Income Tax is levied on "Chargeable Income" and not "Profit" or Salary.

In Income Tax terms, you have Gross Income, Adjusted Income, Statutory Income, Total Income and Chargeable Income.

Tax computation is easier for salaried employees compared to business owners.

I have prepared some write-up on Borang BE 2008 in www.mytaxation.blogspot.com

PCB is just a tax collection method, not a final tax. What is deducted from your salaries monthly is totalled up in a year and compared to your actual tax for the year when you calculate your tax when filing in the Borang BE. If there are shorfall, then you have to pay the balance. If there are overpayments, then you will get a refund from the IRD.

For business owners, your profit of, say RM75,000 is not taxable as it is. You have to calculate what is your chargeable income. If you do not know how to calculate, then you need to look for an approved tax agent.

It does not mean that you cannot file in your own tax returns. The 'approved' means that a person who opens up a shop claiming himself to be a tax agent must be approved by the IRB. Just like a doctor or a lawyer, they must be licensed.

My opinion is, if you own a small business, no need to go to those big accounting firms, their fees may be higher than your tax itself. Go look for a smaller firm. The list of approved firms can be found in the IRB's website.

Under Section 77 of the Income Tax Act, you have to furnish the Income Tax department the information on your income within 30 days when the IRB asks for it. Meaning if you are issued with a return form "B" or "BE", etc, you HAVE to return to them, even if you have "0" income.

Yes it is. There is a detailed explanation in Section 139 of the Income Tax Act for what constitute 'control over the company'. Basically it means you or your associates have shares in the company or have control over the company. If you are just an ordinary employee of a Sdn. Bhd. company, then chances are you are entitled to those tax exemptions.

However, there are a few complications and conflicting rulings with regards to the list of tax-free income listed here.

Firstly, the definition of 'control' is different in Section 139 and Public Ruling 1/2006 (issued 25/02/09). Note that Section 139(7) include 'associates' whereas Note 6.2(a) in PR 1/2006 does not.

If you are working in a company owned by your parents, you are deemed to have control over the company by virtue of Section 139 but NOT if you follow the definition of PR 1/2006 because it does not cover parents.

Secondly, although the list given by the IRB stated that all the 17 items are not available to 'employees having control over the company', item (13) 'Awards' and item (14) 'Leave Passage' are given separately under Para 25C of Schedule 6 and Section 13(1)(b)(ii) respectively.

Para 25C of Sch 6 and Sec 13(1)(b) DO NOT say that these are not available to 'employees having control over the company'. How can the PR sets out conditions that overrides the Income Tax Act ?

As at now, the Finance Bill has not been gazetted yet by Parliament so we do not know if they are going to incorporate these into amendments for Para 25C and Sec 13(1)(b).

Let's keep our fingers crossed.

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Added on April 2, 2009, 10:48 amSince it's 'dikecualikan', no need to put lah.

This post has been edited by gtchye: Apr 2 2009, 10:48 AM

Yes, C1 is for all income from employment (from your EA Form). F2 is also from your EA Form Item D(1). You can follow my step-by-step guide to fill up your Borang BE here

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Added on April 2, 2009, 1:15 pmYou should get a EA Form from your employer. Report only those stated in your EA Form (other than those tax-exempt income in Item G in your EA Form).

This post has been edited by gtchye: Apr 2 2009, 01:15 PM

If your company is a Sdn. Bhd., it will have to submit Form C.

Chances are you are an employee of the Sdn. Bhd. company and you should submit Form BE.

That is only my guess as there are insufficient info in your question.

If your part time job pays you salary, then you should add the 2 salaries that you get and fill the total in the Form BE under 'penggajian'.

If you have expenses, then you should deduct your expenses first, and the net amount fill in the 'penggajian' column. However, you have to make sure that those expenses are allowed to be deducted from salaries.

If you have a salary and a 'part time business', then it is different story altogether.

Tax on dividends received under the single tier dividend system are considered as final tax.
Dividends received under the imputation system can still claim Section 110 credit.
You have to read what your dividend vouchers say.

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Added on April 8, 2009, 12:13 pmIt is interesting to explore this :-

If the house is registered under your name, can your parent sign a rental agreement with the tenant and have the rental paid to them instead of you ? (assuming that your parents have no other income or in a lower tax bracket).

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Added on April 8, 2009, 12:15 pmYou are not allowed to deduct the whole loan repayment amount. Only the loan interests.

This post has been edited by gtchye: Apr 8 2009, 12:15 PM

Debbie,

1. Income tax as the name suggests, is tax on 'income'. You need to ask yourself whether the money that you get from piano lessons are your income. The answer is quite obvious. However, you need to know exactly how you derive your income. Earlier you said 'commission'. Now you say you got all the students by yourself.

Do you get commission or do you get the full fees paid by your students ? Whether you receive cash or through bank, whether you are attached with a centre or not is immaterial here.

2. Yes, you need to go to the LHDN office to get a number allocated to you and get the Form B.

Debbie,

As I mentioned before, you need to ask yourself if the money that you receive from piano lessons (whether commission or direct), translation work, type setting work, etc. are your income ? Your case is very clearly 'yes'. All income need to be declared.

You have to know that the IRB usually requires the payer of commissions or fees to list down who they pay them to, I/C No., address etc. Therefore, there is no escape for your income from the music centre and translation/typesetting jobs, unless the music centre and the company that you do translation work do not submit their tax returns.

As for your income from piano lessons received directly from individual students. Chances are your students are not going to tell the IRB that they have paid so much to you. The IRB is not likely to know if you have received such income. Of course the right thing to do is to declare. You may be able to claim some expenses as a deduction from your fees, eg. traveling, petrol, advertising, teaching materials, etc. if you treat this as your business.

You are welcome.

You have got the right form but the English version is 'for reference only'. You should use the Bahasa Melayu version for filing.

I think you should fill up C1, C2 etc for each of your businesses, i.e. translation/typesetting and piano lessons instead of C15.

2. IRB stands for the Inland Revenue Board (Lembaga Hasil dalam Negeri)

3. Do you mean PCB deduction or deduction for expenses ? If your question is 'What would happen if someone's PCB deductions are more than his income tax?' Then the answer is "the LHDN will refund to you the overpayment".

You do not deduct expenses from the income tax. You deduct expenses from your income. Then only you will get your 'chargeable income'. Income tax is levied on your chargeable income.

Forget about your pay slips. You should fill up your BE Form using details from your EA Form. When the pay slips were prepared, the exemptions were not announced yet.

If the incomes are exempted, you do not have to fill up in your Form BE. Only taxable income are required to be filled up in Form BE.

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Added on April 11, 2009, 10:18 pmAll non-taxable income are group together and appear in Item G in your Form EA. These income do not need to be declared. If your 'Touch n' Go' appears in in any other item other than G, it is taxable. You should ask your HR department why they treat this as a taxable item. They may have their reasons.

This post has been edited by gtchye: Apr 11 2009, 10:18 PM

For dividend income, the date of payment is the date you receive the dividend. If the date of payment is in 2008, then you should declare as 2--9 income, regardless od the accounting year of the company.