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 compile your income and expense statements 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 has the obligation to file tax returns. Many people confuse tax filing with tax payment, but in fact, tax filing is only to report your income for the past year to the government, while tax payment is to submit the tax to the government. A person who files a tax return does not necessarily have to pay taxes, but only if his or her income exceeds a certain amount.
According to the Malaysian Personal Income Tax Schedule, tax may only be payable if the current year’s income exceeds RM37,333 or if the annual income after deducting the provident fund exceeds RM34,000.
According to the Inland Revenue Department (LHDN) website, a single person whose annual income exceeds RM37,333 or monthly income exceeds RM3,111 may be subject to tax. However, this is also subject to whether the tax filer has additional tax deductions.
For married families filing separately, tax may be payable if the annual income exceeds RM37,333 or monthly income exceeds RM3,111 without children. For married families with 2 children filing separately, tax may be payable if the annual income exceeds RM41,333 or the monthly income exceeds RM3,444.
Married families filing a combined tax return with an annual income of more than RM48,000 or a monthly income of more than RM4,000 without children may qualify for tax. Families with one child may be eligible for tax if their annual income exceeds RM50,000 or their monthly income exceeds RM4,167. A family with 2 children may qualify for tax if their annual income exceeds RM52,000 or their monthly income exceeds RM4,333.
This example is based on a personal deduction of RM9,000 and a deduction of RM2,000 per child under 18 years old.
