The Tax Thing

What is Income tax?
Income tax is tax imposed on an individual/company based on their annual income. The amount or percentage of tax is calculated using the government's graduated scale, which depends on earned and unearned income of an individual.

The Inland Revenue Board levies income tax in Malaysia . This Board, which functions under the Ministry of Finance is one of the main revenue collecting agencies . It is responsible for overall administration, including assessment and collection of direct taxes, as per the Income tax Act 1967.

Sources of Income Liable to Tax

Sources of income which are liable to income tax are as follows:

@Gains and profits from trade, profession and business
@Salaries, remunerations, gains and profits from an employment
@Dividends, interests or discounts
@Rents, royalties or premiums
@Pensions, annuities or other periodic payments/li>
@Other gains or profits of an income nature not mentioned above.

Resident Individual

A resident individual is taxed on his chargeable income at graduated rates from 2% to 30% after the deduction of tax reliefs. However, an individual with chargeable income of less than RM2,500 is taxed at zero rate.
Personal Reliefs
The chargeable income of an individual resident is arrived at by deducting from his total income the following personal reliefs:

(a) Personal = RM5,000

(b) Wife = RM3,000

(c) Medical expenses of parents up to a maximum of RM5,000.

(d) Expenditure for purchase of basic support equipment for the individual, his wife, child or parent who is disabled the up to a maximum of RM5,000

(e) Unmarried children below the age of 18 = RM800 per child

The maximum relief for unmarried children (regardless of age) receiving full-time education in universities and institutions of higher education in Malaysia is four times the normal relief.

(f) Incapacitated children RM5,000 per child

(g) Contributions to the Employees Provident Fund and insurance or takaful premiums for life policies are allowed a maximum total tax relief of RM5,000. A further tax relief of RM2,000 is given for insurance or takaful premiums with respect to medical and educational purposes.

***(Source adopted from lawyerment.com.my)

Posted by ahkeenz at 12:04 AM