If your annual income exceeds RM37,333, you may be eligible to pay tax.
The annual tax filing season is here, have you started to organize your income and expenditure statement for the past year? Have you already calculated how much income tax you need to pay?
Everyone who is working or doing business in Malaysia is obliged to file a tax return. Many people would confuse filing a tax return with paying tax. In fact, filing a tax return is just to report your income for the past year to the government, while paying tax is to submit the tax to the government. A person who files a tax return does not necessarily have to pay tax, but only if his income exceeds a certain amount.
According to the Malaysian Personal Income Tax (MIT) table, a person may be liable to pay tax only if his income for the year is more than RM37,333 or more than RM34,000 after deduction of provident fund.
According to the Inland Revenue Department (LHDN) website, a single person with an annual income of more than RM37,333 or a monthly income of more than RM3,111 may be liable to pay tax. However, this is also based on whether the tax filer has additional tax deductions or exemptions.
Married families filing separately may have to pay tax if their annual income exceeds RM37,333 or monthly income exceeds RM3,111 without children. For a married family with 2 children filing a separate tax return, they may be liable to pay tax if their annual income exceeds RM41,333 or monthly income exceeds RM3,444.
Married families filing a joint return may be eligible to pay tax if their annual income exceeds RM48,000 or monthly income exceeds RM4,000 without children. For families with 1 child, they may be eligible to pay tax if their annual income exceeds RM50,000 or monthly income exceeds RM4,167. For a family with 2 children, if the annual income exceeds RM52,000 or the monthly income exceeds RM4,333, the family is eligible to pay tax.
This example is based on a personal deduction of RM9,000 and a deduction of RM2,000 for each child under the age of 18 years old, the actual tax payable will depend on the tax deductions available to the tax filer.
