For this year, Inland Revenue Board has a tax collection target of RM197 billion. With Individual and non-individual taxpayers eligible to submit their Tax Return Form through e-Filing starting last Friday, 1 March, what are some of the exemptions and tax allowances that you are entitled to? SM Thanneermalai, Managing Director, Thannees Tax Consulting Services walks us through that process.

Image Credit: Shutterstock.com

Presenter: Wong Shou Ning, Shazana Mokhtar, Keith Kam
Producer: Wong Shou Ning

Podcast Transcription

Shazana Mokhtar:
Now in 2023, the Inland Revenue Board (IRB) set a new record in tax collection at RM183.3 billion, which was 4.5% higher than the previous year.

Now on paper, it's a good figure, but Malaysia still has a low tax base of just 11.2% of GDP compared to our neighbour Singapore at 12.6% and Thailand at 16.4%.

Keith Kam:
In terms of individuals, only 5.7 million people pay taxes, which is low. And considering the Department of Statistics reported that there are 16.2 million people in employment, albeit some are in unpaid family work and earn below the threshold of RM34,000 a year. As for companies, it was 539,000 with collection revenue coming in at RM98.77 billion.

Wong Shou Ning:
Well, for this year, IRB has a target of RM197 billion, and their focus will be on tax leakages, issues involving individuals with assets and wealth that do not align with their tax declaration, as well as unreported income from Malaysia stored in overseas accounts. So, as individual and non-individual taxpayers can submit their tax return form for the year of assessment 2023 through e-filing, which started last Friday, what are some of the exemptions and tax allowances that you are entitled to, and why is it important for you to file your taxes in the first place?

Shazana Mokhtar:
All right, for some thoughts on this, we turn to SM Thanneermalai, Managing Director, Thannees Tax Consulting Services. Thannee, good morning.

Thanks very much for joining us. So, e-filing for income tax started last Friday. Remind us, which group of taxpayers can take advantage of online submissions, and what are the respective deadlines?

Thanneermalai:
Yes, on 1st March it was available, and principally for individuals, they call that the BE form.

That's due on 30th April, but you will be given an automatic extension if you use e-filing for another 15 days, until 15th May. Partnerships will be later in July, and businesses will be in July, but residents—basically, it's all individuals and also executors of estates, executors and administrators who are administering deceased persons' estates—they will also have to file. All these forms are available now for individuals, businesses, partnerships, non-resident individuals, associations, administrators, executors, and employers: the e-form.

The e-form has to be filed by 30th April. So all these forms are available; everything can be done on e-filing, and it's relatively easy.

Keith Kam:
Thannee, if we look at individuals, can you just maybe remind us of what some of the key changes are in the 2023 filing compared to what we did in 2022 that we can actually take advantage of? What's different?

Thanneermalai:
I think there are very few.

The most important one is actually the medical relief that got increased from RM8,000 to RM10,000, and they also allowed you to claim for mental health assessment for children—you have to see a psychologist or basically a psychiatrist—and that was the main one. And then they removed—remember earlier, in the previous year, there was RM2,500 and another RM2,500 was special relief for tablets, notebooks, and sports equipment.

They still give you the RM2,500, but the additional RM2,500 was taken out, and an additional RM500 was given for sports equipment. So, in total, you have RM3,000. But the most important one was for the people... if you have life insurance, for example, at the moment you get RM4,000 for EPF and RM3,000 for life insurance.

And of course, the PRS (Private Retirement Scheme), you have another RM3,000. But what is important here to note is that those who have not paid life insurance premiums, or do not have any life insurance, can now top it up into EPF, and you get up to RM7,000. And more importantly, it's actually self-employed people—who do not have these compulsory deductions—who can now pay up to RM7,000 and claim the RM7,000.

So you have this sort of choice. Those are the additional things, the important ones.

Wong Shou Ning:
Okay, Thannee, for those who have never filed their taxes electronically, the government, of course, is encouraging them to do so.

And you said that it's an easy process, but what should they do to ensure that it is a smooth one?

Thanneermalai:
You've got to go into the MyTax portal. Let me tell you the first thing: if people, especially older people who don't know how to use the computer, need help, the first thing is you get assistance. If you go to any income tax office, they will assist you, and they will fill in that information for you because they have computer sets—that's number one.

So you don't have to be entirely worried that you don't know how to use the computer. Number two, for those who are already a little familiar, the first thing is to go into your MyTax portal, and you have to get a digital certificate. And once you go in there, it guides you; it'll actually ask you for information about your IC, full name, address, etc.

And automatically an email will be sent to you, and then you will get a digital certificate—no cost, there's no money at all involved. You will have your username, and you will create a password. And after that, it's hunky-dory: you just go in, fill in your numbers, and it does the work for you.

Just put in the information, and the exact tax number will come out. And if you aren't sure, you can keep it in draft form, have it rechecked, and then submit it. It's as simple as that.

Shazana Mokhtar:
So how do you think we can encourage Malaysians to see paying tax as a duty rather than something to be avoided? Because I think right now, how it's seen is penalties—there are penalties for those who do not file their taxes, but is that really enough to, I guess, push people to file their taxes accordingly?

Thanneermalai:
I think most people file their taxes diligently. It's when they start hearing that people who are actually well-connected or in high positions, etc., like the Prime Minister said, think they're privileged—that's when it causes anger; it's psychological. If they don't pay once in four or five years, they get this SVDP program. In my opinion, the government should stop giving these SVDP programs and amnesty programs, because people like us—the 80% or 90% of us who are paying proper taxes—feel aggrieved. Why is it that when I pay my taxes, these guys can come in once in four years and they don't have to pay penalties, even when they have paid their taxes late—five or even ten years late?

So it's something that they should make sure of for everyone. I think there should be the carrot and stick. For the people who are paying on time, I think it's time the government appreciates that, acknowledges that, and actually praises all of us for paying things on time. So I think it's as simple as that, because taxpayers must feel confident that the money is also going to the right places—that's transparency.

And secondly, people who have actually not paid their taxes should be made to pay those taxes together with penalties. Amnesty programs, in my opinion, are okay, but they should not be repeated. Time and time again, we are giving these amnesty programs.

That should stop.

Wong Shou Ning:
Thannee, thanks very much for speaking to us. That was SM Thanneermalai, Managing Director, Thannees Tax Consulting Services, giving us some reminders to take note of as we head into tax season.

Shazana Mokhtar:
Yeah, so everybody, please follow it. It's your civic duty. It would also be good if the government is transparent in terms of how they spend the tax money and that we have far fewer leakages.

Every year when we get this AG report, I always feel very despondent: why are we making the same mistakes again and again? And is anybody accountable for this?

Keith Kam:
And just very quickly, I mean, what Thannee said about it being really, really easy—it really, really is easy. I mean, I didn't have any problem with it. I forgot my password, but you just click "forgot password", and I'm back in again.