Top tips for tax return season 2013
PETALING JAYA: It’s almost that time of the year for us to do our tax returns again! If you are a salaried employee in the private sector or civil service (tha is, if you have the letters ‘‘SG’’ in your tax code), the deadline for filing your tax return for the 2012 calendar year is April 30, 2013. If you’re not sure what type of tax code you have, you can head on to LHDN’s (Inland Revenue Board) website to do a quick check.
You can even submit your tax return and pay your taxes online these days. But before you rush off to do it online (or in person), have a look at our top tips first. These tips are mainly directed at people with the ‘‘SG’’ in their tax code, but all taxpayers should benefit from reading them.
1. Find out how much tax you have already paid via the PCB system
The Potongan Cukai Bulanan or PCB system is one where your employer will automatically deduct a certain amount from your salary every month and pay tax on your behalf, which goes towards paying your tax liability for the year.
To find this out, you should have received in February (ask for it if you haven’t) a Form EA/EC from your employer which tells you how much you have earned and how much tax they have paid on your behalf.
Typically your employer will use some standard statutory tables in order to calculate your PCB, but other than EPF, marital status, and number of children, there are no adjustments for any additional tax reliefs or deductions. This is why your employer may have been overpaying tax on your behalf.
2. Be sure to exclude your tax-exempt income
In a nutshell, tax-exempt income is not to be included when calculating how much tax you should pay. The list of tax-exempt income types is fairly long and a little obscure for some, but for most people, things like bank interest, remittance into Malaysia, pensions after 55 years of age, medical/dental benefits, and death gratuities make handy appearances in the list, which you can find on the LHDN website, or on SaveMoney.my.
3. Make sure you make the most of the tax reliefs available
Tax reliefs are different from tax-exempt income in that they are deducted from chargeable income (rather than just not appearing in it).
For most people with the ‘‘SG’’ code, the four big reliefs that would generally be included in the PCB system are: your personal relief of RM9,000; the EPF contribution relief of RM6,000; a relief of RM3,000 if you are married; and the number of children you have (RM1,000 relief per child).
As with tax-exempt income, the list of tax reliefs is lengthy and some parts a little obscure, but we’ve tried to make it as simple as possible for your benefit here. Tax reliefs which are not included in the PCB system but may be relevant to most taxpayers are things like:
- RM10,000 for interest expended to finance purchase of properties for the first three years;
- RM5,000 for education fees (personal);
- RM3,000 for the purchase of a PC/iPad (only once every three years, yes it’s odd);
- RM1,000 for purchases of books or magazines (for the whole immediate family);
- RM3,000 for private retirement scheme and RM6,000 for Sijil Simpanan Pendidikan Nasional savings schemes;
- RM500 for broadband subscriptions (home and mobile); and
- RM300 for the purchase of sports equipment.
If you have made purchases or had expenses of any of the abovementioned things, you can deduct the individual amounts from your chargeable income.
Be sure that you have kept the receipts for those tax reliefs and that they are dated from the year you are claiming the reliefs for, that is, in 2012.
Also make sure to keep those receipts for at least seven years, as any audits conducted by LHDN upon you will require you to present them.
Remember, the thing about declaring your tax position (income, reliefs) is that you are entirely responsible for how much tax you end up paying based on your own declarations. The flip-side here is that heavy financial (and potentially criminal) penalties are afoot for taxpayers who make misdeclarations on their tax positions, so do be thorough when you file.
Hann Liew is the founder and editor-in-chief of SaveMoney.my, an online consumer advice portal which aims at helping Malaysians save money through smart (and most of the time, painless) savings in their daily banking, technology and lifestyle spending habits.