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 Personal relief Income tax, legally, reduce income tax

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TSlucifah
post Nov 22 2006, 03:25 PM, updated 5y ago

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OK. this thread is not for the faint at heart.

This thread serves the purpose to help those with an annual income exceeding RM70,000 or businessess where you can't alter your profit or loss

the question:

How do I reduce my income tax?

Of course, some of my ways would be:

1. Increase expenditure
2. Buy lots of assetts - vehicles h&p, building s&p, etc
3. Pay high salary to "family employees"
4. pay zakat
5. computer - rm 3,500 insta-rebate (sadly, every 3 yrs only)

any of you got any more ideas? i do hope LYN hs some real accountants / editors who can share their thoughts on how to reduce the taxes without breaking any law
jeremy0
post Nov 22 2006, 03:46 PM

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hehehe...have lotsa children....each children will get u rm1000 deduction...

it depends on whether ur a fixed income earner or running a business...if ur doing business, then there are more ways of tax avoidance...if ur under employment, just make sure to:

-make sure ur EPF+life insurance is rm6k and do not exceed
-educational insurance/medical insurance around rm3k
-buy shares, in which u can use the sec 110 setoff to deduct ur tax payable...
Singh_Kalan
post Nov 22 2006, 03:52 PM

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QUOTE(lucifah @ Nov 22 2006, 03:25 PM)

*
buy vehicle can deduct mei? The 3.5k for computer is not a rebate ler. Its a deduction only.
tasnim
post Nov 22 2006, 04:17 PM

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Books are deductible... make sure you keep the receipt
TSlucifah
post Nov 22 2006, 07:06 PM

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QUOTE(Singh_Kalan @ Nov 22 2006, 03:52 PM)
buy vehicle can deduct mei?  The 3.5k for computer is not a rebate ler. Its a deduction only.
*
the hire & purchase agreement is tax-deductible (since you pay the setem cukai / hasil there already)


QUOTE(tasnim @ Nov 22 2006, 04:17 PM)
Books are deductible... make sure you keep the receipt
*
that's only RM500.00 and i've maxed that out with newspapers & mag subscriptions
yihyan
post Nov 22 2006, 07:08 PM

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3. Pay high salary to "family employees"

I would say is the best one.....
put all sort of expenses into their "salary package" smile.gif
vacation, transportation, meal allowance....etc...tat could mean a lot...
even go shopping also can claim....
mystvearn
post Nov 22 2006, 08:39 PM

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buying educational books can help, bring the recipt. I thought there was one article in the newspaper about it. Tried LHDN website?
TSlucifah
post Nov 22 2006, 10:45 PM

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QUOTE(mystvearn @ Nov 22 2006, 08:39 PM)
buying educational books can help, bring the recipt. I thought there was one article in the newspaper about it. Tried LHDN website?
*
educational books or even comic books are considered under the rm500 rebate for books, which i have maxed out since early of the year

that leaves about rm 9,500+ to pay the govt wink.gif
SUSmxxuang
post Nov 22 2006, 11:23 PM

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Here's a list of personal relief which might help you :

This only apply to resident individuals. These relief are not available to you if you're not an resident individual.

Section 46
a) Personal relief : RM8000
b) (i) Medical expense for parents : RM5000(max)
(ii) Medical expense for taxpayer(you), spouse and children in respect of serious diseases : RM5000(max)*
c) Basic supporting equipment(i.e. wheelchairs, crutches for disabled taxpayers, spouse or child) : RM 5000
d) Disabled tax payer(Hopefully you don't make yourself one) : RM6000
e) Fees for education in law, accounting, technological, vocational or industrial fields scientific and ICT : RM5000(max)
f) Expense on a complete medical examination : RM500(max)*
g) Purchase of books : RM700

*Total of (f) and (b)(ii) should not exceed RM5000

Section 47
a) Wife/Husband relief(Only for combined assesment) : RM3000
b) Alimony payment(only males can claim) : RM 3000
c) Disabled person(only for combined assesment) : RM 3500

Section 48
This section covers reliefs related to your child/children

a) Normal relief : RM1000 per child
b) Disabled child : RM5000 per disabled child
c) 1) For child studying in overseas(degree level and above) : RM4000
2) For child studying in local institution(Diploma level and above) : RM4000
d) Disabled child satisfying criteria (C) above : RM9000

Section 49
a) EPF & Life insurance premium : RM6000
b) Medical and education premium : RM 3000
c) Purchase of an insurance policy utilising his credit in his EPF account : RM1000

There you go...Please keep in mind once you reduce your chargeable income till NIL, you can't claim any relief anymore...Any questions, please ask.

This post has been edited by mxxuang: Nov 22 2006, 11:42 PM
TSlucifah
post Nov 23 2006, 12:01 AM

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QUOTE(mxxuang @ Nov 22 2006, 11:23 PM)
Here's a list of personal relief which might help you :

*
this list is available right out of the income tax booklet

however, all that you had stated must be attached with a valid receipt and supporting documents,

unfortunately, i am very healthy

and no, i am not going agains the law. dun main2 dgn income tax woooo... they know everything wink.gif

i am thinking of "smart" ways that seems to be illegal, but is actually within the governing laws

i know smart accountants and auditors know them. however, when i asked them for advice, they'd cahrge me rm 2,500 for their professional fee, which i am very reluctant to and defeats the main purpose to increase my profit
SUSmxxuang
post Nov 23 2006, 12:26 AM

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QUOTE(lucifah @ Nov 23 2006, 12:01 AM)
this list is available right out of the income tax booklet

however, all that you had stated must be attached with a valid receipt and supporting documents,

unfortunately, i am very healthy

and no, i am not going agains the law. dun main2 dgn income tax woooo... they know everything wink.gif

i am thinking of "smart" ways that seems to be illegal, but is actually within the governing laws

i know smart accountants and auditors know them. however, when i asked them for advice, they'd cahrge me rm 2,500 for their professional fee, which i am very reluctant to and defeats the main purpose to increase my profit
*
Well, they are accountants, of course they'll try to make money out of you whistling.gif Anyways in case you're caught cheating on your taxes, the one who advices you on how to cheat your taxes can be caught too. So you don't see many accountants giving you free advices.

If you're a self-employed businessman with your own business you there are more ways you can reduce your taxes as you can claim many of your personal expenses as business deductions. But if you're just a regular 'makan-gaji' worker, there's nothing much you can do, except get married, and have lots of children...

Actually I doubt the IRB would ever knock on your house door asking you to produce the receipts. They rather go after the big guns tax evaders and(of course) ask some duit kopi from them.

This post has been edited by mxxuang: Nov 23 2006, 12:28 AM
jeremy0
post Nov 23 2006, 09:40 AM

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QUOTE(mxxuang @ Nov 23 2006, 12:26 AM)

Actually I doubt the IRB would ever knock on your house door asking you to produce the receipts. They rather go after the big guns tax evaders and(of course) ask some duit kopi from them.
*
There are desk audits for Self-Employed (BE Category) & external audits for Businesses (B & P)...No, tax officers won't take any money on the spot nor accept any other offerings... wink.gif ...heck, they even bring the Hasil brand mineral water to maintain independence...

The best way to reduce tax for self-employed is still thru dividends....this is especially the case for company director's and important personnel within the company who earn 5 figure monthly salary....anyway, just remember, having a higher level of annual income would allow u to purchase more property/assets without triggering an investigation.



dreamer101
post Nov 23 2006, 10:04 AM

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QUOTE(lucifah @ Nov 22 2006, 03:25 PM)
OK. this thread is not for the faint at heart.

This thread serves the purpose to help those with an annual income exceeding RM70,000 or businessess where you can't alter your profit or loss

the question:

How do I reduce my income tax?

Of course, some of my ways would be:

1. Increase expenditure
2. Buy lots of assetts - vehicles h&p, building s&p, etc
3. Pay high salary to "family employees"
4. pay zakat
5. computer - rm 3,500 insta-rebate (sadly, every 3 yrs only)

any of you got any more ideas? i do hope LYN hs some real accountants / editors who can share their thoughts on how to reduce the taxes without breaking any law
*
Perfectly legal way to reduce your income. Appoint your wife, children and relatives to be non-voting directors of your company. They get pay and they do not have to work. They only have to attend meeting/party every now and then.

Dreamer
xcrue
post Nov 23 2006, 10:21 AM

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QUOTE(lucifah @ Nov 22 2006, 03:25 PM)
OK. this thread is not for the faint at heart.

This thread serves the purpose to help those with an annual income exceeding RM70,000 or businessess where you can't alter your profit or loss

the question:

How do I reduce my income tax?

Of course, some of my ways would be:

1. Increase expenditure
2. Buy lots of assetts - vehicles h&p, building s&p, etc
3. Pay high salary to "family employees"
4. pay zakat
5. computer - rm 3,500 insta-rebate (sadly, every 3 yrs only)

any of you got any more ideas? i do hope LYN hs some real accountants / editors who can share their thoughts on how to reduce the taxes without breaking any law
*
computer is rebate RM500 every 5 years smile.gif

r u seeking tax planning for individual or company?

For company, if the paidup capital is less than RM2.5million, the first Rm500k is taxable @ 20%, so for small company u r advisable to limit up the paidup capital.

U can appoint ur family members as directors as well by paying them directors fees,
hence the EPF rate can be increase from 11% to 19%.

Ur company can frank/issue dividend to directors by using retained earnings, distribution in specie as well. Hence ,the profit of ur company can be spread over to other directors who will be taxed at individual rate. By franking dividend, u have to make sure that there is enough S108 dividend credit in ur company account,else there'll be S106 penalty .

By paying dividend, the recipient can claim S110 set off (rebate at tax payable) @ 28% ,hence the possibility of getting tax refund is high if ur tax paybale rate or marginal rate is lower than 28%

there's more to go... smile.gif

TSlucifah
post Nov 23 2006, 10:27 AM

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QUOTE(dreamer101 @ Nov 23 2006, 10:04 AM)
Perfectly legal way to reduce your income.  Appoint your wife, children and relatives to be non-voting directors of your company.  They get pay and they do not have to work.  They only have to attend meeting/party every now and then.

Dreamer
*
exactly my plan (see tactic no 3)

is there any minimum age for a director? should the process go through lawyer and be made public thru newspaper?

QUOTE(xcrue @ Nov 23 2006, 10:21 AM)
computer is rebate RM500 every 5 years smile.gif

r u seeking tax planning for individual or company?

For company, if the paidup capital is less than RM2.5million, the first Rm500k is taxable @ 20%, so for small company u r advisable to limit up the paidup capital.

U can appoint ur family members as directors as well by paying them directors fees,
hence the EPF rate can be increase from 11% to 19%.

Ur company can frank/issue dividend to directors by using retained earnings, distribution in specie as well. Hence ,the profit of ur company can be spread over to other directors who will be taxed at individual rate. By franking dividend, u have to make sure that there is enough S108 dividend credit in ur company account,else there'll be S106 penalty .

By paying dividend, the recipient can claim S110 set off (rebate at tax payable) @ 28% ,hence the possibility of getting tax refund is high if ur tax paybale rate or marginal rate is lower than 28%

there's more to go... smile.gif
*
moar. moar

(somehow, i sense that you are an auditor lurking inLYN forum wink.gif)

dreamer101
post Nov 23 2006, 10:33 AM

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QUOTE(lucifah @ Nov 23 2006, 10:27 AM)
exactly my plan (see tactic no 3)

is there any minimum age for a director? should the process go through lawyer and be made public thru newspaper?
moar. moar

(somehow, i sense that you are an auditor lurking inLYN forum wink.gif)
*
Lucifah,

1) There is a difference. A director can still be working for someone else. Let say your son is working for company XYZ now. You can appoint your son to be director of your company while he is working for company XYZ. He cannot be a worker for both your company and XYZ company at the same time.

2) Unless you are a bumi, if your paid-up capital is 250K or higher, you have to give 30% of your company to a bumi. NEP applies.

3) What you need is a good accountant.

Dreamer
Canopies
post Nov 23 2006, 01:03 PM

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LOL>.

tell u how la

donate to the charity

and claim it from income tax...and the charity gv u how many percents back its legally yes
RDPD
post Nov 23 2006, 02:09 PM

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QUOTE(lucifah @ Nov 22 2006, 07:06 PM)
that's only RM500.00 and i've maxed that out with newspapers & mag subscriptions
*
Is it any limitation to the types of book? Only limit to education type book? or any book will do? For example those personal finance book can?
Thanks
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post Nov 23 2006, 02:44 PM

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QUOTE(lucifah @ Nov 22 2006, 03:25 PM)

How do I reduce my income tax?

Of course, some of my ways would be:

3. Pay high salary to "family employees"
Make sure the "family employees" tax rate is lower than that of your co. smile.gif

1 often used technique. Time your holidays during some conference/seminar related to your business. Fly first class, stay in the most expensive hotel money can get you ( all this as stated in the invoice. Where you eventually stay or exchange your 1st class tkt to economy class for 2 pax, well,... ...

Charge it all to the Co...all expenses paid holiday!

leekk8
post Nov 23 2006, 04:33 PM

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Is it we only be taxed when our annual income exceeds RM70k? I mean personal income tax here, as a normal employee.

If my annual income is RM70k, then the insurance premium is tax deductible, so, will I be taxed anymore?

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