Income Tax

All Malaysian are liable to pay tax on income accrued in, derived from or remitted to Malaysia. Sources of income can be taxed includes gains and profits from trade, profession and business, salaries, remunerations, gains and profits from an employment, dividends, interests or discounts, rents, royalties or premiums, pensions, annuities or other periodic payments and other gains or profits of an income nature not mentioned above.

Taxable income is arrived at after adjusting for expenses incurred wholly and exclusively in the production of the income.

The rate of tax depends on the resident status of the individual which is determined by the duration of his stay in the country (as stipulated under Section 7 in the Income Tax Act 1967). A resident individual is taxed on his chargeable income at graduated rates from 2% to 30% after the deduction of tax relief.

However, an individual with chargeable income of less than RM2,500 is not taxed. The chargeable income of an individual resident is arrived at by deducting from his or her total income the personal relief. Tax liability of a resident individual is reduced by rebates. Income tax matters in Malaysia are under the jurisdiction of Inland Revenue Board of Malaysia.

Income tax is supposed to be those poor who earn less will get taxed less. The rich who earn more will get higher taxed. Luckily, the law has states that the individual with chargeable income of less than RM 2,500 is not taxed. Therefore, income tax does not be a burden for those individuals.

In my life, I never paid any taxes. Therefore, I unable to experience how the income tax affect my life and how the feeling when I have to pay a tax. Due to those reasons, I do not have much knowledge about the income tax and only can know it during the business law class. This is an opportunity for me to explore extra information about the income tax to enhance my understanding about the income law. 1 thing that i know about income tax is most of the people dislike to pay the income tax because the procedures to report the income tax is messy.

Prepared by,
Fong Yok Yan (1071120015)