTD is a mechanism in which employers deduct monthly tax payments from the employment income of their employees.
Employers rely on an employee’s personal data submitted to their Human Resource department to compute monthly MTDs. However, in order for the MTD amount to be accurate you will need to provide more information to your employers.
You will need to submit a Form TP1. It is in this form you should state other reliefs that you are entitled to, to facilitate the computation of MTD. Reliefs that can be included in the form are:
With all the above information provided by the employees, the employer will then remit the correct MTD amount to the Inland Revenue Board (IRB) of Malaysia every month.
Individual taxpayers must meet the following criteria in order to avoid filing for tax again when tax season comes along:
However, if you opt to file for your tax, you still do so before the deadline every year.
If you are married, there are a few things you need to consider when deciding whether to file for joint or separate assessment with your spouse. Making the right decision will maximise tax savings for you and your spouse.
Choosing the appropriate filing status is a major tax decision for newlyweds. According to Section 45 of Malaysia’s Income Tax Act 1967, all married couples in Malaysia have the right to choose whether to file individual or joint taxes.
As a general rule of thumb, if both spouses are earning high incomes in the year of assessment, it is always recommended to opt for separate assessment to leverage on the tax reliefs and deductibles available.
Here are the differences between separate and join assessment:
With our income tax calculator, you can roughly estimate how much tax savings you will be able to make when you file for your tax in 2019. There’s still time for you to carefully plan your purchases to maximise your tax reliefs!
If you still have questions, visit our income tax guide for more information on existing regulations and how they apply to you.