Malaysians should be prepared for the tax season this year. Like in previous years, the deadline for residents and non-residents without business income is March 31st, while the deadline for residents and non-residents with business income is June 30th. To avoid future troubles, you must be prepared for tax filing as a responsible citizen.
For better tax filing, you must keep accurate records and documents for tax purposes. You can ask your accountant’s help to fill out your tax return precisely and completely by carefully monitoring and thoroughly tracking all of your expenses, revenue, and deductions during the fiscal or calendar year. Tax time, on the other hand, might be difficult if you don’t keep solid records.
Personal Information and Identification
MyKAD, marriage certificates, birth certificates, and other supporting documents will be crucial for tax filing. Full identity documents will assist you in establishing your identity in the eyes of IRBM Malaysia. This way, your identity will not be mixed up with other citizens’ who may face greater taxes.
Furthermore, their identity will determine the amount of tax collected on individuals. People who are married, for example, will pay fewer taxes since they have dependents from their spouses.
You must also update your address. If you are moving to a new location within the country, you must send a letter to the Chief of IRBM informing them of your new address within three months. If you fail, you will be fined RM 2,000 – RM 20,000 or imprisoned for a maximum of six months—or both.
Employment Information and Records
Other documents you must prepare are tax filing documents related to income, including EA Form, BE Form, Form E, and Form P. The EA form is a private employee’s annual salary/equity statement.
The BE form is an income statement form for individuals who do not run a business, which is a salary received every month only. Borang E is a declaration report filed to IRBM by every employer annually; it functions as a report. Form P is used to declare inherited assets received during a specific tax period.
Don’t get confused about separating income tax statements and employer statements. Income tax statements, including salary information, tax deductions, and social security contributions, are typically sent at the end of each year. Your employer provides them.
An employer’s statement is a form that contains inquiries regarding your employee’s work and income, which is evidence of employment. Keeping records is not only good for tax records but also for employers to track the progress of a business.
Business Information and Records
A successful business has strong relationships with its banks, creditors, and other financial partners. These companies may frequently request critical financial records, such as income statements indicating profit and spending for a specific time; and balance sheets showing the number of assets, liabilities, and equity in your company. Keep your financial data on these documents up to date and current to accurately reflect where your company stands at any given time.
Some relevant documents for tax filing for business are business registration documents, financial statements, invoices, receipts, tax invoices, deeds of assignment, and other documents like contracts, licences, and permits.
Investment Information and Records
Maintain thorough records to disclose all investment income and claim all legitimate deductions appropriately. List records needed for investments, such as stocks and property, including:
- Dividend vouchers;
- Interest statements;
- Real estate income statements from property managers or rental agents;
- Capital gains and losses statements;
- Foreign income statements;
- Other documents related to investment trading.
During the year, your investment documentation must match and represent the information that goes into your return. It will be challenging to assemble the exact statistics for your profits, losses, costs, and deductions without these records, which are required to file your tax return accurately.
Deductions and Credits
Tax deductions and credits can save you a lot of money if you know what they are, how they work, and how to apply for them. Some relevant forms and records needed for deductions and credits are:
- Receipts and invoices;
- Insurance premium receipts;
- Fixed deposit interest certificates for National Education Savings Scheme (SSPN);
- Information on zakat payment;
- Other relevant documents.
A tax deduction reduces your taxable income, which lowers your tax payment. You deduct the amount of your tax deduction from your income, so your taxable income will be reduced. Your tax bill will be lower if your taxable income is smaller.
Record keeping is the true essence of accountability in any business, and it will come in handy when it comes to the hardships of tax filing in Malaysia. The more transparent, comprehensive, and easily accessible your company’s balance sheets, income statements, receipts, and deductible records are, the easier it will be to deal with an IRBM auditor.
It is necessary to produce the appropriate records that back up any information you have claimed on your tax return. Otherwise, your company may be investigated and monitored regularly until you establish a solid record-keeping system. Keep your financial data on these documents up to date and current to accurately reflect where your company stands at any given time.