Taxes
Compulsory Contribution
What are Income Taxes
Income taxes are money that governments takes from everyone's income to spend it on public services like:
Road, hospitals, public schools etc.
In Malaysia, the more you earn, the more you pay.
Chargeable Income (RM)
| Chargeable Income (RM) | Rate % |
|---|---|
| 0 – 5,000 RM | 0% |
| 5,001 – 20,000 RM | 1% |
| 20,001 – 35,000 RM | 3% |
| 35,001 – 50,000 RM | 8% |
| 50,001 – 70,000 RM | 14% |
| 70,001 – 100,000 RM | 21% |
| 100,001 – 250,000 RM | 24% |
| 250,001 – 400,000 RM | 24.5% |
| 400,001 – 600,00 RM | 25% |
| 600,001 – 1,000,000 RM | 26% |
| 1,000,001 – 2,000,000 RM | 28% |
| Exceeding 2,000,000 RM | 30% |
3 ways to avoid taxes
1. CHANGE SALARY TO CLAIMS
Requesting for your employer to change these fixed allowances from salary to claims since claims are not taxable. Meanwhile for employers, reimbursement will be treated as business expense and would be tax deductible.
2. CLAIM SPOUSE RELIEF
This is beneficial to a couple if either the husband or wife is paid less than RM35,000 in a year.
For example, Adam is a salaried employee but his wife has no income during the assessment year.
In this case, electing for joint assessment under Adam’s name would be ideal, as Adam will be able to claim spouse relief of up to RM3,000 under a joint assessment.
3. EARN TEXT-EXEMPT INCOME
This refers to financial products or instruments that are not taxed and with earnings that are not taxed. One example of this is the Private Retirement Scheme (PRS), a voluntary long-term contribution scheme designed to help self-employed individuals accumulate savings for retirement.
Income generated from PRS is exempted from income tax. You are also allowed to claim for a tax relief of up to RM3,000 per annum when you invest with PRS.
*Inflation :a general increase in prices and fall in the purchasing value of money.
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