First of all, you need to know what is considered income by Lembaga Hasil Dalam Negeri (LHDN). Is it just the monthly salary you get from your employer, or does it also include other types of income?
With effect from year 2016, an individual who earns an annual employment income of RM25,501 (after EPF deduction) has to register a tax file. These are the types of income that are taxable:
These are the types of income that are taxable:
- Business or profession
- Employment
- Dividends
- Interests (except bank deposit interests)
- Discounts
- Rent collected
- Royalties
- Premiums
- Pensions
- Annuities
- Perquisites, which includes bill claims, company credit cards, loans from company, sponsored club memberships, sponsored child tuition fee, personal driver and any benefits offered by your employer that could be converted into cash.
Here’s an example of how to derive your total income:
Now that you have your total annual income, you need to find out what your chargeable income is. Chargeable income, also known as taxable income, is your total annual income minus all the tax exemptions and tax reliefs you are entitled for.
Here’s an example of how to calculate your chargeable income:
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