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15 Common Questions Beginners Ask About Income Tax

BY Team Loanstreet

Updated 18 Mar 2024




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*The content and information on this article might be changed or updated periodically by Team Loanstreet without notice.


Each year you have to go through the ordeal to file your tax return, which can be a tedious task for you. With the help of this article, you will get to know exactly what you require to file your taxes and the easiest way to do it. This article includes any new additions and changes that have been made to the taxation rule for the years 2023/2024.
 

What's covered in this article?


Tax is imposed on every individual as a compulsory contribution to state revenue, levied by the government on working people’s income and business profits. In Malaysia, you are liable to yearly tax payments if your income is accrued or derived from Malaysia.


While you are preparing to file your taxes, you should understand the following terms:

 

1. What is taxable income?


It is the base upon which the income tax system imposes tax.
 

2. What is tax exemption?


Tax exemptions are certain monetary exemptions that can be claimed to reduce your taxable income. These items are completely removed from your taxable income, unlike tax reliefs which are deducted from your taxable income.
 

3. What is tax relief?


It is the amount which can be deducted from your annual income to reduce your taxable income. To get a better understanding on the categories where you can receive tax relief, read our article Understanding Tax Reliefs
 

Some of the changes and additions made to tax relief are as follows:
 

Item Tax Relief Amount
Medical expenses

i) Serious diseases, Fertility treatment, and Vaccination.

ii) Complete medical examination, COVID-19 detection test, and Mental health examination or consultation.

iii) Expenses for children aged 18 and below:
  • Assessment of intellectual disability diagnosis
  • Early intervention program / intellectual disability rehabilitation treatment
From RM 8,000 to RM 10,000


4. What is tax rebate?


Tax rebates also known as tax returns is a reduction in your tax expenditure after you have calculated your tax for the year.

  • If your chargeable income does not exceed RM 35,000 you will receive a rebate of RM 400.

  • Rebates for Zakat, Fitrah, or other Islamic religious events are also applicable for rebate.
     

Now that you are familiar with the above terminologies, you can use the following questions as a guide to filing your taxes:
 

5. Are you a tax resident?


Yes, if you are residing in Malaysia for at least 182 days in a calendar year.
 

6. Are you taxable?


You are if your income is more than RM 5,000 per year.
 

7. How much tax is imposed if you are a resident individual?


The tax rates changes according to the level of your chargeable income as shown below:

 

  Chargeable Income (RM) Rate (%) Tax Payable (RM)
On the first 5,000 0 0
On the next 15,000 1 150
On the first 20,000 3 150
On the next 15,000 3 450
On the first 35,000 6 600
On the next 15,000 6 900
On the first 50,000 11 1,500
On the next 20,000 11 2,200
On the first 70,000 19 3,700
On the next 30,000 19 5,700
On the first 100,000 25 9,400
On the next 300,000 25 75,000
On the first 400,000 26 84,400
On the next 200,000 26 52,000
On the first 600,000 28 136,400
On the next 1,400,000 28 392,000
On the first 2,000,000 30 528,400
Above 2,000,000 30  

 

Now, you must be wondering what is chargeable income?

It can be simplified into a formula as follows:

Chargeable Income = Taxable income – Tax exemptions – Tax Reliefs
 

8. Are there any changes in tax rate for resident individuals from the previous year?


Yes, for the year 2016, tax rates for resident individuals whose chargeable income is from RM 600,001 to RM 1,000,000 has increased by 1% and chargeable income exceeding RM 1,000,000 has increased by 3%.
 

9. How much tax is imposed if you are a non-resident individual?

 
Type of income Tax rate
Public entertainer’s professional income 15%
Interest 15%
Royalty 10%
Rental of movable property or service charge from use of property/plant/machinery 10%
Business and employment income Increased from 25% to 28%
Income other than the above 10%

 

10. What other items are taxable?

 
  • Perquisites - benefits or perks that come with your employment that can be converted into monetary value are taxable including bill claims, company credit cards, company loans, sponsored club memberships, sponsored child tuition fee, personal driver and any other benefits offered by your employer that could be converted into cash.

  • Benefits in kind (BIK) are also taxable. Benefits in kind are benefits or perks that come with your employment that could not be converted into monetary value like cars, lodging, electronics and home furnishing.
     

11. What is the deadline for filing your taxes? Which form should you fill?

 
Form Type Due Date
BE Form Individuals without business source 30th April every year
B Form Individuals with business source 30th June every year
M Form  Non-resident without business source 30th April every year
M Form Non-resident with business source 30th June every year
P Form  Partnership 30th June every year

 

12. What documents should you prepare before filing your taxes?

 
  • Form EA/EC: This form is collected from your employer that mentions the amounts of tax you need to pay and how much tax have been paid by your employer on your behalf.

  • To Choose Form BE or Form B?
    Your source of income will determine the type of form you have to fill up. You can now also do this online at www.hasil.gov.my

  • What records should you keep?
    Receipts for preceding 7 years from the date of filing, which have been used as evidence of tax reliefs.
     

13. Where can you file your tax return in the quickest possible way?

 

In the e-filing website from www.hasil.gov.my
 

14. What do you need if you are filing your tax return for the first time?

 
  • You have to obtain PIN from Tax Return Form

  • You have to provide the following details and documents for PIN application:

             ​ (1) Tax Reference Number

              (2) Latest Address

              (3) Copy of IC/Passport

              (4) Telephone Number

  • For email application, send all 4 required documents to pin@hasil.gov.my

  • Register for e-Filing in the nearest Inland Revenue Board (LHDN) branch, mail, fax or e-mail.

  • After first time login, you do not need to register again for subsequent year tax return. Just remember your password and continue to complete the form only.
     

15. Where can you get assistance and more info on filing taxes?

 
  • To assist taxpayers especially on e-Filing service, Inland Revenue Board of Malaysia (IRBM) has opened an e-Filing service counter at every branch nationwide. Please contact the nearest IRBM branch for your e-Filing consultation.

  • If you do not receive your refund automatically, you should send an email to callcentre@hasil.gov.my

    *The above article is intended for informational purposes only. Loanstreet accepts no responsibility for loss that may arise from reliance on information contained in the articles.

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Team Loanstreet

Run by a professional human-sized team, get resourceful tips & guides from our very own library of financial articles that can help improve your financial lifestyle & make a well-informed money decision. We strive to provide you with the best service in helping you to get the most out of that DUIT!

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