MY Income Tax

Required Inputs

Minimum viable -- bank statement for the full year, confirmation of business type (sole proprietor, partnership, or professional), and residency status. Recommended -- all sales invoices, purchase invoices/receipts, EPF/SOCSO/EIS statements, prior year Form B and tax assessment (Borang J), business registration (SSM). Ideal -- complete accounting records (income statement and balance sheet), capital allowance schedule, partnership agreement (if applicable), prior year tax computation.

R-MY-1

Residency unknown. "Resident and non-resident individuals are taxed at very different rates. Cannot proceed without confirming residency status."

R-MY-2

Company (Sdn Bhd) or LLP. "This skill covers sole proprietors and partnerships only. Companies file under corporate income tax (Form C). Escalate to a tax agent."

R-MY-3

Cross-border income. "Foreign-sourced income remitted to Malaysia may be exempt or subject to tax under recent amendments. Escalate to a specialist."

R-MY-4

Real property gains. "Real Property Gains Tax (RPGT) is a separate regime. Out of scope."

Computation of Adjusted Income

| Step | Description | |---|---| | Gross business income | Total revenue from business activities | | Less: Allowable expenses (Section 33) | Expenses wholly and exclusively incurred in the production of income | | = Adjusted income | Business profit before capital allowances | | Less: Capital allowances (Schedule 3) | Depreciation per tax rules | | Less: Unabsorbed losses brought forward | Prior year business losses (max 10 consecutive YA carry-forward from YA 2019) | | = Statutory income from business | |

Allowable Deductions (Section 33)

| Category | Treatment | |---|---| | Cost of goods sold | Fully deductible | | Staff salaries and EPF contributions | Fully deductible | | Office rent (business premises) | Fully deductible | | Utilities (business premises) | Fully deductible | | Professional fees (accounting, legal) | Fully deductible | | Marketing, advertising | Fully deductible | | Travel (business purpose) | Fully deductible | | Insurance (business-related) | Fully deductible | | Bad debts (specific provision, written off) | Deductible | | Repairs and maintenance | Deductible (revenue nature only) | | Double deduction | Promotion of exports, approved training, disabled employee costs, R&D |

Capital Allowances (Schedule 3)

| Asset Category | Initial Allowance | Annual Allowance | |---|---|---| | Heavy machinery / general plant | 20% | 14% | | Office equipment, furniture | 20% | 10% | | Motor vehicles (max RM100,000 cost; RM200,000 if on-the-road price ≤RM150,000) | 20% | 20% | | Computer, IT equipment | 20% | 40% | | Small value assets (each ≤RM2,000, total ≤RM20,000/YA) | 100% | -- |

Non-Deductible Expenses

| Expense | Reason | |---|---| | Private/domestic expenses | Not business-related | | Income tax itself | Tax on income | | Entertainment (50% restriction applies to most) | 50% disallowed unless for promotional purposes | | Capital expenditure (non-qualifying) | Must go through capital allowance | | Fines and penalties | Public policy | | Donations (unless to approved institutions) | Not deductible under Section 33; separate relief may apply |

Personal Reliefs (YA 2025)

| Relief | Amount (RM) | |---|---| | Individual and dependent relatives | 9,000 | | Disabled individual (additional) | 7,000 | | Spouse (no income or electing joint assessment) | 4,000 | | Disabled spouse (additional) | 6,000 | | Child (unmarried, under 18) | 2,000 per child | | Child (18+, full-time education in Malaysia) | 2,000 per child | | Child (18+, full-time education overseas at degree level) | 8,000 per child | | Disabled child (additional) | 8,000 per child | | Medical expenses (self, spouse, child -- serious illness) | max 10,000 | | Medical expenses (parents) | max 8,000 | | Life insurance + EPF | max 7,000 | | Education and medical insurance | max 4,000 | | Lifestyle (books, internet, computer, sports, courses) | max 2,500 | | EV charging facilities | max 2,500 | | Private Retirement Scheme (PRS) | max 3,000 | | SOCSO/EIS contributions | max 350 | | SSPN (National Education Savings Scheme) | max 8,000 | | Education fees (self -- Masters/doctorate, approved courses) | max 7,000 | | Breastfeeding equipment (once per 2 YA) | max 1,000 | | Child care / kindergarten (child ≤6 years) | max 3,000 |

Forms

| Form | Who Files | Deadline | |---|---|---| | Form BE | Individuals with employment income only | 30 April (e-Filing: 15 May) | | Form B | Individuals with business income (sole proprietors, partnerships, freelancers) | 30 June (e-Filing: 15 July) | | Form P | Partnership declaration (filed by precedent partner) | 30 June | | Form M | Non-resident individuals | 30 June |

Filing Process

1. Register for e-Filing at mytax.hasil.gov.my (first-time users) 2. Obtain Tax Identification Number (TIN) from LHDN 3. Complete Form B with business income, personal reliefs, and tax computation 4. Submit electronically via MyTax portal 5. Pay any balance of tax due (after deducting CP500 instalments paid)

Penalties

| Offence | Penalty | |---|---| | Late filing | Surcharge under Section 112(3): RM200 -- RM20,000 or imprisonment ≤6 months | | Late payment | 10% increase on tax unpaid after due date (Section 103(3)) | | Additional penalty | Further 5% on amount still unpaid 60 days after due date | | Incorrect return | Penalty equal to the amount of tax undercharged (Section 113) | | Wilful evasion | Fine RM1,000 -- RM20,000 or imprisonment ≤3 years, plus 300% penalty (Section 114) |

Interaction with Other Systems

| System | Interaction | |---|---| | CP500 (prepayment instalments) | See **my-pcb** skill for self-employed instalment payments | | EPF/SOCSO/EIS | See **my-epf-socso** skill for contribution rates and obligations | | SST (Sales and Services Tax) | Separate regime; not covered by this skill |

Key Legislation

| Topic | Reference | |---|---| | Income tax rates | ITA 1967, Schedule 1 | | Business income | ITA 1967, Section 4(a) | | Allowable deductions | ITA 1967, Section 33 | | Capital allowances | ITA 1967, Schedule 3 | | Personal reliefs | ITA 1967, Sections 45A-49 | | Filing and payment | ITA 1967, Sections 77-107 | | Penalties | ITA 1967, Sections 112-114 |

Key LHDN Resources

| Resource | URL | |---|---| | MyTax e-Filing | https://mytax.hasil.gov.my | | Tax rates | https://www.hasil.gov.my/en/individual/individual-life-cycle/income-declaration/tax-rate/ | | Tax reliefs | https://www.hasil.gov.my/en/individual/individual-life-cycle/income-declaration/tax-reliefs/ | | Contact centre | 03-8911 1000 / HASiL Care Line |

Prohibitions

- NEVER apply resident tax rates without confirming 182-day residency requirement - NEVER claim personal reliefs for non-resident taxpayers - NEVER allow entertainment expenses at full deduction -- 50% is disallowed unless qualifying promotion - NEVER claim capital expenditure as a revenue expense - NEVER treat CP500 instalment payments as expenses -- they are credits against final tax - NEVER present calculations as definitive -- always label as estimated