How to pay less personal tax http://biz.thestar.com.my/news/story.asp?file=/2010/2/22/business/5708...

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How to pay less personal tax http://biz.thestar.com.my/news/story.asp?file=/2010/2/22/business/5708...

THE 2009 tax-filing season for individuals has

arrived. For many of us, April 30 will be just
another day (perhaps accompanied by
scrambling for our just-in-time filing) to settle
our dues with the Inland Revenue Board by submitting the Form e-BE and
paying any balance tax.

Before clicking the button to complete the e-filing, take a second look at
the figures keyed in. Is the amount of tax calculated the lowest it can be?
Here are some tips on saving tax that would not get you in trouble with the
law.

1. Know your income: What is taxable and what is not.

Gone are the days when you agonise over the delay in receiving your
Form EA from your employer. It is now a law for employers to issue the
Form EA to their employees no later than the end of February. The key
point to note is not all income in your Form EA is taxable! Scrutinise all
the items in Form EA to see if there is any which should be tax-free. For
example:

Travelling allowances

If you receive travelling allowance, up to RM2,400 for your travels from

home to office is tax-free. What this means is if you receive an allowance
of RM12,000 for such travel, you can deduct RM2,400 and only RM9,600
is taxable. Further, travelling allowance of up to RM6,000 for official
duties is tax-exempt.

Meal, parking and childcare allowances

Many employees receive these allowances, do you? You would be happy

to know that you can enjoy such perks with no worries about paying tax
thereon (up to RM2,400 in the case of childcare allowance).

2. Make the most of all tax-free benefits.

Medical benefits

Medical benefits for traditional medicine including ayurvedic, plus

maternity benefits are also tax-free.

Interest subsidies

Your employer may have subsidised interest on your housing, car and
education loans. In the past, these subsidies would be taxable on you.
Now you would be glad to know such interest subsidies are tax-exempt
(so long as the total loans do not exceed RM300,000).

Broadband and telephone benefits

Who can leave home without the iPhone, Blackberry or PDAs nowadays?
Getting such a device from your employer plus reimbursement for
broadband and telephone bills are tax-free. So take advantage and enjoy
the latest gadgets and services.

3. Know your limits.

Just as in drinking and driving, stay within the limits to avoid any trouble or
triggering tax.

If you have enjoyed any staff benefits like discounts on your company’s
goods or services and kept within the RM1,000 a year limit, you should
enjoy tax exemption thereon.

Did you receive a small token from your employer on your achievements

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in service excellence, innovation or productivity which brought on a

smile? Don’t blame your employer if they kept the awards below RM2,000
as no tax should be levied on you. Neither is the award for your long
service with the company (for more than 10 years) forgotten. As long as
your employer kept the value of all awards to you within the RM2,000
limit, the smile should remain on you.

4. Look for more tax-free income.

Bank interest income

You will note a subtle difference in your bank statement nowadays as it

no longer shows the amount of tax withheld. Bank interest income is now
tax-exempt.

Dividends

Dividends need not be entirely taxable. Have a good look at the dividend
voucher. If it states that the dividend is “tax-exempt”, then it is not taxable
anymore.

5. Gain more deductions.

Purchase of sports equipment

If the slimming fad has caught on with you, keep the receipts of your
purchases of any sports equipment. A claim of up to RM300 is a small
incentive to shape those curves and muscles in a big way!

Have receipts or evidence to support more deductions

Medical expenses for your parents certified by a medical practitioner

(restricted to RM5,000);

Medical expenses for serious diseases for self, spouse or child (up to
RM5,000), including a complete medical examination for self, spouse or
child limited to RM500;

Basic supporting equipment for disabled self, spouse, child or parents

(ceiling of RM5,000);

Disabled person (self) (RM6,000);

Disabled husband/wife (RM3,500);

Education fee (self) up to tertiary level for the purpose of acquiring law,
accounting, Islamic financing, technical, vocational, industrial, scientific or
technological skills or qualifications for a masters or doctorate level,
undertaken for the purpose of acquiring any skill or qualification (limited to
RM5,000);

Purchase of books/journals/magazines/similar publications for self,

spouse or child (up to RM1,000);

Net deposit in National Education Savings Scheme (ceiling of RM3,000);

Purchase of personal computer for individual (maximum deduction of

RM3,000 allowed once every three years);

Premiums on life insurance plus EPF and other approved fund

contributions (subject to RM6,000 restriction);

Premiums for education or medical insurance (restricted to RM3,000);

Relief of up to RM10,000 on the housing loan interest paid (conditions

apply);

Payment of alimony to former wife (maximum total deduction for wife and
alimony payment is RM3,000);

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How to pay less personal tax http://biz.thestar.com.my/news/story.asp?file=/2010/2/22/business/5708...

Zakat other than monthly zakat deduction from salary; and

Fees/levy paid by a holder of an employment pass, visit pass (temporary

employment) or work pass.

The rule of the “game” of keeping your tax liability to the minimum when
preparing your tax return Form e-BE is to do it right within the law. For a
start, make the website of the Inland Revenue Board, www.hasil.gov.my,
one of your favourites from now until April 30 to access its easy to read
guides. Happy e-filing!

● Ang Weina is executive director and global employer services leader

with the tax practice of Deloitte Malaysia.

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