Filing taxes can be intimidating, especially for first timers. In Malaysia, the Inland Revenue Board (LHDN) oversees the tax system. This guide will help you understand the basics of filing taxes and provide essential information for a smooth experience. With the right guidance, you can file your taxes easily and on time.
Important dates:
- 1st March: Tax e-Filing for Year of Assessment 2024 begins
- 30th April: Due date for those without business income (manual)
- 15th May: Due date for those without business income (e-Filing)
- 30th June: Due date for those with business income (manual)
- 15th July: Due date for those with business income (e-Filing)
Step 1: Determine if you need to file taxes
Income tax in Malaysia is applicable to individuals who earn an annual income above a certain threshold. This includes income from:
- Employment (Salary + other taxable earnings like bonus, overtime, commission)
- Income from freelance or part-time jobs
- Business or profession
- Dividends
- Rental income
- Royalties
- Profits from investments
- Other sources, such as pensions or annuities
Some common non-taxable items include:
- Employer-provided medical benefits
- Government scholarships
- Gifts or inheritance
You are required to file taxes in Malaysia if:
- You are a resident of Malaysia under tax laws. If you're unsure about your residency status for tax purposes, refer to the Inland Revenue Board of Malaysia's (LHDN) guidelines.
- Your annual taxable income exceeds the prescribed threshold (currently RM34,000 after EPF deductions).
Step 2: Register with LHDN
If you're a first-time taxpayer:
- Visit the nearest LHDN branch or register online via the MyTax portal.
- Submit your details to obtain an income tax reference number which is necessary for all tax-related transactions.
- Obtain a one-time PIN for e-Filing via the MyTax portal or at a LHDN branch.
- Set up your account on the MyTax platform for online tax filing.
Step 3: Gather necessary documents
Ensure you have (whichever relevant):
- EA Form (provided by your employer, detailing your income and deductions)
- Proof of additional income (e.g., rental agreements, business income record, self-employed/freelancer income records)
- Receipts for tax relief claims (education fees, medical expenses, etc.)
- Evidence of EPF, SOCSO, or insurance contributions
Step 4: Understand tax exemptions, deductions, reliefs, and rebates
- Tax exemptions are types of income that are not taxed. They don't count towards your taxable income and aren't included in the aggregate income on your BE form. These exemptions are usually listed separately in your EA form.
- Tax reliefs help lower your chargeable income, which determines your tax rate. This can ultimately reduce the amount of tax you need to pay. This is where you claim reliefs for lifestyle expenses like smartphone purchases, gym memberships, etc. Check your tax relief claims here.
- Tax deduction like tax reliefs, reduce your chargeable income but are listed separately on your tax return form. Tax-deductible expenses include donations, gifts, and contributions to charities, organisations, or the government. Members of professional bodies can also claim their subscription fees as tax-deductible expenses.
- Tax rebates help lower your tax payable. Unlike tax reliefs, tax rebates directly reduce the amount of tax you owe, not your chargeable income. For example, if your chargeable income is below RM35,000, you may qualify for a RM400 tax rebate, effectively giving you a 'discount' of RM400 on your total tax payable.
Step 5: Login to MyTax for e-Filing
Visit the MyTax portal and log in with your credentials (from Step 2). To access e-Filing, click on “EzHasil Services”, and then click on “e-Filing” in the dropdown list. Select the correct tax return form based on your income type:
- Form BE: For resident individuals with employment income only
- Form B: For resident individuals with business income
- Form M: For non-residents and foreigners
Ensure you select the correct year of assessment: YA 2024. Remember, you’re declaring the income you earned in the previous year.
Step 6: Fill in your personal details and other particulars
Step 7: Fill in the statutory income section
Enter your total income earned for the year. This includes earnings from employment, rents, and other sources in the respective boxes. Your EA form will be useful here, as it details your annual income from your employer.
The form will automatically total all the figures you enter to show your aggregate income (total income earned in the year).
Step 8: Tax deductions
Next, calculate any tax deductions you are entitled to. You also need to enter the total monthly tax deductions (MTD) paid during the year, which can be found in your EA form.
There are also other details within this section. Fill only which are relevant to you.
Step 9: Tax reliefs and rebates
Claim your tax reliefs. Check your tax relief claims here.
After claiming all your tax reliefs, you'll determine your chargeable income. This income level determines your tax rate and the amount of tax you need to pay.
Remember to check for any tax rebates you’re eligible for. These are directly deducted from the tax you owe.
Step 10: Review and submit
Review your summary and check the final tax amount. Don't worry if it's negative; this is due to the advanced tax payments made through MTD, meaning you'll get a tax refund from the government. Submit your form and congratulations on submitting your first ever tax returns!
Step 11: Pay your tax or get a refund
If you’ve been paying MTD monthly, your tax reliefs and rebates might lower your final tax bill to less than what you’ve paid. If so, you’ll get a refund for the overpaid amount, which will be automatically sent to the bank account you provided on your tax form, usually within 30 days of filing.
If you still owe taxes after filing, make sure to pay before the deadline. You can pay online through LHDN or at an LHDN branch.
*Disclaimer: Taken from LHDN as of 22nd January 2025.
Summary
Here’s a clearer breakdown of how your final tax payable amount is calculated:
- Start with your total taxable income (Step 1), also known as aggregate income.
- Subtract tax deductions to get your total income.
- Subtract any tax reliefs to arrive at your chargeable income.
- Apply the relevant tax rate to the chargeable income to calculate your tax payable amount.
- Subtract any tax rebates to determine your final tax payable amount.
Filing taxes in Malaysia may seem overwhelming at first but breaking it down into manageable steps makes it easier and straightforward. Timely and accurate tax filing ensures compliance and helps you avoid penalties. If you're unsure about anything, consult a tax professional or contact LHDN for assistance. Happy tax filing, Malaysians!
