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Tuesday, 11 February 2014

Annual returns too tax-ing?

PETALING JAYA: The option of not having to file annual tax returns may have been set to start in April next year, as announced in the last Budget.

But for many taxpayers, the form-filling begins now.

People opting for the plan known as “final tax” must start updating their employers now on their tax relief for 2014 to ensure that accurate deductions are made, according to the Inland Revenue Board (IRB).

IRB public relations officer Masrun Maslim said those who qualified for the final tax plan should start filling in the TP1 now, where they can detail for their employers rebates and reliefs that they are entitled to.

The employers will take these rebates into account when working out the salary deductions for the month.

Masrun said those who opted for the final tax plan but failed to notify their employers of their rebates risked paying more than they should.

“This is because under the scheme, the monthly tax deductions or MTD are deemed as the final tax and the taxpayer will not get any refunds when 2014 ends,” he said.

“The benefit of having MTD as the final tax is that one can take home more at the end of the month. Reliefs are taken into account immediately and they no longer need to wait for refunds from us. The final tax applies to those who are happy with the MTD amount,” he told The Star.

The TP1 form, he said, could be downloaded from the IRB website (www.hasil.gov.my) and includes rebates for book allowance, insurance, personal computer, sports equipment, education and medical expenses including basic support equipment for parents. It should be submitted as and when there are reliefs to be claimed.

Most single income taxpayers would qualify for the final tax option but not those who receive certain perks from their employers like housing or benefits such as a car, driver, gardener and recreational club membership. These taxpayers have to submit their returns as usual.

“People who opt for the final tax plan should declare all tax deductions and rebates and submit the TP1 form without receipts to the employers who will then update the system and ensure the correct tax amount is deducted every month and submitted to the IRB,” Masrun added.

He said that compulsory monthly tax deductions would normally take into account personal relief and contributions to Employees Provident Fund or other approved schemes. The TP1 form are only for additional rebates.

For those who make mistakes in a TP1 form or forgot to submit it to their employers, Masrun said they could still opt to file the annual tax returns before April 30 next year.

“They could conduct the online self-assessment and determine if they are overpaying with their monthly deductions. If they are not, then they can choose the final tax plan.

“Otherwise, it is in their best interest to submit their returns and get their refunds quickly as it is their money. People who underpaid should also file their returns,” he said, adding that those who opted for the final tax but decided to change their mind could still do so.

Masrun said the final tax plan was introduced following complaints about having to file returns when the amount involved was the same as the MTD.

“We came up with the idea of having the MTD as the final tax as it is hassle-free and the monthly take-home pay will be more.”

He stressed, however, that for the 2013 year of assessment, taxpayers need to submit their returns as usual by April 30 this year.

Do you have a query regarding Monthly Tax Deductions as final tax? Can’t quite figure out how everything works? Email your query to sunday@thestar.com.my and we will get the answers from the tax experts this Sunday.

Related story:

Employers want TP1 form submission time regulated

Tags / Keywords: Family Community , income tax , irb


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