How to file Income Tax in Malaysia using LHDN e-filing & What are the tax reliefs available for YA 2019?

In lieu of the Movement Control Order period due to the Covid 19 pandemic, IRB has extended the income tax deadline for this year by 2 months – taxpayers have until 30 June 2020 to file their forms either manually or by e-filing.

© ?????? ??????? | 123rf

Preparing and filing your income tax in Malaysia can be a challenging and anxiety-inducing experience every year for most people, but it doesn’t have to be if you understand how income tax works in this country.

Taxpayers can start submitting their income tax return forms through the e-Filing system starting from March 1 of every year,  unless otherwise announced by LHDN. This method of e-filing is becoming popular among taxpayers for its simplicity and user-friendliness.

Who needs to file income tax?

According to the Inland Revenue Board (IRB) of Malaysia, also known as Lembaga Hasil Dalam Negeri or LHDN, any individual earning a minimum of RM34,000 after EPF deductions must register a tax file. This translates to roughly RM2,833 per month after EPF deductions or about RM3,000 in net income. It should be noted that this takes into account all your income, and not only your salary from work.

While you must file your taxes, you may not necessarily have to pay anything due to tax reliefs and rebates.

How to file my taxes online using e-filing?

Unlike the traditional income tax filing, where you have to print out the income tax form and fill it in manually, the e-Filing income tax form calculates your income tax for you automatically.

Here is the step-by-step guide for the e-Filing process:

1. Register for first-time taxpayer online via LHDN Malaysia

*existing e-filing users, proceed to next step

If you have never filed your taxes before on e-Filing income tax Malaysia 2020, go to http://edaftar.hasil.gov.my/ where you can apply online for the registration of income Tax File for individuals and companies. Click on Borang Pendapatan Online in the first step of e-Daftar and then, you will have to fill-up the form for registration.

© LHDN Malaysia

After you have filled up the form, you will have to reconfirm your information. Your application number will be presented after confirmation.

NOTE: Please note down your application number for future reference!

© LHDN Malaysia

Scroll down from your application number, and click on Muat Naik Disini to upload a copy of your identity card. You have 14 days to upload it, and your identity card must fulfil the following requirements:

  1. Just scan the front of your identity card showing your name and I.C. number clearly
  2. File must be in .gif format
  3. File size must be between 40kb and 60kb
  4. File name must be in alphanumeric only

Once you’ve uploaded your identity card, you need to physically visit the nearest LHDN branch to obtain your PIN number. New taxpayers used to be able to do this online, but it seems like the feature has been removed – we’ll update this page if that changes!

2. Go to e-Filing website

Once you have gotten your PIN, here are the steps on how to file income tax in Malaysia.

If you already have the PIN from LHDN or an account for e-Filing, you can proceed to LHDN’s official website, click on ezHASIL and then click on myTax. This will lead you to the main page of the e-Filing system.

© LHDN Malaysia

3. Login to e-Filing website

Next, key in your MyKad identification number (without the dashes), and your password.

If you are a first-timer, click on Login Kali Pertama. Then fill in your PIN and identity card number to register for an account.

© LHDN Malaysia

4. Choose the right income tax form

Once you’ve logged in, you will be shown a list of features available on e-Filing. To begin filing your tax, click on e-Borang under e-Filing:

© LHDN Malaysia

After clicking on e-Borang, then you will be shown a list of income tax forms. If you are an individual with non-business income, choose Income Tax Form BE (e-BE), and choose the assessment year (tahun taksiran) 2019. Remember, you file for 2019 income tax in 2020.

© LHDN Malaysia

5. Check your personal details

In the first section of the form, MAKLUMAT INDIVIDU, you can check your details displayed on the form, make changes if the form is displaying incorrect information or does not display your latest information.

There will also be a “layak menuntut insentif dibawah seksyen 127” which refers to claiming incentives under section 127 of the Income Tax Act (ITA) 1976. This is incentives (such as exemptions) under the provision of paragraph 127(3)(b) or subsection 127 (3A) of ITA 1976, which is claimable as per government gazette or with a minister’s approval letter. If you are not entitled to such exemptions, choose “TIDAK BERKENAAN”, which means Not Applicable.

Below that, you will see “melupuskan asset di bawah Akta Cukai Keuntungan Harta Tanah 1976”, which refers to any disposal of assets under the Real Property Gains Tax (RPGT) 1976. If you have not disposed or sold any real estate, just select “TIDAK”. Additionally, you can read up about RPGT at the LHDN website.

If you would like your income tax return to be banked into your bank account directly, this is where you need to fill in your bank account details. LHDN has numerous times assured taxpayers that bank account details will be safeguarded and not shared with any other parties.

© LHDN Malaysia

6. Fill in your income details

In the second section, PENDAPATAN BERKANUN, JUMLAH PENDAPATAN DAN PENDAPATAN TAHUN KEBELAKANGAN YANG BELUM DILAPORKAN, you can key in your income details according to the relevant categories.

© LHDN Malaysia

The second step is to fill in the approved donation and gifts amount. Refer to our tax deduction section to understand more about this deduction. Remember, you must ensure the organisation you donate to, is approved by LHDN. If unsure, you can check the status of the charitable organisation on the LHDN website.

Check if the total monthly tax deductions (MTD/PCB) displayed is correct. You can find this information in the EA Form provided by your company.

If you have not declared any income in the previous years, this is where you declare it. For undeclared income from previous years, fill in the sub-section PENDAPATAN TAHUN KEBELAKANGAN YANG BELUM DILAPORKAN at the end of this section.

7. Fill in your tax reliefs, tax rebates and tax exemptions

In the third section, PELEPASAN/REBAT/TOLAKAN CUKAI/PELEPASAN CUKAI, key in your tax reliefs, tax rebates and tax exemptions.

Understand the tax reliefs available and identify which are applicable to you to ensure you spend wisely and save on your income tax. Make sure you retain the proof of purchase or spending for the items you are claiming for up to seven years.

© LHDN Malaysia

8. Check the total taxes you are due or your tax return

Once you have filled up all the reliefs and rebates, the system will automatically calculate your taxes and you will know if you have balance or excess in income tax payment.

This can be seen in the last section, RUMUSAN.

© LHDN Malaysia

Your total tax will be shown in the first red box in the screenshot above. After deducting your MTD/PCB, if there is an excess or income tax return, it will be shown in the second red box in the screenshot.

9. Declare, sign and send

The final step is to declare that all the information provided is true. Then, you need to electronically sign the form and send it in by clicking on (Tandatangan & Hantar).

© LHDN Malaysia

That’s all! It may seem intimidating to use e-Filing form at first, but it really is easy to do. Those who did not own a computer or have Internet access could head to the special computer counters at IRB branches.

If you would like to check or change any information, click on KEMBALI.

You can check how much income tax you will pay with the latest tax rates using this income tax calculator

What are the available Tax Reliefs for Year Of Assessment 2019? (Tax filed In 2020)

What is an income tax relief? Tax reliefs are set by LHDN, where a taxpayer is able to deduct a certain amount for money expended in that assessment year, from the total annual income. These are for certain activities or behaviours that the government encourages or even necessities or burdens to lighten our financial loads. Tax reliefs can help reduce your chargeable income, and thus your taxes. If planned properly, you can save a significant amount of taxes.

© thamkc | 123rf

The three most well-known tax reliefs are the self & dependent tax relief of RM9,000, life insurance and EPF relief at RM6,000. Here’s the complete list of the income tax relief you can claim in 2020 for Year of Assesment 2019.

INDIVIDUAL RELIEF TYPES
Amount
Self and dependent
RM9,000
Insurance & other policies
Life insurance and EPF including not through salary deduction

For pensionable public servants: up to RM7,000 life insurance
For non-public servants: up to RM3,000 for life insurance and up to RM4,000 for EPF

RM7,000
Deferred annuity and Private Retirement Scheme (PRS) – with effect from year assessment 2012 until year assessment 2021
RM3,000
Insurance premium for education or medical benefit including not through salary deduction
RM3,000
Contribution to the Social Security Organisation (SOCSO)
RM250
APPLICABLE TO CERTAIN TAXPAYERS
Husband/Wife/Alimony payments
RM4,000

Medical expenses for parents

OR

Parent
-Limited 1,500 for only one mother
-Limited 1,500 for only one father

RM5,000

OR

RM3,000

Education fees (Individual)
(i) Other than a degree at Masters or Doctorate level for acquiring law, accounting, Islamic financing, technical, vocational, industrial, scientific or technological skills of qualification;
(ii) Degree at Masters or Doctorate level for acquiring any skills or qualifications
RM7,000
Medical expenses for serious diseases for self, spouse or child
RM6,000
Complete medical examination for self, spouse or child
Fertility or IVF treatments
Lifestyle:
(i) Purchase of books, journals, magazine, printed newspaper and other similar publications (except banned reading materials) for self, spouse or child;
(ii) Purchase of a personal computer, smartphone or tablet for self, spouse or child;
(iii) Purchase of sports equipment for any sports activity as defined under the Sports Development Act 1997 (excluding motorised two-wheel bicycles) and gym memberships for self, spouse or child; and
(iv) Payment of monthly bill for internet subscription
RM2,500
Purchase of breastfeeding equipment (allowed once every 2 years)
RM1,000
Disabled individual
RM6,000
Disabled wife/husband
RM3,500
Basic supporting equipment (for disabled self, spouse, child or parent)
RM6,000
Donations to charities, sports bodies, and approved projects Up to 7% of aggregate income
Other donations, gifts, and contributions Up to gift value unless otherwise stated
Subscriptions to professional bodies Full exemption
Zakat/fitrah paid in the year of assessment Full exemption
Departure levy rebate for umrah or religious travel (Limited to 2 trips per lifetime) Amount paid
Applicable to tax-paying parents
Ordinary child relief
RM2,000
Each unmarried child of 18 years and above who is receiving full-time education (“A-Level”, certificate, matriculation or preparatory courses)
RM2,000
Each unmarried child of 18 years and above that is:
(i) receiving further education in Malaysia for diploma or higher (excluding matriculation/preparatory courses)
(ii) receiving further education outside Malaysia for degree or its equivalent (including Master or Doctorate)
(iii) the instruction and educational establishment shall be approved by the relevant government authority
RM8,000/per child
Disabled child
RM6,000/per child
Additional exemption of RM8,000 for a disabled child aged 18 years old and above, not married and pursuing diplomas or above qualifications in Malaysia or bachelor degree or above outside of Malaysia in a Higher Education Institute that is accredited by related Government authorities
Net saving in SSPN’s scheme (total deposit in 2019 minus total withdrawal in 2019)
RM6,000
Child care fees to a child care centre or a kindergarten
RM1,000

On top of just looking at tax reliefs, how you file can make a difference. For married taxpayers, you need to consider whether to file for joint or separate assessment to maximise on the tax relief such as spouse relief, and also which spouse to claim for child relief. Depending on the income differences between the spouses, claiming joint or separate taxes can have a big impact on your tax savings.

This article was repurposed from “Malaysia Income Tax e-Filing Guide” on iMoney.com.my | Edited by Reena Kaur Bhatt

Share