The Inland Revenue Board of Malaysia (IRB) has enforced the Income Tax (Deduction from Remuneration) (Amendment) (No.2) Rules 2014 effective 1 January 2015 for the implementation of the monthly tax deduction (MTD) as the final tax with effect from Year of Assessment 2015. This allows eligible tax payers to elect not to submit their annual personal tax returns, while treating their MTD as final tax for that income year via submission of relevant forms to HR for allowable deductions and rebates.
However, an employee is only eligible to opt for MTD to be made as final tax within several conditions including if the employee serves the same employer for a period of 12 months in a calendar year. Hence, it is not applicable to an employee joining the University less than 12 months. (Further information on MTD as final tax is accessible in My.Swinburne.)
The University will deduct the monthly income tax directly from the staff member’s monthly salary via the Computerised Calculation and will remit the amount to IRB on behalf of the staff as per statutory requirements.
Even after an employee chooses to submit the forms for MTD to be made as your final tax along the year, the employee may still opt to submit the yearly tax return form BE to IRB for any possible refund.
Every employee who is liable to tax is required to declare his / her income to IRB either through opting for MTD as final tax within a year of assessment or by submitting the yearly tax return within the stipulated due date by IRB.
If an employee chooses to submit the yearly tax return, the following must be done:
The taxpayer is required to keep the following documents for 7 years:
The calculation of the 7 year period begins from the end of the year in which the tax return is filed.
Tax administration under SAS is based on the concept Pay, Self-Assess and File.
|Pay||Monthly salary deductions are made for individuals having employment income, or through instalments for individuals having business income.|
|Self-Assess||Taxpayers compute their own taxes.|
|File||The yearly tax return is submitted to the IRB together with the payment for the balance of the income tax payable to meet any shortfall in the monthly payments or a claim for repayment if there is an overpayment.|
Determination of residence status for Individual is provided under the Income Tax Act (ITA) 1967. For more information, please refer to http://www.hasil.gov.my.
Brief Summary: e.g. for income in year 2015
|Number of days in Malaysia||Income Tax Rate||Residential Status|
|Below 182 days upon joining||25% (effective 2015)||Non Resident|
|182 days & above in any year||Based on Income Tax Rates published by Inland Revenue Board in their website. The rates are based on the annual chargeable income which ranges from 1% to 25%.||Resident|
|Below 182 days upon resigning & leaving Malaysia|
25% (in 2015)
|Below 182 days in 2015. But a resident in 2014.|
Not 25% (in 2015) due to:E.g. Prior to the year of assessment in 2015, an individual was physically present in Malaysia on 31 December 2014 and 1 January 2015. The individual is considered resident in 2015 even though he or she does not reach 182 days in 2015 because the individual meets the conditions of being present in Malaysia on 31 December 2014 and 1 January 2015. Nevertheless, this is provided the individual meets the requirement as a resident in 2014.
|Below 182 days upon resigning and leaving Malaysia in 2015 but a resident in 2014|
25% (in 2015)E.g. Prior to the year of assessment in 2015, an individual was physically not present in Malaysia on 31 December 2014 and 1 January 2015. The individual is considered non-resident in 2015 because the individual does not meet the condition of being present in Malaysia on 31 December 2014 and 1 January 2015 even though a resident in 2014.
PCB Calculator is an electronic support system to calculate Monthly Tax Deductions (MTD). You may click this link to PCB Calculator.
For more information, please visit www.hasil.gov.my
The Employee Provident Fund (EPF) has been set up by the Malaysian government to cater for retirement. It is an option for an expatriate to contribute to the fund.
The current cumulative statutory contribution rate is 21% (13% employer’s share and 8% employee’s share until 31 Dec 2017) for employees earning a monthly salary / wage of RM5,000.00 and below, while the cumulative statutory contribution rate of 20% (12% employer’s share and 8% employee’s share until 31 Dec 2017) are for employees who are earning a monthly salary / wage above RM5,000.00. The statutory contribution rates may be amended from time to time by the government.
The latest contribution rates for employees and employers are accessible on the EPF website at http://www.kwsp.gov.my. Employers are required to remit the employee’s contribution share based on the latest schedule.
Withdrawal can be made by expatriates who have ceased to be employed in this country and wish to return to their country of origin.
For more information, please visit www.kwsp.gov.my