Personal Income Tax E-Filing For First Timers in Malaysia
By Kian Ng
6 commonly asked questions with regards to personal income tax e-filing for first-time tax-payers.
Q1. What Is Defined As “Income”?
You must pay income tax on all types of income, including income from your business or profession, employment, dividends, interest, discounts, rent, royalties, premiums, pensions, annuities, and others.
For salaried employees, this not only includes your monthly salary, but also things like bonuses, overtime, commissions, and all other taxable income that you received in that particular year.
Q2. Who Needs To Pay Income Tax?
Any individual earning more than RM34,000 per annum (or roughly RM2,833.33 per month) after EPF deductions has to register a tax file.
You don’t have to pay taxes in Malaysia if you have been employed in the country for less than 60 days or for income that is earned from outside Malaysia.
It is advisable for those who earn lesser than the amount stated earlier to also file in their tax to keep a good record of their credit history.
Understanding Tax Rates And Chargeable Income
Here are the income tax rates for personal income tax in Malaysia for YA 2019 (i.e. Year of Assessment 2019).
Your annual taxable income is RM48,000. Based on this amount, the income tax to pay the government is RM1,640 (at a rate of 8%). However, if you claimed RM13,500 in tax deductions and tax reliefs, your chargeable income would reduce to RM34,500. This would enable you to drop down your tax bracket to 3% instead. Which means, you only require to pay RM585. That’s a difference of RM1,055 in taxes!
Please note that chargeable income is your taxable income AFTER deducting any tax deductions and tax relief. It’s very important you know how it works because as you can see, the tax rate you are charged with increases as your chargeable income does. The more you reduce your chargeable income through tax reliefs, the lesser your final tax amount will be!
Q3. When Do I Need To File (Submit) Online for My Income Tax Form?
For the BE form (resident individuals who do not carry on business) the deadline is usually mid-May for e-Filing.
This year, that should 15 May May 2020 via e-Filing.
For the B form (resident individuals who carry on business) the deadline is usually the end of mid-July for e-Filing.
This year, that should be 15 July for e-Filing.
Important note: The Inland Revenue Board (IRB) in a statement in Mar 2020 announced that deadline to submit income tax return forms has been extended for 2 months due to the Movement Control Order (MCO) which is starting from March 18 until March 31. You can file your taxes online via ezHASiL on the LHDN website.
Q4. How Do I File My Income Tax – Is There A Form To Fill
Step 1. Register as a first-time taxpayer on LHDN e-Daftar
Before you can file your taxes online, you need to be able to log into ezHaSiL. To do so, you need to do the following.
Register on e-Daftar to get your income tax number.
Step 2. Log in to ezHASiL and access e-Filing
Once you have successfully logged into ezHASiL, click on e-filing.
Step 2. Select Your Income Tax Return Form (ITRF)
Here are the different types of ITRFs depending on which category you fall under as shown below. Select the appropriate one relevant to you. For example, if you are employed, you would select e-BE.
Once you are able to access to the right e-form, go right down to the bottom and start filling in all figures required. You can choose to view your form in either English or Bahasa Melayu. The images cropped below are breakdown of what a BE form for residents earning income without a business will look like.
Step 3. Filling Up Your Form – Individual Particulars
In this section, check to see that your personal details are displayed correctly on the form. Here are a few things to take note:
Type of assessment – whether you are doing filing together or separately with your spouse, and so on.
Incentive under section 127 refers to the Income Tax Act 1976. It is only applicable to those who have incentives claimable as per government gazette or with a minister’s approval letter.
A TAC via SMS which is needed to sign and submit your e-form will be sent to your handphone number registered to LHDN, so ensure it is correct.
Tax refund, if applicable, will be routed to bank account number provided.
Disposal of asset under the Real Property Gains Tax Act 1976 – relevant if you have sold any property last year.
Step 4. Filling Up Your Form – State Your Income
Under statutory income, fill out all the money you earned from employment, rents, and other sources in the respective boxes. This is what your EA form (provided by your employer) states with your annual income earned from your employer. However, there are several reasons why you shouldn’t accept the annual income stated on your EA form as the final figure for your statutory income from employment such as benefits-in-kind such as cars, accommodation, and etc.
Once you have keyed in all your statutory income, the form will automatically total it up to show your aggregate income.
Step 5. Filling Up Your Form – Tax Reliefs and Rebates
The next step will be to move on to any tax deductions you may be eligible for so you can lessen your aggregate income.
At the bottom of this section, you need to key in the total monthly tax deductions (MTD) paid during your year of assessment. MTD or Potongan Cukai Bulan (PCB) is the compulsory mechanism where employers deduct monthly tax payments from a taxable employee’s salary. You can find this amount on your EA form (provided by your employer).
The full list of tax reliefs you can claim for is on the LHDN website.
Once all your tax reliefs have been claimed, your chargeable income determined, for all Muslim tax payers, you can claim for any tax rebates for. Zakat and fitrah can be claimed as a tax rebate for the actual amount expended up until the total tax amount.
For example, if your employment income is RM50,000 a year and you have claimed RM15,000 in tax reliefs. This would bring your chargeable income down to RM35,000 and the amount of tax you have to pay is RM600. If you have contributed RM400 in the last year on zakat, you can minus that amount from the RM600 and end up with a final tax amount of RM200 to pay.
Step 6. Filling Up Your Form – Summary
On this page, you should see the final tax amount displayed. You will have either one of two scenarios, either the figure displayed is positive or negative.
Don’t worry if your tax amount is in the negative, this is due to amount paid through MTD – which means you will get a tax refund from LHDN.
This page allows you to cross check on all figures keyed in by going go through the form again and amend it, if any. Once you are certain your form, click “Continue”.
On the declaration page, request a TAC via SMS from the number you have registered with LHDN and key it in. Next, click the sign and submit button, enter your identification number and password in the pop-up, and press the sign button. Now, you’re done with filing your income taxes for the year of assessment!
REMINDER: Before you exit the website, make sure to save and print the acknowledgement and e-BE form for record-keeping purposes. All income taxpayers shall keep their records for at least 7 years just in case LHDN randomly selects any taxpayers to justify their income tax payment for previous years.
Q5. Can I Amend My Submitted Tax Form?
Once you’ve submitted your form, you cannot make any further changes to it online via e-Filing. If you wish to make any amendments to your income tax declaration, you need to submit an appeal for amendments on or before 30 April 2020.
Q6. After Submitting, How Do I Pay Your Income Tax?
Now that you’ve filed your taxes and determined your final tax amount, you’ll find yourself in either one of two scenarios;
You may find that your final tax amount while filing is lesser compared to what was has been deducted due to tax reliefs. Thus, you will be eligible for a tax refund from LHDN, credited to the bank account you’ve provided (in Step 3) within 30 working days after tax submission.
However, if you still owe LHDN some unpaid taxes, you’ll have to pay them before the due date which is 30 April 2020. The list of how to make payment is available on LHDN website.
If you pay your taxes late, a penalty of 10% will be imposed on the balance of tax unpaid after the deadline of 30 Jun 2020. If the tax and penalty is not paid within 60 days, a further penalty of 5% will be imposed on the amount owed.
Do you have any inquiries or tips about tax filing? Share with us in the comment section below.