The Tax Season

MALAYSIANS from all walks of life are probably gearing themselves to carry out their national duty - submission and payment of income taxes.As tax rules and laws can be quite tedious and complex, there is almost invariably the fear of the unknown as the penalties for incorrect submission of tax returns could result in hefty penalties and fines.Issues such as the deductibility of expenses, the taxability of gains made (are they capital gains? .

.. and therefore not taxable perhaps.



..), timing of taxation of income earned and many more questions abound.

Resident taxpayers who do not carry on business and earn only employment income essentially would be filing the Form BE by30th April 2025. There is a grace period of 15 days for submission via e-Filing, which effectively means that the final deadline for Form BE submissions is May 15 this year. A resident individual running a business will need to submit theForm B (or Form e-B for e-Filing).

Individuals that are earning employment income as well as carrying on business would also be filing the Form B. The deadline to submit the Form B for the YA 2024 is June 30 this year, with the deadline for e-Filing submissions being July 15.Employers are required to issue EA forms to their employees who worked for them during the year of assessment by Feb 28 of the following year.

This means that for YA 2024, employees should have already received their EA forms from their employers by Feb 28 2025. If an individual has worked for more than one employer over the course of 2024, he needs to reach out to the HR department of the previous employer for a separate EA form. For all Malaysian businesses, it is crucial to submit the Form E to the IRB via e-filing by April 30 2023.

A failure to submit the form on time could result in a penalty of RM200-RM20,000, imprisonment for up to six months, or both! Given the strict enforcement by HASiL, businesses must ensure compliance to avoid unnecessary penalties.For employed individuals, in addition to salaries, there might be other benefits or perks that they receive as part of their employment income. Are such benefits taxable in Malaysia? This isn't such a straightforward answer, as it depends on the type of benefits - as well as exemptions available.

In short, there are two types of benefits: * Benefits-in-kind (benefits that are not convertible into money)* Perquisites from employment (in cash, or convertible into money)Both categories are technically taxable, although there are exemptions such as petrol and medical benefits. These exemptions, however, do not apply if the employee in question is a director, or an employee who has "control over his employer" via the holding of shares. It is important for both employers and employees to understand these nuances to avoid unintended tax liabilities.

For most taxpayers, the immediate priority during the tax season would be to start looking for information on all the tax reliefs, deductions, and rebates that are claimable so that they would pay less tax. Keeping proper documentation is crucial in this regard, as HASiL has the authority to request supporting documents for claims made. With proper planning and awareness of tax obligations, taxpayers can navigate this tax season efficiently while ensuring compliance with tax regulations.

Another crucial aspect to be aware of is the potential for a tax audit by the authorities. HASiL conducts tax audits to ensure compliance and detect underreported income or improper claims.Taxpayers should ensure that their records are accurate, complete, and readily available in case of an audit.

Common triggers for tax audits include inconsistencies in reported income, excessive claims for deductions, or discrepancies between employer-submitted records and individual filings. Being prepared and maintaining proper documentation can help mitigate risks and ensure a smooth process in case of a tax audit.* The writer is council member of Chartered Tax Institute of Malaysia and tax partner of SCS Global Consulting (M) Sdn Bhd.

© New Straits Times Press (M) Bhd.