IT’S tax season again!
Unfortunately, however, the filing procedure tends to end up being a truly “taxing” period for many individuals.
We’ve all heard the horror stories of people failing or forgetting (be it willingly or otherwise) to file their taxes only to be slapped with back-taxes so high that you’re likely to seek the help of money-lenders or psychiatrists.
The following are some simple tips to follow to help keep you on the correct path to filing your income tax.
Don’t miss out anything: Taxand Malaysia Sdn Bhd executive director Thang Mee Lee advises individuals to ensure that they declare the correct amount or claim the correct deductions when filing their income tax.
“Employees can rely on their EA Form as the assumption is that the details are declared properly from the employer,” she tells StarBizweek.
However, some individuals may forget to include additional details if they have other sources of income, such as a side business. For instance, if they are getting rental income from a property within Malaysia, it is still taxable,” Thang adds.
According to PricewaterhouseCoopers Taxation Services Sdn Bhd (PwC), taxable income includes profits from business, employment income, dividends and/or interests, rents, royalties or premiums, pensions or annuities and other income.
PwC executive director Hilda Liow cautions individuals not to assume that the monthly tax deductions by an employer is the final amount of tax payable.
“You still need to file and finalise your assessment for the year,” she says.
Thang points out that further that the income tax deadline for employed individuals is April 30.
“If you’re a sole proprietor or business partner, then the deadline is June 30,” she says.
Don’t delay: Filing your taxes on time not only helps avoid unnecessary problems in the future, but it also means not being slapped with a fine or penalty.
“Those who file their income taxes on the online e-filing system are also given a 15-day extension to do so,” says a tax consultant from Deloitte Malaysia.
This would mean that the deadline extension of 15 days for employees is May 15, and for sole proprietors and business partners, its until July 15.
According to the Inland Revenue Board, there will be no extension for those submitting in the conventional way. It should be noted that a penalty of between 20% to 35% is imposed for late submissions.
According to PwC, an individual is liable to a fine of not less than RM200 and not more than RM2,000 or imprisonment for a term not exceeding six months, or to both, for late submission of tax returns.
“Filing your income tax doesn’t have to be complicated. All it requires is a bit of effort and energy. Take the tiny effort to do it within time and you avoid the unnecessary hassle of fines and penalties, which all lead to unwanted stress,” an industry observer points out.
Keeping a record: Another simple tip to ensure one does “not to go astray” is to keep up to date records of your relevant, tax-related documents.
“Keeping it all together means easy referencing for you in the future.
“Of course, it’s also important to keep your file or folder in a place that’s easily accessible,” an observer adds.
Thang concurs: “Keeping a file is definitely advisable. Whenever you receive your receipts, having it all together will make it easy when it comes to filing your tax returns.”
And don’t think all the ink of receipts are of military grade. They tend to fade over time and you will end up with ineligible receipts only a forensic team with be able to decipher.
Says Hilda: “Be disciplined in keeping documentary evidence to support your income reported and tax deduction claims. Remember, you will need to keep your supporting records for at least seven years!”
Seek professional help: No, we’re not talking about the medical type, at least not yet! But if you feel you’re already buried neck deep in back-taxes and other related stuff, then it doesn’t hurt to get some help.
“Of course, it depends on the complexity of the tax matter. If you’re an employee, it can be done quickly and easily, especially online,” says the tax consultant from Deloitte Malaysia.
Thang concurs that filing taxes these days is not as complicated as one may think.
“If the situation is not straight forward, then it certainly doesn’t hurt to seek the aid of a tax consultant.
“But for (general) employees, it’s quite straight forward and simplified,” she says.
By EUGENE MAHALINGAM at thestar on Saturday April 7, 2012