Every tax payers are allowed to claim tax reliefs to set-off against their employment or business income when calculating their personal tax.

However, based on our experience, most of the tax payers have easily believed that they can just fill in any amount as they think fit in the tax relief column, for example, books relief, at the time when filling up the tax return form. 

Some tax payers have recalled that they have purchased some books in last year but are unable to locate these receipts now. They will based on their best judgement to put in an amount, say RM800.

This has in fact put them in a very dangerous situation where most of the tax payers will not bother to search those receipts after they have submitted their tax return form. Ultimately, those receipts will be gone forever after 2 years!

As such, report what you have and not what you think you have and keep all the bills/receipts in a safe place or in your tax folder. You will be able to produce those receipts to  the officers of Inland Revenue Board (IRB) in any future tax audit request.


Failing to produce those receipts will result in at least 45% penalty based on under-declared tax payable by the tax payers.

The penalty for omission or understatement of income is provided under Section 113(2) of the Income Tax Act 1967, which is 100% of the tax undercharged.

Record Keeping

Please report whatever you have and keep the following documents for 7 years:

  1. EA/EC Form
  2. Original dividend vouchers
  3. Insurance premium receipts
  4. Books purchase receipts
  5. Medical receipts
  6. Donation receipts
  7. Zakat receipts
  8. Children`s birth certificates
  9. Marriage certificate
  10. Other supporting documents
  11. Working sheets (if any)

The calculation of the 7 year period begins from the end of the year in which the ITRF is filed.

Taxpayer Responsibilities

Every taxpayer who is liable to tax is required to declare his income to IRBM. The taxpayer is responsible for:-

  1. Obtaining and forwarding Income Tax Return Form (ITRF):The taxpayer has to send or submit the ITRF that has been duly completed before 30th April every year to the address below :-Information Processing Department
    Inland Revenue Board of Malaysia
    Level 10-18, Tower C
    Persiaran MPAJ
    Jalan Pandan Utama
    Pandan Indah
    55100 Kuala Lumpur
  2. Declaring income and claiming expenses.
  3. Computing income tax payable.
  4. Keeping records for audit purposes.
  5. Paying the income tax payable.

 

Popular Now:  Malaysia Personal Tax Rates (Table) 2011 Hot highlights

3 COMMENTS

  1. Keep all the receipts for 7 years? Recently, quite a number of my colleagues and l have received the CP547X notice from LHDN claiming that we still owed unpaid tax arrears backdated to even 20 years (as in my case)We are threatened with court actions and other consequences if the amounts which are claimed unpaid are not settled by given datelines.Upon making enquiries at the LDHN (P.J) l was told that the unpaid amount dated back from 1992 to 1999. At that time, my salary was too meagre to be taxed. I was a primary school teacher then. Can you tell me how l could explain to them that 20 years is too long a period to be keeping all those records – please?

    • Dear Leong, LHDN will not investigate any further on the amount since it was more than 7 years.

      LHDN should have looked after these outstanding from you then, but they didn’t. Thus you were also not aware you owed them money.

      But this does not stop them from claiming the outstanding from you now.

      Since you were not aware on the outstanding 20 years ago (since they never chase you), it will be impossible for you to keep these records (employment contract, pay slip, bank statement, EA form).

      Unless you proved the outstanding was wrong by giving evidence to LHDN, the court will assume all figures recorded in the LHDN system are correct.

      Sorry to say that you will have no choice but to pay the outstanding.

  2. are they not time barred under the limitation act since its over the period of more than 6 years?

LEAVE A REPLY

Please solve the math to comment. Thank you. * Time limit is exhausted. Please reload CAPTCHA.