Hi everyone,
I want to ask about dividend. I read at a link in this forum and it says that we need to pay tax for dividend we recieve every year except for singletier dividend, we do not need to pay tax.

For normal dividend, when we get it, do we need to pay tax for it?

For example:
I have 1000units of GENTING and it pays 1st interim RM0.02 as dividend.
Then, I will get RM20 as dividend.

Do I need to pay tax for the RM20?

Please help.

i believe for all dividend from YA 2008 onwards, they are adopting single tier dividend which means u dont have to pay for the tax.

Hi,
Thanks a lot for the help. Now, I finally understand.

So, I can concentrate on my dividend investing style.

Think you believed in the wrong thing, for companies with big balance under their s108 tax credit, they still can declare imputation dividend for another 4~5 years (depends on the transition period given or exhaust of their tax credit).
Anyway, one tier mean you had paid the tax in advance using the company tax rate, not don't have to pay tax
http://thestar.com.my/news/story.asp?file=...&sec=budget2008
http://malaysiantaxation.blogspot.com/2008...it-balance.html

This post has been edited by htt: Jul 15 2009, 09:19 AM

sdas86,

If the company is adopting single-tier tax, it will be stated in their announcement when publishing their dividend. It would read something like "x.x% per ordinary share tax exempt under the single tier tax system". If that's the case, then no tax for the dividend. Unless otherwise stated, you will have to pay the tax still.

For s108 dividend frank out of existing tax credit, normally for individual investor, it is advisable to declare the dividend received in order to enjoy the tax credit. Hence you might sometime claim back your excess tax credit, and it is not unheard off for some individual with sizable dividend to claim back tens of thousand in tax refund every year.

They are a lot of people who did not declare to claim the tax credit, because they worried about IRB audit where they get the money to buy these share in the first place. That, truly is their losses.

Now with single tier dividend, you are tax at 25% (at the source) regardless of the tax-tier. For single tier dividend, you do not need to declare anything.


This post has been edited by plc255: Jul 15 2009, 10:03 AM

Incorrect, whether or not the company is adopting single-tier tax or still uses s108 franking, on the part of the shareholders, it is deemed as paid. This is because the company will declare dividend, minus the tax, and send out the dividends to the shareholders.

Simply put, the shareholders do not need to declare or pay tax in lieu of the dividend, because it has already been paid for by the company

Sure boh ..
I think we need to declare the divident and pay the tax .. you can see it behind the EA form ..

I know someone who didnt declare and get caught .. fine and blacklist ..

To be safe , just drop by Income tax department and ask ..

This post has been edited by MoonRider: Jul 15 2009, 01:58 PM

I think, by right the taxpayers need to declare all sources of incomes, including foreign sources ( the completeness and not on purpose omitting some )

In practice, many could qualify themselves by not declaring.

A norm, but might not the correct way.

This post has been edited by SKY 1809: Jul 15 2009, 02:12 PM

That is correct.


You declare to claim tax credit.

Give a simple example, let say a person receive RM18,000 net a year of dividend from various listed company.
If all the dividend is s108 frank dividend, so Gross dividend will be RM24000, minus 25% tax, hence you get RM18000.

Let's further assume that this person had retired with no other income, so he declare his income to IRB as follow:

Total income = Gross Dividend income = RM24000
Tax Credit (Tax already paid) = RM6000
Net Dividend = RM18000

But based on his total income of RM24000 for the assessment year, he should not pay any tax (lowest tax band + personal relief etc).
Hence IF he declare this dividend, he is entitled to a RM6000 refund from IRB. And I had seen these IRB cheque for this sort refund before, plenty of times, these days with online submission, these refund came back in about 1 month.

This is a highly simplified case, hope that everyone get the point. Also this knowledge is about to be obsolete, thanks to single tier dividend.

I suspect it is something else, and nothing to do with not declaring dividend.
BTW, the dividend mentioned here is dividend from the public listed company in KLSE. Other country / type, I dunno.

No matter what you still need to pay tax.

Using the old way, you get tax first @ 25%, then you can claim back the extra when you fill your tax form in mar every year.

The new method, your dividend is also tax, but at source. That means your dividend is given to you already tax'ed. But single tier means less paper work for you.

Tax man mantra: Pay me more is fine by me; pay me less and fine on you.

Xuzen

To make it clearer for those not familiar,
whether old imputation or new single tier, the dividend received in your hand is already taxed in the first place.

And to put it in more simpler term :

The cheque that you get in your mailbox, no need declare, no need pay tax


Why ?

It has been taxed at source .

Which is a bummer for me... because my tax bracket is below 25%. Sob sob sob... cry cry cry!

Xuzen



This post has been edited by xuzen: Jul 15 2009, 04:48 PM

Which section of Income Tax law says so ?

Mind you, there are foreign dividends too, like those investing in overseas.

This post has been edited by SKY 1809: Jul 15 2009, 05:22 PM

Actually, to be safe, declare everything, no matter imputation or one-tier or tax exempted, but state clearly, then you won't miss out anything & safe...

I agree , 1097.24%.

Esp for those invest globally like you.

This post has been edited by SKY 1809: Jul 15 2009, 05:30 PM

Solution : Aim to bump your tax bracket to 25%

Is REIT Dividend Tax rate 25% as well ?
i think i read somewhere that a forummer said it is only 10% witholding tax ?

Normal Dividend - 25%
Single Tier - 0% (Already Taxed)
Tax Exempt - 0% (No need to pay tax)
Capital Repayment - 0% (No tax)
REIT Dividend - ???

hope someone can clear my doubts.. ty

This post has been edited by mopster: Jul 15 2009, 05:40 PM

REIT dividend that is taxable has a 10% withholding tax, instead of the 25% tax.