Monday, 1 May 2017

What Is Tax Rebate?


The example in the previous chapter shows a tax amount of more than RM4,000 – that’s quite a big sum. But this may not be your final tax yet. The last step you can make to reduce your tax is through tax rebate.




Most people confuse income tax rebate with income tax relief. The difference between the two is: a tax relief is deduction from the total income to derive your chargeable income, whereas tax rebate is deducted from the actual taxed amount.





Sunday, 30 April 2017

Tax Rates For Year Of Assessment 2016 (Tax Filed In 2017)

Now that you understand how to derive your chargeable income to file for your 2016 income tax, we can calculate how much tax you will be paying for last year’s assessment.


Justin Bieber


Saturday, 29 April 2017

What Is A Tax Exemption?

Fortunately, taxpayers in Malaysia are not taxed on our total income, as certain portions of our income are tax exempted. For income tax filed in Malaysia, we are entitled for certain tax exemptions that can reduce our overall chargeable income.
Tax exemptions either reduce or entirely eliminate your obligation to pay tax. Most taxpayers are entitled to an exemption on their tax return that reduces your tax bill in the same way a deduction does.
The following tax exemptions will not be included in the taxpayer’s EA Form:

The above tax exemptions are subject to approval, and conditions set by LHDN.
Read on to understand more about the above tax exemptions:

Friday, 28 April 2017

Tax Reliefs For Year Of Assessment 2016 (Tax Filed In 2017)

What is a income tax relief? Tax reliefs are set by LHDN, where a taxpayer is able to deduct a certain amount for money expended in that assessment year, from the total annual income. These are for certain activities or behaviours that the government encourages or even necessities or burdens to lighten our financial loads.


For income tax Malaysia, tax reliefs can help reduce your chargeable income, and thus your taxes. If planned properly, you can save a significant amount of taxes.


In our example, a taxpayer would have been taxed about 10% of his total chargeable income of RM84,300 if he had claimed no tax reliefs at all.

However, with the self & dependent tax relief of RM9,000, life insurance & EPF relief at RM6,000, his total chargeable income is now RM69,300, hence, he would only be taxed about 8% of his chargeable income.


Thursday, 27 April 2017

What Is A Tax Deduction?


After deducting tax reliefs from your annual income, you can still reduce your chargeable income with tax deductions.


In Malaysia, a tax deduction is similar to a tax relief, where it reduces your chargeable income. Tax deductions are a result of Gifts and Donations.


Donations are only tax deductible if the donations are made to Government approved charitable organisation or directly to the Government, and you must keep the receipt of the donation.

For income tax 2017, if your chargeable income is RM55,000, and you’ve donated RM2,500 to an approved charitable organisation, you are allowed to deduct 7% of your aggregate income to reduce your chargeable income.

For income tax 2017, if your chargeable income is RM55,000, and you’ve donated RM2,500 to an approved charitable organisation, you are allowed to deduct 7% of your aggregate income to reduce your chargeable income.


Total chargeable income after tax deduction
= RM55,000 – (RM55,000 x 7%)
= RM55,000 – RM3,850
= RM51,150