How To File Income Tax Malaysia Explained

Gather Your Documents

Before diving into your tax filing, gather all the necessary paperwork. This includes your EA form, which details your annual earnings, bank statements to track interest or other income, records of any investments, and more importantly, receipts for any expenses that qualify for tax reliefs. 

Keeping these documents in order not only speeds up the process but also minimises the chance of making mistakes, which could lead to complications later. For example, knowing the exact amounts of your EPF contributions and life insurance premiums helps you claim the proper reliefs.

Determine Your Tax Residency Status

Your tax residency status plays a key role in how your income is taxed. Generally, if you’ve spent 182 days or more in Malaysia, you are considered a tax resident. 

This status gives you access to the full range of tax reliefs and the progressive tax rate structure. Individuals who do not meet this residency requirement are treated as non-residents face a flat rate of 30% and are not eligible to enjoy any reliefs.

So it’s very important to confirm your residency status, as this will have a direct impact on the tax you pay.

Calculate Your Chargeable Income

Alright, so we have gathered our documents and figured out our residency status. Now comes the bit that really matters, working out your chargeable income.

To put it simply, your chargeable income is your total earnings for the year, minus anything the government allows you to deduct, such as tax reliefs or rebates. It’s really quite straightforward, but it’s where people often stumble.

Let’s really drive home the importance of those tax reliefs just to highlight how big of a deal this is. Imagine two individuals, both earning RM120,000 annually.

• Person A: They’re a bit rushed with their taxes and only manage to claim RM10,000 in reliefs. This leaves them with a chargeable income of RM110,000.
• Person B: They’re meticulous, gather all their receipts, and claim a total of RM30,000 in reliefs, reducing their chargeable income to RM90,000.

Now, let’s see how this plays out with the tax brackets:
Person A (Chargeable Income RM110,000):

• Person A (Chargeable Income RM110,000):
  
  • On the first RM100,000: RM9,400
  • On the next RM10,000 (at 25%): RM2,500
  • Total Tax: RM11,900
• Person B (Chargeable Income RM90,000):
  
  • On the first RM70,000: RM3,700
  • On the next RM20,000 (at 19%): RM3,800
  • Total Tax: RM7,500

Just by claiming an extra RM20,000 in reliefs, Person B saves a whopping RM4,400 in taxes. This is how important it is to claim those sweet reliefs, the difference in claiming them can drop you into a much lower tax bracket and save you a lot of money.

Claiming Tax Reliefs and Rebates:

Now, when it comes to lightening your tax load, tax reliefs and rebates are your best friends. These reliefs cover a range of expenses, from education fees and specific medical costs to contributions made to approved retirement schemes. 

For instance, you can claim reliefs for certain lifestyle expenses, which includes things like books, sports equipment, and even computers, provided you have the necessary receipts. This not only lowers the amount you owe but, as we saw earlier, could drop you into a lower tax bracket. 

If you want a full comprehensive list of tax relief options in Malaysia, check out our tax relief guide.

How To File Personal Income Tax

Filing your income tax in Malaysia can seem a bit daunting at first, but it’s a process that gets easier with each year. Here’s a general overview of the steps involved:

1. First-Time Taxpayer Registration (e-Daftar)

If you’re filing your taxes online for the first time, you’ll need two things: an income tax number and a PIN for e-Filing. To get your income tax number, you’ll need to register on the e-Daftar platform, accessible through the MyTax portal on the LHDN website or app.

Once registered, you can obtain your e-Filing PIN either online or by visiting an LHDN branch. This is the initial step to set up your online tax filing.

2. Accessing e-Filing (MyTax)

For those who have filed taxes before, you can skip the registration and go straight to the MyTax website. Here, you’ll find the e-Filing platform. 

Upon logging in, you’ll see your dashboard, which includes information like tax balances and potential refunds. To begin filing, navigate to the e-Filing section and select the appropriate income tax return form (ITRF) based on your income category. 

Remember to choose the correct year of assessment, which is typically the previous year.

3. Filling Out Your Income Tax Return Form

The ITRF is where you declare your income and claim any eligible tax reliefs. It’s divided into sections, starting with your personal details which should be checked for accuracy. 

You’ll then declare your total income, including salary, rents, and other sources, referencing your EA form (Statement of Remuneration from Employment) and other relevant documents. It’s important to include all taxable income and exclude any tax-exempt items for clarity and accurate sake.

After declaring your income, you will be given the option to enter any tax deductions, such as donations, zakat and your monthly tax deductions (MTD). Finally, you’ll claim your tax reliefs and rebates, which as we discussed, really goes a long way in reducing your taxable income. Just make sure you select the correct reliefs that you are entitled to.

4. Submission and Confirmation

Once you’ve completed filling out your ITRF, carefully review all the information for accuracy. You will need to obtain a TAC when you sign and submit the e-form. 

After submission, you’ll receive a confirmation, and you can keep a copy of your submitted form for your records. Remember, these records should be kept for at least 7 years in the event LHDN starts to audit your taxes.  

The income tax deadline is typically April 30th for individuals with income solely from employment. For businesses, the deadline falls on June 30th. 

Conclusion On Income Tax Filing in Malaysia

Filing taxes might seem a bit tricky at first, but honestly, getting a handle on the process, knowing your reliefs, and keeping good records really helps.

If you’re still a bit unsure about certain parts or if you have some specific questions, don’t hesitate to get professional help. 

Accounting.my specialises in navigating the complexities of personal tax and reliefs, helping you to optimise your returns and avoid any potential pitfalls. 

Don’t wait for the taxman to come knocking on your door! Reach out to us to get your taxes sorted with our professional tax services!