How to file persona income tax?

Taxpayers can start submitting their income tax return forms through the e-Filing system starting from March 1 of every year, unless otherwise announced by LHDN.

This method of e-filing is becoming popular among taxpayers for its simplicity and user-friendliness.

If this is your first time filing your tax through e-Filing, don’t worry, we’ve got your back with this handy guide on e-Filing.

Step by step

1. Log into mytax.hasil.org.my

2. Choose “Identification Card No”

3. Complete it and click submit

4. Choose e-CP55PD on the first timer if the digital certificate is not displayed.

5. Fill in your email address, upload IC, and click submit

6. You will receive IRB notification within five (5) working days.

7. Follow step 2 and 3

8. Mytax dashboard will be displayed

9. Click ezHasil service and select e-filing

10. Choose the Form

11. Select Tahau Taksiran

12. Complete Part 1, 2, 3, 4 and 5

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How to check personal income tax numbers online?

Step 1 : Go to https://mytax.hasil.gov.my

Step 2 : Click “E-draft”

Step 3 : A new page will emerge.

Step 4 : Select “Individual”

Step 5 : Fill in email & phone number. Fill in security phase and click Search

Step 6 : Get your income tax number

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KTP (Audit, Tax, Advisory)

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

• Website www.ktp.com.my

• Instagram https://bit.ly/3jZuZuI

• Linkedin https://bit.ly/3sapf4l

• Telegram http://bit.ly/3ptmlpn

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

• Website www.thks.com.my

• Facebook https://bit.ly/3nQ98rs

KTP Lifestyle

An internal community for our colleagues on work and leisure.

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RMDC Remission of Penalty & Surcharge

The Royal Malaysian Customs Department (RMCD) has announced Remission Program 2023 on Penalty and Surcharge in their website banner.

Key Summaries of the Remission Program

• Full payment must be made.

• The Bill of Demand (BOD) is issued for taxable period on or before 31 December 2022.

• For cases registered with court, company/ individual is required to inform Civil Officer handling the case by writing in order to participate in this program ( T&C apply).

• This program is also offered to company/ individual who has received approval to pay outstanding taxes by instalment.

• The amnesty program run from 1 February 2023 to 30 September 2023 (8 months)

Our Takeaways

Is this Special Voluntary Disclosure Program (SVDP) which is scheduled to start in June 2023?

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KTP (Audit, Tax, Advisory)

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

• Website www.ktp.com.my

• Instagram https://bit.ly/3jZuZuI

• Linkedin https://bit.ly/3sapf4l

• Telegram http://bit.ly/3ptmlpn

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

• Website www.thks.com.my

• Facebook https://bit.ly/3nQ98rs

KTP Lifestyle

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This message was brought to you by KTP

Corporate Income Tax Rate for SME

Tax Rate - Companies

Resident companies are taxed at the rate of 24% while those with paid-up capital of RM2.5 million or less*, and gross business income of not more than RM50 million (strictly all business sources) are taxed at the following scale rates:

• SMEs will have a reduced corporate income tax rate of 15% for the first RM150,000 ringgit chargeable income.

• SMEs earning between RM150,00 to RM600,000 on the first chargeable income will be charged at 17%, and

• Balance (those earning more than RM600,000) will be charged the 24% tax rate.

* none of its related companies within the group ( by way of shareholding of more than 50%) paid up share (ordinary) exceeding RM2.5 million.

Definition of SME for Tax Purpose

SME companies are defined

• Paid-up share capital not exceeding RM2.5 million

• Gross income (business source) not exceeding RM50 million

New Ruling on Foreign Shareholders (wef Year of Assessment 2024)

With effect from YA 2024, one more condition for SMEs to enjoy the preferential tax rate

If more than 20% of paid-up share capital is owned by a foreign company or non-Malaysia citizen, SME will not entitle to 15% and 17% preferential tax rate.

Tax Implication on Foreign Shareholding More Than 20%

Taxpayers will be subject to a 24% tax rate if the foreigner owns more than 20% shareholding.

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KTP (Audit, Tax, Advisory)

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

• Website www.ktp.com.my

• Instagram https://bit.ly/3jZuZuI

• Linkedin https://bit.ly/3sapf4l

• Telegram http://bit.ly/3ptmlpn

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

• Website www.thks.com.my

• Facebook https://bit.ly/3nQ98rs

KTP Lifestyle

An internal community for our colleagues on work and leisure.

• Tiktok http://bit.ly/3u9LR6Q

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• Facebook http://bit.ly/3ateoMz

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延长国家教育储蓄计划 (SSPN) 的个人所得税减免

这项延长措施将导致政府一年减少约2亿5000万令吉的收入. 一个人在评估年度内为其孩子存入 SSPN 可获得最高 RM8,000 的所得税减免（因当年的任何提款而减少）.

原定于 2020 年到期的减免已延长至 2022 年

什么是SSPN？

• 它是一个国名教育储蓄计划

• 为了鼓励父母们培养良好的储蓄习惯，提早为孩子准备教育基金

SSPN 是国家高等教育储蓄机构 (PTPTN) 推出的储蓄计划. PTPTN 是根据 1997 年国家高等教育管机构法 [第 566 号法案] 成立的.

SSPN 的推出是为了让父母能够储蓄并最终资助他们的孩子在高等教育机构的教育。 为了鼓励个人向 SSPN 账户存款，引入了 ITA 第 46(1)(k) 段，允许对向该计划存款的个人进行扣除.

从 2012 年至 2018 年课税年起，允许扣除的金额是相关年度的净捐款，上限为 6,000 令吉。从 2019 课税年起，净捐款的最高扣除额增加至 8,000 令吉.

净贡献是一年中的存款数额减去当年的任何提款数额。

SSPN 账户可以由父母为 18 岁及以下的孩子开立，并维持该账户直到孩子年满 29 岁.

父母在孩子年满 29 岁之前存入此账户的存款可作为扣除额。

对于 18 岁及以上的儿童，他们可以选择以自己的名义或以父母的名义开立账户。 如果账户是以孩子的名义开立的，则该孩子没有资格从账户中的存款中扣除，因为根据 ITA 第 46(1)(k) 段的扣除仅适用于作为父母的存款人或 监护人。 父母也没有资格扣除，因为他们不是以孩子的名义开设账户的存款人。

SSPN-I & SSPN-I Plus的分别

SSPN-I 就是现在所谓的SSPN Prime

• 纯储蓄的存款计划

• 存款者无需每个月固定存款

SSPN-I & SSPN-I Plus的分别

SSPN-I Plus就是现在所谓的SSPN Plus

• 它类似是储蓄保险配套， 可享有人寿保险，36种疾病医药保障，住院补贴等等。

SSPN可以扣税吗？

• SSPN-I 税务减免高达RM8,000

• SSPN-I PLUS 则分成两个部分

(i) 净存款 – 税务减免高达RM8,000

(ii) 人寿保险 – 税务减免高达RM3,000

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KTP (Audit, Tax, Advisory)

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

• Website www.ktp.com.my

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THK (Secretarial, Account, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource booking, accounting and payroll services to clients

• Website www.thks.com.my

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KTP Lifestyle

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KTP Career

An external job community on vacancy in Johor Bahru for interns, graduates & experienced candidates.

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#Ktp #Thks

Tax Budget 2023 - Webinar

• Topic : Tax Budget 2023

• Date : 10/03/23

• Time : 2.00pm

• Location : Live Interview

• Language : Chinese

• Speakers : Chong Yew Jia & Teo Mei Qi

• Moderator : Koh Teck Peng

Proposed agenda :

Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim have proposed some changes to the income tax rates under the new Budget 2023.

Key summary on tax budget 2023 for

• Individual

• Corporate

• Indirect Tax

• Others (Capital Gain Tax, Luxury Goods Tax, SVDP)

Webinar

Watch the full video (45 minutes) in the YouTube

https://youtu.be/k4XBq8rzZoE

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KTP (Audit, Tax, Advisory)

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

• Website www.ktp.com.my

• Instagram https://bit.ly/3jZuZuI

• Linkedin https://bit.ly/3sapf4l

• Telegram http://bit.ly/3ptmlpn

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

• Website www.thks.com.my

• Facebook https://bit.ly/3nQ98rs

KTP Lifestyle

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Tax Budget 2023 - Others

Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim have proposed some changes to the income tax rates under the new Budget 2023.

Key summary on tax budget 2023 for Others

Capital Gain Tax

The proposal to introduce a capital gains tax (CGT) on the disposal of unlisted shares has been welcomed as a move in the right direction by economists but a tax expert has cautioned a more in-depth study is needed.

The proposal is a sign the government is kickstarting its move to impose taxes on more capital items in the future.

Tricor Malaysia chairman Veerinderjeet Singh opines the government would have in theory three mechanism options for CGT implementation.

“Either a new legislation on CGT will be introduced, or the existing legislation on real property gains tax (RPGT) will be amended to include the sale of shares of unlisted companies, or it will be added within the Income Tax Act by defining it to include certain capital gains, which can be reported annually.”

Luxury Goods Tax

A luxury tax is a tax imposed on goods that are considered expensive, unnecessary and unimportant. Such items include cars, private jets, yachts and jewellery.

Retabling the budget in the Dewan Rakyat last week, Anwar who also holds the finance portfolio said that the government had no plans to reintroduce the goods and services tax (GST).

In Norway, cars and chocolate alike are considered a luxury and subject to a luxury tax. 

Let’s see how the government come out with detailed implementation in the coming months.

Special Voluntary Disclosure Program (SVDP)

The IRB and RMCD will implement the SVDP again. Under the SVDP, a 100% penalty remission will be granted with effect from 1 June 2023 to 31 May 2024.

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KTP (Audit, Tax, Advisory)

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

• Website www.ktp.com.my

• Instagram https://bit.ly/3jZuZuI

• Linkedin https://bit.ly/3sapf4l

• Telegram http://bit.ly/3ptmlpn

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

• Website www.thks.com.my

• Facebook https://bit.ly/3nQ98rs

KTP Lifestyle

An internal community for our colleagues on work and leisure.

• Tiktok http://bit.ly/3u9LR6Q

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Tax Budget 2023 - Individual

Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim have proposed some changes to the income tax rates under the new Budget 2023.

Key summary on tax budget 2023 for individual

Petron Oil (M) Sdn Bhd & Anors (Appellants) v Ketua Pengarah Hasil Dalam Negeri (IRB)

Lesson from Tax Case:

To claim the tax deduction on the finance expenses and related cost, the Company is advised to keep proper documentation on purpose of the loan amount used, list the related expenses incurred and claim the tax deduction in the year assessment incurred.

Background information

This is an appeal case made by three companies (Appellants) against the Deciding Order of the Special Commissioners of Income Tax (SCIT).

On 7.8.2013 the Appellants had submitted its tax returns (Forms C) for YA 2012 without taking a deduction for the Financing Expenses.

On 23.8.2013, the Appellants filed notices of appeal against their own assessments to claim deduction on the following expenses:

1) upfront fees

2) stamp duty charges

3) legal fees.

On 30.1.2020 SCIT via a Deciding Order dismissed the Appellants’ appeal as the finance cost incurred are not deductible under section 33(1) of the Income Tax Act 1967 (ITA).

Tax Issue:

Whether the Financing Expenses incurred for the YA 2012 by the Appellants in respect of the financing obtained are deductible under section 33(1) of the ITA.

IRB opinion:

The abovementioned expenses are not deductible under section 33 (1) of the ITA as the expenses were incurred in order to secure the granting of the facility by the financier.

The expenses are capital in nature.

The decision by The Court of Appeal

1) The nature of the Appellants businesses was dealing with the sale, marketing, distribution and refining petroleum and petroleum related products and does not deal with monitory, where finance fund used for share investment.

2) The related expenses claimed by the Appellants were incurred to obtain the loan.

3) That the expenses claimed were capital in nature and thus not deductible under section 39(1)(c) of the ITA.

4) To be eligible for deduction under section 33(1) of the ITA, an expense must fulfil “wholly and exclusively incurred in the production of gross income”.

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KTP (Audit, Tax, Advisory)

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

• Website www.ktp.com.my

• Instagram https://bit.ly/3jZuZuI

• Linkedin https://bit.ly/3sapf4l

• Telegram http://bit.ly/3ptmlpn

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

• Website www.thks.com.my

• Facebook https://bit.ly/3nQ98rs

KTP Lifestyle

An internal community for our colleagues on work and leisure.

• Tiktok http://bit.ly/3u9LR6Q

• Youtube http://bit.ly/3ppmjyE

• Facebook http://bit.ly/3ateoMz

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KTP Career

An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.

• Instagram https://bit.ly/3u2PxHg

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#Thk

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Form E 101

Form E 2022 - HR/ACCOUNT 们别错过了我们为您准备的常见 Form E 问题！

⚠️有些什么更新 ❓

⚠️又有些什么常见问题呢❓

阅读我们过去在 Facebook 上的 E/EA 表格上的分享 :

1) Tax Filing Deadline 2022 Malaysia dated on 10/01/2022

https://bit.ly/3r5k2go

2) E呈报(E Filing)Form E 终极秘籍 dated on 15/03/2021

https://bit.ly/35pjcm9

3) 温馨提示 - Form E 截至日期为31/03/2021 dated on 12/03/2021

https://bit.ly/35wKebq

4) Form EA 有什么? Dated on 22/02/2021

https://bit.ly/3g1LQMg

5) 花红几时需要报进Form EA? Dated on 16/02/2021

https://bit.ly/349JSGZ

6) 公司给员工红包可不可以扣税? Dated on 10/02/2021

https://bit.ly/3KPMI4G

7) Deadline for Form E submission is approaching! dated on 09/02/2021

https://bit.ly/3KMqsZL

8) 是时候呈报𝐅𝐨𝐫𝐦 𝐄了，让我们为您复习一遍！dated on 28/01/2021 各位雇主与员工请注意！！！

https://bit.ly/3u4aSCz

9) 你知不知道 ... IRB不再打印+发E表格(Form E) 给雇主! Dated on 25/01/2021

https://bit.ly/349K4pH

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KTP (Audit, Tax, Advisory)

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

• Website www.ktp.com.my

• Instagram https://bit.ly/3jZuZuI

• Linkedin https://bit.ly/3sapf4l

• Telegram http://bit.ly/3ptmlpn

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

• Website www.thks.com.my

• Facebook https://bit.ly/3nQ98rs

KTP Lifestyle

An internal community for our colleagues on work and leisure.

• Tiktok http://bit.ly/3u9LR6Q

• Youtube http://bit.ly/3ppmjyE

• Facebook http://bit.ly/3ateoMz

• Instagram https://bit.ly/3jZpKLo

KTP Career

An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.

• Instagram https://bit.ly/3u2PxHg

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#Thk

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Key Update of Withholding Tax for past 5 years

Summary of update in withholding tax for the past five (5) years

1. Tax Update on Withholding Tax dated 07.11.2022

https://www.ktp.com.my/.../tax-update-on.../07nov22

2. Small Value Withholding Tax Payment (update) dated 07.10.2022

https://www.ktp.com.my/.../small-value.../07oct22

3. Small Value Withholding Tax Payment dated 19.08.2022

https://www.ktp.com.my/.../small-value.../19aug22

4. (Update) 2% Withholding Tax on Commission to Agents dated on 12.07.2022

https://www.ktp.com.my/.../2percent-withholding.../12july22

5. (Latest update) Withholding Tax on Payments to Agents dated 21.04.2022

https://www.ktp.com.my/.../2percent-withholding.../21apr22

6. Withholding Tax on Payments to Agents dated 17.03.2022

https://www.ktp.com.my/.../2percent-withholding.../17mar22

7. Top 5 Withholding Tax Questions dated 28.01.2022

https://www.ktp.com.my/.../top-5-withholding-tax.../28jan22

8. 2% withholding tax on commission dated 30.12.2021

https://www.ktp.com.my/.../2-withholding-tax-on.../30dec21

9. (English Version) Do you know how to reduce withholding tax with the certificate of residence (COR)? Dated 23.11.2021

https://www.ktp.com.my/.../certificate-of.../22nov21

(Chinese Version) 您知道如何使用居住证 (COR) 减少预扣税吗？dated 23.11.2021

https://www.ktp.com.my/.../certificate-of.../22nov21

10. (English Version) Budget 2022 – SME edition dated 18.11.2021

https://www.ktp.com.my/.../tax-budget-2022-sme.../18nov21

(Chinese Version) 2022 年预算摘要 - 中小企业版dated 19.11.2021

https://www.ktp.com.my/.../tax-budget-2022-sme.../19nov21

11. 两个重要改变 - 预扣税（withholding tax）dated 11.11.2021

https://www.ktp.com.my/blog/withholding-tax-malaysia/11nov21

12. Purpose and usage of certificate of residence under withholding tax in Malaysia dated 23.04.2021

https://www.ktp.com.my/.../certificate-of.../23april2021

13. 马来西亚预扣税 (𝐖𝐢𝐭𝐡𝐡𝐨𝐥𝐝𝐢𝐧𝐠 𝐭𝐚𝐱)的规则概述(第3篇) dated 21.09.2020

https://www.ktp.com.my/.../fwwses3ezyrg9gf-7r8xl-aaa5d...

14. 马来西亚预扣税 (𝐖𝐢𝐭𝐡𝐡𝐨𝐥𝐝𝐢𝐧𝐠 𝐭𝐚𝐱)的规则概述(第2️⃣篇) dated 21.09.2020

https://www.ktp.com.my/.../fwwses3ezyrg9gf-7r8xl-aaa5d...

15. 马来西亚预扣税(withholding tax)的规则概述 (第1️⃣篇) dated 21.09.2020

https://www.ktp.com.my/.../fwwses3ezyrg9gf-7r8xl-aaa5d...

16. Withholding Tax In Malaysia Part 2 of 2 dated 28.06.2019 (eKTP 114)

https://www.ktp.com.my/.../withholding-tax-in-malaysia...

17. Withholding Tax In Malaysia Part 1 of 2 dated 28.06.2019 (eKTP 113)

https://www.ktp.com.my/.../withholding-tax-in-malaysia...

18. Withholding Tax Part 3 of 3 dated 13.10.2017 (eKTP 45)

https://www.ktp.com.my/blog/withholding-tax-part-3-of-3

19. Withholding Tax Part 2 of 3 dated 06.10.2017 (eKTP 44)

https://www.ktp.com.my/blog/withholding-tax-part-2-of-3

20. Withholding Tax Part 1 of 3 dated 28.09.2017 (eKTP 43)

https://www.ktp.com.my/blog/withholding-tax-part-1-of-3

Authored by Mqteo, audit and tax associates of the Firm.

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Common mistakes in Form EA : Benefits-In-Kinds (BIK)

Overview

Must living accommodation provided by Company be declared under Form E and Form EA? How’s the declaration affect the tax of the director or employee?

Besides, what is the determination of the value of the living accommodation(VOLA) for employees and directors?

Let’s have a quick look below for more information on the benefit of living accommodation.

Key takeaways:

You will understand:

1. What consider the benefit of living accommodation?

2. What is the tax treatment for living accommodations?

3. How many categories of the value of living accommodation?

4. How to determine the value of the living accommodation?

5. Can the value of living accommodation be adjusted if provided for less than 12 months in a basis period?

6. What kind of expenses paid by employees allow them to set off the value of living accommodation provided by the employer?

Summary of learning

1. What consider the benefit of living accommodation?

- Living accommodation provided by the employer to its employee. This also includes if the benefit is provided to the employee’s spouse, family, servants, dependants or guests.

- This benefit is a benefit-in-kind and is not convertible into money.

2. What is the tax treatment for living accommodations?

- The benefit is taxable together with the employment gross income employment.

- Gross income from employment includes wages, salary, remuneration, leave pay, fee, commission, bonus, gratuity, perquisite or allowance (whether in money or otherwise) in respect of having or exercising the employment.

3. How many categories of the value of living accommodation?

- 3 categories of the employees/director received the benefit: -

a) Category 1 – For employees (private sector) or service director

b) Category 2 – For the director (not service director) of a controlled company

c) Category 3 – For the employee/service director/officer of the Government/Statutory Bodies.

4. How to determine the value of the living accommodation?

- Category 1 (For employees (private sector) or service director)

a) Defined value of the living accommodation (eg. rental of the living accommodation); or

b) 30% of the gross income from employment

Whichever is the less

- Category 2 (For the director (not service director) of a controlled company)

a) The defined value of the living accommodation

- Category 3 (For the employee/service director/officer of the Government/Statutory Bodies)

 For employees and directors except for a director (not a service director) of a controlled company

a) 3% of the gross income from employment

5. Can the value of living accommodation be adjusted if provided for less than 12 months in a basis period?

a) The value of the living accommodation should be reduced appropriately.

b) The basis of reduction can be based on the period of accommodation provided instead of the actual period of occupation.

6. What kind of expenses paid by employees allow them to set off the value of living accommodation provided by the employer?

a) Rent

b) Any public rates or insurance premiums

c) Expenses on repair or maintenance of premises.

Source

Public Ruling No. 3/2005 Living Accommodation Benefit Provided For The Employee By The Employer

https://phl.hasil.gov.my/pdf/pdfam/addendum_pr_3_2005.pdf

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An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

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THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

• Website www.thks.com.my

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KTP Lifestyle

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Why IRB return my Form CP21?

Types of the common mistakes

1. Failure to use the prescribed form issued by IRBM

• Missing pages from the submitted form.

• Not comply with the printing specification as follow:

i. Plain white A4

- (210mm x 297mm) / 80gsm (minimum)

ii. Printing format

- Portrait, using laser printing,

- in one page (one-sided)

iii. Printing colour

- Black/ pure black/ monochrome

2. Incomplete information

• Incomplete employer information

• Failure to provide the basic employee information

• Failure to submit a copy of the employee IC/passport (if information submitted previously has changed)

• Failure to provide information in the ‘Particulars of Remuneration’ / ‘Monthly Remuneration Information’ Section.

• No complete date in the Form, such as:

i. Date of commencement of employment

ii. Date of resignation/retirement death

iii. Expected date to leave Malaysia

3. Mistakes under the Declaration section

• Incorrect or incomplete information:

- Name, Identification / Passport Number and Designation

• No signature or signature not using black ink pen.

• The use of signature stamps and digital signatures is not permitted.

• The Form is not signed by the empowered person.

4. Form submitted using an unauthorised method

• The form cannot be submitted via email or fax.

What are the consequences of an incomplete form?

i. The incomplete form will not be processed by Inland Revenue Board Malaysia (IRBM).

ii. Penalty will be imposed under Paragraph 120(1) of the Income Tax Act 1967 as a result of delay or failure to submit the form:

• A fine of not less than RM200 or not more than RM20,000;

• An imprisonment not exceeding six months; or

• Both.

How to fill in and submit the form?

To fill in the relevant fields using:

• Black ink pen and in block letters; or

• Typed using a computer and printed it on the Form.

To submit Form CP21, CP22A and CP22B:

• Through the e-SPC application.

• To the IRBM Branch that handles the employee income tax file.

• To the nearest IRBM office.

To submit Form CP22:

• To the IRBM Branch that handles the employer tax file.

• To the nearest IRBM office.

Source:

Criteria on Incomplete Form CP21, CP22, CP22A and CP22B Which is Unacceptable | Lembaga Hasil Dalam Negeri Malaysia

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An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

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THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

• Website www.thks.com.my

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Tax Treatment on Compensation for Loss of Employment

Overview

Many economists and financial experts predict the global recession to start in 2023. The global recession has led the organisation to cut costs by laying off employees. Those employees will receive money either in the form of compensation for loss of employment or gratuity.

Do you know whether the incomes received by the employees from loss of employment are taxable or exempted in Malaysia?

Key takeaways:

You will understand:

1. What is included in compensation for loss of employment?

2. What is the difference between compensation and gratuity?

3. What are the tax treatments?

4. Circumstances not subject to tax exemption.

Summary of learning

1. What is included in compensation for loss of employment?

According to Paragraph 13(1)(e) of Income Tax Act 1967, it includes:

a) Salary or wages in lieu of notice;

b) Compensation for breach of a contract of service;

c) Payments to obtain release from a contingent liability (employer’s obligation) under a contract of service;

d) Ex-gratia or contractual payments such as redundancy payments, severance pay, etc. made to employees who have become redundant for reasons beyond their control;

e) A payment in consideration of a covenant, arrangement or similar agreement restricting the activities of an employee in respect of engaging in an employment of a similar kind after termination of his employment.

f) Voluntary Separation Scheme (VSS) or Mutual Separation Scheme

2. What is the difference between compensation and gratuity?

It is important to differentiate whether the payment made to an employee is compensation or gratuity, as there will have different tax treatment.

a) Compensation for loss of employment

- Compensation is a payment given to the employees when they are laid off before the end of the service contract.

b) Gratuity

- Gratuity is a payment given to the employees when they resign or retire after serving for a long period of time. It is a lump sum amount that is presented to recognise an employee’s past services.

3. What are the tax treatments?

The compensation for loss of employment received by an employee is given a full or partial exemption as follows:

a) Full Exemption

A full exemption will be given if the reason for loss of employment is due to ill health.

Criteria: The health condition of the employee is required to be certified in writing by a Medical Board.

b) Partial Exemption

An exemption of RM10,000 is given for each completed year of service.

Criteria: The employee must work with the same employer or companies within the same group during the period.

4. Circumstances Not Subject to Tax Exemption

a) Reemployment implied under separation schemes:

If the separation scheme offers the employees reemployment with the same employer or any other employer, the compensation under the scheme does not qualify for an exemption.

b) Compensation for loss of employment for non-service director:

Non-service director is a director employed in the service of the Company that owns more than 5% of the ordinary shares of the Company.

Payments made by controlled companies to non-service director is not eligible for any tax exemption.

Source:

Public Ruling No. 1/2012 – Compensation for loss of employment

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An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

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• Website www.thks.com.my

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Quiz of the day - Keyman Insurance Tax Deductible Malaysia

1. Issue

KTP Tax Consultant Sdn Bhd can claim a tax deduction on Mr. Koh Teck Peng personal insurance in KTP Tax Consultants Sdn Bhd?

What is the personal tax impact on Mr. Koh Teck Peng?

In my opinion, the personal insurance paid by the Company for Mr. Koh is not tax allowable as Mr. Koh is control director of KTP Tax Consultants Sdn Bhd.

However, Mr. Koh has to declare the total amount of premium paid in his personal income tax which is taxed under paragraph 4(b) of the ITA

2. Fact

Company Tax impact

There are a number of requirements that must be met in order to claim a tax deduction.

According to Income Tax Act 1967 Section 33(1), expenses only can be deductible if it wholly and exclusively incurred in the generate of income is allowable as a tax deduction.

Refer to Paragraph 4 of Public Ruling No.2/2003 – Key Man Insurance, if the insurance meets the following two requirements, the premium payable on a term life policy or an accident policy which is no return after expiration policy is allowable as a deduction against gross income from a business:-

• The insurance has no element of investment

• beneficial of the insurance must remain with the employer or company not the “key-person” or his family

However, a whole life policy and endowment policy is deemed to have element of investment due to both of these policies have cash value that are redeemable.

Therefore, these two policies would be regarded as a capital asset of a Company and thus the premium paid on these policies would not be allowed for tax deduction under paragraph 5.

Connected person

Addition, if the premium paid for director insurance on life of that person who owns share in the company is not allow to claim tax deduction in controlled company. It is also not permitted to deduct the premium for a ''key-man'' insurance coverage on the life of a business partner or sole proprietor under paragraph 7.

Personal Tax Impact

Refer to paragraph 6.8 Insurance premiums - Public Ruling No.5/2019 – Perquisites From Employment

The amount of the annual premium paid by the Company on behalf of the employee (including his family, his nominee) is a perquisite to the employee and shall reported in employee Form EA.

By reporting in the Form EA in employee, this would results in the amount of annual insurance premium become taxable income for the employee.

3. Reference

• Public Ruling No: 2/2003 “Key-man” Insurance

  https://phl.hasil.gov.my/pdf/pdfam/PR2_2003.pdf

• INCOME TAX ACT 1967 - Section 33(1) Adjusted income generally

  https://phl.hasil.gov.my/pdf/pdfam/Act_53_20190101.pdf

• INCOME TAX ACT 1967 - Section 139 Controlled companies

  https://phl.hasil.gov.my/pdf/pdfam/Act_53_20190101.pdf

• Public Ruling No.5/2019 – Perquisites From Employment

  https://phl.hasil.gov.my/pdf/pdfam/PR_05_2019_2.pdf

Authored by Ms Lee Liu Shi, audit & tax associates, in her personal LinkedIn post.