INDIVIDUALS not carrying on a business will need to file their personal tax returns latest by May 15. It must be done electronically as manual filing is no longer allowed. Missing this deadline will trigger penalties.
Under the Inland Revenue Board’s (IRB) operational guidelines, the penalty rates could range from 15% of your tax payable if your tax return is filed within one year from the due date, and it will increase to 30% in the second year and to 45% thereafter. In practice, the late filing penalty starts at RM200. If there are any unpaid taxes after May 15, there will be an additional penalty of 10% on the outstanding taxes. Delaying the filing of your returns beyond May 15 is expensive.
Should everyone file tax returns?
Employees earning only employment income which have been subjected to monthly tax deduction need not submit any tax returns as their taxes deducted under the monthly tax deduction scheme will be regarded as the final tax. Although it is final tax, the IRB retains the right to review the assessments and issue additional assessments in case there is an understatement of taxes. Although individuals who do not have any taxable income or are below the taxable income thresholds need not file tax returns, it is advisable to file the returns to safeguard your rights in case an amendment has to be made.
Retirees who have been filing tax returns in the past and perhaps currently they are receiving income that is not subject to tax, such as pension, can choose to cease filing their tax returns. In such circumstances, it will be advisable to write in to the IRB to close their tax files. Please ensure you get an acknowledgement or reply from the IRB to avoid any disputes with the IRB in the future. This equally applies to taxpayers who are permanently leaving the country upon obtaining the tax clearance.
Take advantage of the tax reliefs
All reliefs are available in the e-filing system. Once you enter the e-filing system, the information on the tax reliefs is automatically displayed and it is easy to pick the ones that you are entitled to. In addition to the existing reliefs, the new reliefs available for year of assessment 2024 is the expansion of relief for medical expenses for self, spouse and child for dental treatment (limited to RM1,000), expansion of scope of tax relief for medical treatment for parents to include complete medical examination (limited to RM1,000) including skills enhancement courses to the existing lifestyle relief of RM2,500, increasing the lifestyle relief to purchase sport equipment and gym membership fees to RM1,000.
Keeping records
It is compulsory under the law to keep the relevant bills to support your relief claims for a period of seven years. In any tax audit, you will be asked to produce the underlying records supporting your claims, and in the event you are unable to produce this records, your relief claims will be denied and you will be subjected to penalties on the grounds that you have underpaid your taxes.
All donations you wish to claim tax deductions should be supported with Section 44(6) receipts issued by the approved charitable body or institutions.
Other matters to be declared
The tax return form requests you to declare any foreign bank accounts, and whether you have remitted any foreign sourced income into Malaysia. If you have foreign bank accounts, be prepared to explain the source of the funds in case you are requested to prepare a capital statement by the IRB.
If you have disposed of any real property, you need to disclose this in the return. Please ensure that the Real Property Gains Tax returns have been filed.
This article is contributed by Thannees Tax Consulting Services Sdn Bhd managing director SM Thanneermalai (www.thannees.com).
It is compulsory under the law to keep the relevant bills to support your relief claims for a period of seven years. – Bernama filepic
