PETALING JAYA: More than ever, this year’s tax relief measures offer a lifeline to many, especially since the Covid-19 pandemic has caused great upheavals and losses in the job market.
As of yesterday evening, the Inland Revenue Board (LHDN) had received 1.5 million tax return forms for individuals without business income, a 30% increase compared to the same time last year.
Salaried employees must file their taxes by April 30 (manually) or by May 15 (e-filing), while those earning a business income will have to do so by June 30.
Tax expert Koong Lin Loong advised people to ensure that they file the right income tax form, especially since many joined the gig economy following the pandemic.
“Some people who are now part of the gig economy misunderstood and think that because they are working part-time, they don’t need to submit taxes.
“However, if you earn income in Malaysia, you must file your taxes unless your revenue is below the taxable amount, ” he said.
If a person is earning a salary or passive income only, he or she needs to fill in Form BE, said Koong
However, if they are salaried employees but also dabble in the gig economy such as in food delivery or e-hailing services, they should fill in Form B.
“If you are a direct sales agent, hawker, tuition teacher or selling products on social media, you are a business owner and must fill in Form B.
“This is regardless of whether you are registered with the Companies Commission of Malaysia or town council. You must file taxes if your earned income reaches the taxable amount, ” he added.
As for the tax measures the government has set in place for this year, Koong advised people to be aware of the additional RM2,500 relief for lifestyle expenses.
This extra relief is given to those who bought a smartphone, tablet or personal computer between June 1 and Dec 31 last year.
“Many people were confused because they thought the form had a mistake because it repeated the RM2,500 relief. But this extra relief is under the Penjana initiative, ” he said.
He gave the example of Mr A, who has claimed the maximum amount of additional lifestyle expenses, domestic tourist expenses and childcare fees.
“Let’s say that he also donated RM5,000 to Tabung Covid-19. Compared to the previous tax assessment year, he would save about RM2,000 in taxes, ” he added.
Tax advisory firm Tricor Taxand executive director Thang Mee Lee also advised those who underwent employment changes last year to be aware of certain tax measures.
“For those who lost their jobs and are paid a gratuity, they can claim an exemption of RM1,000 for each completed year of service with the same employer.
“For those who have been retrenched or given a voluntary separation scheme/mutual separation scheme and are paid a severance payment, they can claim an exemption of RM20,000 for each completed year of service with the same employer, ” she said.
She added, however, that the RM20,000 exemption was only applicable to those who were retrenched between Jan 1 and Dec 31 last year.
Other common mistakes include not reporting rental income from property in Malaysia, she said.
“Moreover, the RM8,000 relief for children aged above 18 years and undertaking tertiary education is only available if the institution and course of study are recognised by the government, ” she said, adding that the full list can be referred to at www.jpa.gov.my.
Harvey & Associates managing partner Harvindar Singh said income from small-scale business was still taxable, with certain expenses deductible.
“People who have lost jobs and started business ventures might not be keeping proper records of such income and expenses, so it is a good idea to start doing so, ” he said.
He added that one of the tax items people could keep an eye out for was the RM1,000 tax relief for entrance fees to tourist attractions or accommodation at premises registered with the Commissioner of Tourism.
“Tax relief for fees paid to childcare centres and kindergartens have also increased to RM3,000, ” he added.
Federation of Malaysian Consumers Association (Fomca) chief executive officer T. Saravanan advised people to avoid the last-minute rush when filing taxes.
“Don’t ever try to claim any tax exemptions without receipts because if you are called for an audit, you must present all the receipts.
“If you need to pay tax but do not have any income, please make an appeal to the LHDN as soon as possible, ” he said.