Hi all,

For a newly-formed company intending to pay only Director Fees, is there a need to register with EPF, Socso and LHDN, and then remit any % of Director Fees to them?

Thanks.

Among the payments not liable for EPF contribution:
• Service charges
• Overtime payment
• Reward
• Retirement benefits
• Retrenchment, temporary and lay-off termination benefits
• Any travelling allowance or the value of any travelling concession
• Payment in lieu of notice of termination of employment
• Director's fee

The above list is not exhaustive. Should require further clarification, please contact our Call Management Centre at 03-89226000, enquiry or any EPF Office.
http://www.kwsp.gov.my/portal/en/employers...-responsibility

Categories of employees exempted from SOCSO's coverage:-

• Government employees
• Domestic servants
• Self-employed persons
• Foreign workers
• Business owner and spouses of sole-proprietorship or partnership
http://www.perkeso.gov.my/en/employer-a-employee.html

LHDN...I think director can-lah

Thanks, yklooi.

So it means that Director's Fees have to pay PCB to LHDN?

I think it depends on the amount......
example.
http://www.hasil.gov.my/goindex.php?kump=5...it=5000&sequ=11




This post has been edited by yklooi: Sep 14 2013, 03:15 PM

What is the best way to pay Director without having to pay LHDN upfront?

pay at the end of the year?

Maybe I should rephrase my question:

What is the best way to classify payment to myself on a regular basis, without the company having to pay EPF, Socso, LHDN or Kastam?

good question....
what about dun't pay director fees above the taxable rate?

Which is RM2,500 per year? Can't survive with that amount la.

what about paying a little taxes and the director got higher fees...both win-win for the director and the govt....
unless you have certain reason against paying taxes.
that's is all I know.....
guess the govt needed taxes to run and give BR1M among others

Taxes has to be paid of course. My point is that if I receive the Director Fees, I will have to declare it in full in my BE Form. That is on personal income tax.

On the company side, I would like to find out what procedures there are when it comes to my Sdn Bhd paying me the Director Fees, as in what are the procedures and % of tax to be paid, and when.

get the advise of a qualified tax accountant......what is posted here may not be "qualified". and you may end up in deep shit with the govt. ha-ha

I am sure there are some excellent tax/accounting/cosec types here

then how do you who is real?
are they really helping you or secretly "hurting" you in the end?

Director salary paid for each month - subjected to EPF, Socso, PCB (Tax instalment)

Director fee paid in ad-hoc basis - Not subject to EPF and Socso, Have to declare in BE form

Company tax rate is at 20% (For the first RM500k chargable income), subsequently 25% flat rate.
While Personal tax rate is multi tier rate, max at 26%.
These figure will help u in your business tax planning

If pay dividend, is it taxable at personal level?

Or if pay ownself as consultant?

Even if u declare dividend, the profit at Company level still has to pay tax.

Then why not declare director salary/fee to reduce it? is all about tax planning

but TS is seeking to "What is the best way to classify payment to myself on a regular basis, without the company having to pay EPF, Socso, LHDN or Kastam?"

My bad

Dividend would be the best option to avoid all the above, since our tax structure is tax on one source.

So it is best to, for example, let the company revenue be taxed maximum at 20%, then declare the Profit After Tax as dividends (which is not taxable at the personal level at 25%)?

Every Sdn. Bhd. will appoint auditor and tax agent, why not u ask them regarding this matter?

You will need to pay PCB for the directors.

Do it before 10th next month. If you already missed out the timing, make it to an accrual director fee.

Dr. Director fee
Cr. Other Payables (Amount owing to Director)

When you think time is good, just pay it by deducting PCB using the 2013 PCB calculator.

Thanks. How about paying out as Consultancy Fees instead of Director Fees? Are there any deductions to be made?

You would need to hv proper invoice for billing.

For professional fee (tax filing & secretary fee) , it's a disallowed expense , need to add back in tax comp.

Not sure about consultancy fee, pls clarify the consultation.

To claim it as a business expense, unless the director has a firm or a consultancy company, and to put the so called "director fee in same shit" in his revenue as business income.

Overall, the tax would be in our beloved government's hand no matter how, unless you do it fictitiously by manipulating.

This post has been edited by ck23: Sep 16 2013, 10:43 PM

If say my company get RM10,000 in revenue, I just want to pay myself RM10,000 in the easiest possible way. Not planning to avoid tax.

Revenue aka turnover aka sales. Are you trying to say Profit before Tax?

A Sdn Bhd needs to file CP204 monthly. Please budget it wisely.

You are asking so is like your CP204 paid for was lesser than estimate and will kena the shortfall 10% penalty.

If you transfer the profit to your own, you will be levied Personal Tax. (Unless it's a dividend payout)

Overall it's just the same. Maybe if you haven't reached the tax bracket, based on scale rate, you save a bit rather than paying 20% flat rate for SME. (On the first 500k Profit, though)

This post has been edited by ck23: Sep 17 2013, 10:31 AM

I get what you mean by the 26% personal vs 20% corporate tax rate, and on the dividend payout being paid from PAT and hence not taxable at personal level.

Thing is, I have not lodged anything to LHDN (or EPF for that matter), so how do I pay myself?

then you should register employer account with LHDN. They will give you a ref number starts with E.

Due Date for Form E return is every 31 March, next year.

You can pay to your own self anytime. If your annual income is RM29950, then no need file PCB.

Just pay as a director fee. However, it needs a company resolution for it.

So in the meantime just pay as "Advance to Director"? Then later knock off salary/pcb/epf from there?

ck23,

I think it is more of an advance since the money is needed first.

Thanks for your advice!