Chinese New Year is always my best opportunities to catch up with my friends especially those from secondary school. Most of us have been in the labour force for 3 years while there are a few whom just graduated. Suddenly “Hi Nova I am just wondering, am I taxable? When should I declare tax?” …. Ooohhh suddenly it hit my mind that this question has been asked many times before. So I decided to include my answer in this blog.Generally, anyone whom is already working suppose to start declaring your income to Inland Revenue Board (IRB). BUT!!! Its not the first time that I had heard so many complaints from my friend (whom have salary of less than RM2500 per month) that are not “allowed” by the IRB officer to open an account with IRB. Most companies will open a tax account for you with IRB but there are some smaller companies which don’t do that for you.
Basically for those whom already has a tax account, it’s advisable for you to declare you income every year. But for those without, try to open one even if your income is below RM2500 (although sad to say that you might be asked to go home by the IRB officer). Don’t forget althought your basic might be below RM2500, but your annual income might be still more than RM30,000 (RM2,500X12months) due to bonus, allowance, over time claim and other income.
There is a very big chance that you are actually over charged for tax paid during the months which you get higher pay cheque (example during the months that you receive your annual bonus or quarter yearly sales commission). After you declared your income tax and realize that you are actually not taxable or IRB has actually over charged you, IRB will return the excess to you by sending the cheque to your home (It really works because I received it before last year).
I hope this write up comes in just in the write time during this time that most already receive their B form from IRB J. All the best in your tax planning.
Question and Answer
1) Dear Nova, the RM2,500 chargeable income in the schedule above refers to the monthly salary or total annual income? eg if my annual income is RM30,000, for the first RM2500 im not charged..followed by the next 2500 i'm charged at 3%?
First of all you have to differentiate between your annual income and your income taxable.
Income Taxable = Annual Income - Tax Deduction
Example of tax deductions are EPF/insurance, computer, medical expenses, gift to charity and investment in SSPN
Therefore if your annual income is RM30,000 and assume your total tax deduction is RM27,000 therefore your taxable income is RM3,000. Therefore based on the schedule above, the tax payable is (RM2500X0%) + (RM500X1%) which is RM5.
Anyway this is just an illustration. There are still many tax exemption when you fill in the BE form. Therefore if your annual income is RM30,000, most probably you are not taxable. But incase you are taxed some where when you actually have higher income in a particular month due to bonus/special allowance, therefore IRB will have to return the money (which are deducted on that particular month for tax) to you.
