A friend of mine who is Senior Manager of manufacturing industry recently got a pay rise of RM500, which increasing his monthly income to RM10,500 and putting him in a much higher tax bracket. He came back to me to ask whether should he take the pay rise?
Now, I would like to share with you the percentage of the increment that goes tax when the salary increase by RM500 per month.
The tax laws is different from country to country and in the Malaysia, the income from blogging or any internet business is generally taxable. Based on the taxation rules, all income realized from whatever source is considered a taxable income.
Legally, bloggers need to report their online income. However, not everyone does that because of one reason or another. For me, there’s a specific law in our country that makes our income from blogging and other internet business as a tax exempted. But, do we still need to declare our online income? Until what income level should we declare? That’s why our tax laws are not interpreted in such a way where most of the bloggers can follow.
It’s advisable to pay your income tax on time as the IRB doesn’t provide us the time delay. If you can pay your income tax return on time then you can avoid the penalty charges. But, if you cannot have own discipline then you may face penalties.
For those who are under employed, they have to file their returns and pay their income taxes by April 30 whereas for those who are self-employed then they need to file their returns by June 30.
Penalty Charge for Late Payment of Income Tax
There are several methods for you to pay your income tax, you can make your payment at Public Bank, Maybank, LHDN(Lembaga Hasil Dalam Negeri) counter, by cheque or bank draft, or online banking. I more prefer do things online since it is hassle free; therefore I made my income tax payment through Public E-banking.
If you are a resident of Malaysia, and you have source of income from Malaysia…Then you have to pay tax. If you are a resident of Malaysia, but your gain income from overseas, like Internet business income, dividend income from foreign stocks…are all exempted from Malaysia’s Income Tax.
Pay Income Tax Through Pbebank
Make sure that you have a Public Bank Internet Banking account. You can apply it at any Public Bank branch. Once you get it, you can login your account.
Although i am not an accountant or tax auditor but I still want to share my thought with you all on how to reduce income tax without breaking any laws. First of all, it is determined by whether you are a fixed income earner or running own business.
If you are under employment, then you can increase expenditure by:
– Buying life insurance, educational insurance, and medical insurance
– Buying educational books include magazine subscriptions with the condition that it can directly improve your job service. For example, if an engineer buy accounting book, and then cannot get that relief.
– Getting married, and have lots of children
Or increase your assets by:
– Buying property
– Buying computer RM3, 500 instant rebate but I think is for every 3 years (This is New Announced Budget, before that is RM500 for every 5 years)
If you are doing business, then there are more ways of to reduce income tax as you can claim many of your personal expenses as business deductions.
–Appoint your family members as directors. They get pay and no need have to work. They just only have to attend meeting.
–Time your holidays during some conference related to your business. Fly first class; stay in the most expensive hotel.
– Put all sort of expenses into “salary package” which may include vacation, transportation, meal allowance and etc.
Why Company Like To Give Allowance To Their Employees?