April 3, 2009

TA Investment declares distribution for TA High Growth Fund

TA Investment Management Bhd (TAIM) has declared a 2.5 sen gross income distribution per unit for the TA High Growth Fund (TAHGF), for its financial year ended 31 March 2009. The distribution of 2.5 sen per unit is equivalent to an income return of 4.3% (source: Lipper Hindsight).

"Despite the global market downturn, we managed to maintain our distribution for the fund. We believe that the market will continue to be very volatile in the first half of year 2009." says TAIM's deputy chief investment officer, Ms. Vivien Loh. "The global markets have shown some signs of recovery with the concerted effort of the global central banks to help their respective economies. However, we believe the initial impact should be to restore market confidence through a sustainable market recovery. The real economy needs to show some signs of recovery in the employment and trade market". Our strategy for the fund is to accumulate on weakness for an expected market recovery towards the end of year 2009. In the mean time we are to trade cautiously, while awaiting the actual signs of economic recovery."

TAHGF, which was launched in June 2004, is a unique fund that offers investors an opportunity to invest in high earnings growth companies listed on the Bursa Malaysia. The investment objective of the fund is to provide investors with above average capital growth over a medium to long-term period by investing mainly in companies that offer higher growth prospects.

For more information, please call 1-800-38-7147 or visit our website at www.tainvest.com.my.

Source: TA Invest

April 2, 2009

HwangDBS declares 3 sen distribution for EDF

HwangDBS Investment Management Bhd today announced the seventh income distribution of three sen for its Enhanced Deposit Fund (EDF) for the financial year ending April 30, 2009.

As at end of February 2009, EDF has registered a total growth of 13.7 per cent on its net asset value per unit, HwangDBS said in a statement.

The fund since its inception has outperformed its benchmark, the Maybank three-month fixed deposit rate, by a total of 12.45 percent and has distributed a total of 8.95 sen since inception, it said.

HwangDBS chief executive officer and executive director, Teng Chee Wai, said EDF has been charting strong growth due to its active management strategy and team-based approach.

Teng said the interest rate cut by Bank Negara Malaysia recently had benefited local money market funds over the immediate term.

“As our money market funds managed to extend their duration late 2008, the cut also implies that, moving forward, money market yield will trend lower,” he said.

Source: Bernama

April 1, 2009

Distribution for Pacific Mutual's funds

Pacific Mutual Fund Bhd has declared RM9.25 million income distribution for five of its funds for the financial year ended March 31.

It said on April 1 the funds involved were the Pacific Pearl Fund, Pacific Dana Aman, Pacific Dana Murni, Pacific Cash Fund and Pacific Asia Brands Fund.

For the Pacific Pearl Fund, the income distribution is 2.5 sen per unit while for Pacific Dana Aman (0.5 sen), Pacific Dana Murni (1.5 sen), Pacific Cash Fund (0.4 sen) and Pacific Asia Brands Fund (1 sen).

The distribution yields for investors based on the net asset value (NAV) per unit prior to the distribution is 4.42% for Pacific Pearl Fund, Pacific Dana Aman (1.4%), Pacific Dana Murni (2.84%), Pacific Cash Fund (0.79%) and Pacific Asia Brands Fund (3.17%).

Pacific Mutual general manager, business development and marketing Gary Gan said last year was truly a tumultuous year for investors as global markets capitulated, in some cases, wiping out the entire gains from the previous five-year bull run in a single year of economic distress amidst an unprecedented financial crisis.

Gan said despite the obvious tough investment conditions, Pacific Mutual could be able to offer consistent payouts to its investors.

Pacific Mutual manages 19 funds, including six global funds and two wholesale funds. It also manages private funds under its asset management business.

Source: TheEdge Malaysia

March 31, 2009

Public Mutual declares distributions for 2 funds

Public Bank's wholly-owned subsidiary, Public Mutual declares distributions for two of its funds. The total gross distributions declared are for financial year ended 31 March 2009:

Fund

Gross Distribution / Unit

Public Aggressive Growth Fund

5.00 sen

Public Regular Savings Fund

3.50 sen

Public Mutual's Chairman Tan Sri Dato' Sri Dr. Teh Hong Piow commented that Public Mutual is pleased to be able to declare distributions on these two funds despite these trying times.

Public Aggressive Growth Fund which was launched in 1994, aims to seek high capital growth over the medium- to long-term period through investments in situational and high growth stocks.

Meanwhile, Public Regular Savings Fund which was also launched in 1994, aims to achieve consistent capital growth over the medium- to long-term period and to achieve a steady growth in income.

Public Mutual is Malaysia's largest private unit trust company with 67 funds under management. It has over 2,000,000 accountholders serviced by over 40,000 unit trust consultants. As at 28 February 2009, the total net asset value of the funds managed by the company was RM23.5 billion.

Source: Public Mutual

March 30, 2009

More tips on filing taxes

IF I am paid a fixed monthly travel allowance (with EPF contribution) which covers fuel for travel within Peninsular Malaysia, parking and toll, am I allowed to take advantage of tax exempt benefits? – GOH C.H.

A. YES, with effect from year of assessment 2008, tax exemption is given on petrol card, petrol allowance or travel allowance and toll card for official duties provided by the employer. The tax exemption is up to RM6,000 per annum.

ARE dentures for parents eligible for tax rebate? – Lii

THE tax deduction for medical expenses for parents is up to a maximum of RM5,000.

Medical expenses that qualify would cover medical treatment for the parent evidenced by a receipt issued by a medical practitioner. It also includes dental treatment but this is limited to tooth extraction, filling, scaling and cleaning and does not include cosmetic dental treatment expenses such as teeth restoration and replacement involving crowning, root canal and dentures.

Therefore, the expense for your parent’s dentures would not qualify for the tax deduction.

On a separate note, it is important to differentiate that the RM5,000 maximum claim is for a tax deduction (i.e. to be deducted against your total income to arrive at your chargeable income) and not a rebate (i.e. a rebate is deducted from your income tax charge to arrive at your tax payable).

I HAVE two questions: 1) The RM3,000 rebate for purchase of computers every three years. I last purchased a computer in August 2006. Can I purchase a new computer now (March 2009) to enjoy the rebate again or do I have to wait after August 2009 or some other date?

2) My wife and I jointly own two commercial properties which are rented out. My wife is a full-time housewife and has no income. I am at the maximum tax rate currently and on combined assessment filing. Can my wife take up the full rental income or at least 50% of the income and file for separate assessment?

If only 50% of rental income is allowed, do we need to split the property expenses like quit rent, insurance and assessment 50/50 also? – William Tan

FIRSTLY, it is important to differentiate a tax deduction from a tax rebate. The RM3,000 maximum claim for the purchase of a personal computer for non-business use is for a tax deduction (i.e. to be deducted against your total income to arrive at your chargeable income) and not a tax rebate (i.e. a rebate is deducted from your income tax charge to arrive at your tax payable).

Prior to year of assessment 2007, a RM500 rebate was given for the purchase of a personal computer used for non-business purposes on a household basis once in every five years of assessment.

Currently, the relief given is a tax deduction for the purchase of a personal computer for non-business use up to a maximum of RM3,000 given on an individual basis once in every three years of assessment.

Since your claim for the RM500 tax rebate was in year of assessment 2006 under the old tax provisions, you will be entitled to claim the RM3,000 tax deduction for another computer purchase anytime after the new tax provision took effect from year of assessment 2007. Therefore, you may purchase a new computer now (March 2009) and claim the RM3,000 tax deduction. Provided the existing law on the tax deduction does not change, your next qualifying purchase would be in year of assessment 2012.

2) Since your two properties are jointly owned, each of you would declare half the rental income equally in your respective tax return. Any expenses expended to generate the rental income from the jointly-owned properties (for example, property quit rent and assessment, insurance and repair and maintenance) must also be split equally to be deducted against the rental income.

Your wife may elect for a separate assessment to report her half share of the net rental against her personal tax relief.

UNTIL last year, taxpayers could claim back excess tax paid on dividends received in 2007. Is this still possible in 2009? – Taxpayer

WHETHER you are still able to claim back the excess tax paid on dividends in year of assessment 2008 and 2009 would depend on the type of dividend that you receive from the company i.e. whether it is a franked (or tax deducted) dividend or exempt dividend.

With effect from year of assessment 2008 under the single-tier system, there is no further need for the company to deduct tax when paying dividends and any dividends distributed by the company will be exempt from tax in the hands of the shareholders.

However, transitional provisions in the tax legislation allow two options for companies with a credit balance in their section 108 accounts as of Dec 31 2007 when they want to pay dividends to the shareholders:

>The company can continue to use such credits in the section 108 account to pay franked dividends to shareholders up to Dec 31, 2013 or until the section 108 credits are exhausted, whichever comes earlier.

>Alternatively, the company may at any time make an irrevocable election to forgo the right to distribute franked dividends and pay dividend under the single-tier system.

The company, upon paying the dividend, is required to furnish the shareholders with a certificate warrant which will state whether tax has been deducted from the dividend or whether it is tax exempt pursuant to the single-tier system. If it is franked dividends, you can continue to claim back the excess tax paid, if any.

I AM a sole proprietor. I draw a monthly salary from my business net EPF deduction of 11%. My business pays the employer’s portion of EPF contribution (12%). I understand the 12% EPF contribution for its proprietor is not a tax-deductible expense for the business. For my personal computation of tax payable, can I utilise the 11% deduction as a tax relief lumped together with my insurance premium giving a maximum relief of RM6,000? – Lim Jun Kean

THE 11% employee portion of EPF contribution is considered as part of your gross salary and subject to income tax (in addition to the sole proprietor business profit) on you. You are however entitled to claim the 11% EPF deduction as part of the maximum RM6,000 together with the life insurance premium tax relief in your personal tax return.

I GET newspapers delivered to my home for which I get a monthly bill. Can I claim this as a deduction under reading materials?

Also, my mother has undergone ayurvedic treatment. Can I claim deduction under parents’ medical expenses? The expense is supported by official bills and receipts – S.Thiruchelvam

AN amount of up to a maximum of RM1,000 is deductible in respect of the purchase of books, magazines, journals or other similar publications (in hard copy or electronic form) for the purposes of enhancing knowledge of the individual, spouse or child. However, newspapers and banned reading materials are specifically excluded. Therefore, you cannot make a claim on your newspaper bills.

Medical expenses that qualify for the tax deduction for medical expenses for parents of up to a maximum of RM5,000 would include medical treatment evidenced by a receipt issued by a medical practitioner registered with the Malaysian Medical Council.

Unless the ayurvedic practioner is registered with the Malaysian Medical Council, the medical expenses will not qualify.

I AM a retiree with no regular source of income except for dividends on investment in shares. Since the amount of yearly dividends I receive is less than RM30,000, I regularly claim RM4,000 to RM5,000 tax rebate under section 110 (dividends). Lately, I have received many Tier 1 dividends which do not indicate the amount of tax paid on behalf of the shareholders. Being a retiree, can I claim the tax rebate? If not, then all shareholders including retirees are paying the corporate tax of 25% on their dividends received. With the banks’ savings and FD interest rate of 2% to 3% per annum, how are the retirees going to survive? I hope you can assist by bringing up the plight of the retirees during the next budget dialogue. – Lim

WITH effect from year of assessment 2008, the single-tier system took effect. Under this system, there is no need for the company to deduct tax when paying dividends and any dividends distributed by the company will be exempt from tax in the hands of the shareholders.

However, transitional provisions in the tax legislation allow two options for companies with a credit balance in their section 108 accounts as at Dec 31, 2007 when they want to pay dividends to the shareholders:

>The company can continue to use such credits in the section 108 account to pay franked dividends to shareholders up to Dec 31, 2013 or until the section 108 credits are exhausted whichever comes earlier.

>Alternatively, the company may at any time make an irrevocable election to forgo the right to distribute franked dividends and pay dividend under the single-tier system.

If the dividends you receive indicate that no tax has been deducted, these dividends would be either exempt dividends or dividends paid under the single-tier system. In both cases, the dividends are exempt from tax in your hands and you are not entitled to claim the section 110 tax credits on such dividends.

You are correct in saying that retirees are one of the most-impacted group as a result of the single-tier system since under the previous full imputation system, you are able to get tax refund from claiming the section 110 tax credit due to your lower personal tax rate compared to the company tax rate. This has been brought to the attention of the relevant authorities in the dialogues and discussions by the professional bodies.

I READ in the papers that the recent mini budget has increased the current RM6,000 tax relief per year of service to RM10,000 for retrenched workers. Is there a limit on the number of years and does it apply for voluntary separation and early retirement? – Worried Worker

THE tax exemption on compensation for loss of employment received by employees (including payment pursuant to a separation scheme where employees are given an option for an early termination of an employment contract) is increased from the current RM6,000 to RM10,000 per completed year of service with the same employer or with companies in the same group. It covers the voluntary separation scheme but does not cover early retirement.

There is no limit on the number of years of service. However, please note that the RM10,000 exemption is applicable on the number of completed years of service.

In addition, the increased tax exemption is only applicable on payments made in respect of individuals who have ceased employment on or after July 1, 2008. If the individual has ceased employment on or after July 1 2008, and tax clearance has been issued by the IRB with the RM6,000 tax exemption (prior to the mini budget announcement on March 10 2009), the individuals can make an appeal to the IRB for a reduced assessment.

MY wife and I have a combined assessment. However, my wife was retrenched from her company on Dec 7. She has not found a new job and has had no income since then. Do I still continue to submit the combined tax assessment for 2008 and subsequent years despite her not earning any income? – Ismail

YOU should fill code 4 – “Diri sendiri, isteri tiada punca pendapatan” under Part A5 – “Jenis Taksiran” in your tax return. If your wife has received the year of assessment 2008 tax return, she should complete and file a “Nil” return to the IRB, together with a cover letter stating that she has no income in 2008.

I OWN five units of properties with three units in joint names with my spouse and the others solely owned by me. My question is, every month my spouse will collect the rental on my behalf, and she also troubleshoots if there are problems with the houses. Since she uses her own transport, makes telephone calls, pays parking and toll fees, goes to the bank etc. can I pay her a salary for her help? My spouse is a housewife – Sam

THE tax law allows you to claim a deduction for expenses that you have expended to generate the rental income from your properties. These may include quit rent, assessment, insurance, repairs and maintenance, housing loan interest taken on the properties and rent collection fee paid to an estate agent.

As your wife is a “related party” and not a registered real estate agent, there could be more scrutiny by the IRB on the claim for the fee paid to her. For example, whether the fee payment is at market rate, whether the fee is commensurate with the services provided or is it excessive, etc. If a fee is paid to your wife, she will have to report the income in her tax return.

I WRITE academic books and earn a few thousand from the payment of royalty. Actually, I am not selling the books or doing any business from the sale of the books. The publisher does all the marketing and selling. I just do the writing. Every year I report the income from the royalty together with my salary from the Government minus some of the expenses. My questions are:

(a) Presently I am given the OG or the B form. Should I be using the SG form instead because I am not doing any business?

(b) How is the RM20,000 exemption considered in a case like mine? – Anonymous

THE IRB have treated your royalty income as a business source and issued you a Form B (under an OG tax reference number). On the basis that you receive the royalty income and presumably claim some direct expenses against it, the tax treatment of your royalty income would essentially be the same whether it is reported under a Form B or Form BE. The tax filing deadline if the royalty is treated as a business source under Form B is June 30 whereas if it is a non-business source, the deadline is April 30.

There is a specific provision in the tax legislation to exempt RM20,000 royalty income or payment in respect of the publication of, or the use of or the right to use any literary work. You should exclude the RM20,000 exempt royalty income and declare the net (after deducting related expenses) balance of royalty income in your tax return.

I WAS told by the officers at IRB that filling the HK-3 forms this year will be simple. I only have to fill in according to what is required by that form. Firstly, I don’t have to submit the dividend vouchers to the Income Tax office, together with the Borang BE.

Secondly, according to the instructions accompanying the borang BE, I have to correct/adjust for the Z, X and Y column. Is this correct? – K T KHOO

YES, you need to only submit worksheet HK-3 and are not required to submit the dividend vouchers in order to claim a tax refund on your dividend income.

If you are submitting your tax return via e-Filing, the computer system will calculate the re-grossing of the net dividends automatically. However, if you are submitting the hard copy of your return, you will need to compute the re-grossing yourself and complete the worksheet accordingly.

YOU mentioned about investing in the National Education Savings Scheme (SSPN). What is this, and how does one apply for it? I’m a single father with two school-going boys. What can I do to reduce my tax deduction? – Andrew

FULL details regarding the National Education Savings Scheme (SSPN) can be found at www.ptptn.gov.my website for National Higher Education Fund Corporation (see box above for details).

Source: TheStar

Your tax queries answered

Yes to golf balls and shuttlecocks but no to swimsuits and sports shoes. These are among many specifications related to tax exemption. What makes the cut and what doesn’t, who qualifies and who doesn’t are among the many questions from our readers in response to Sunday Star’s stories last week on how to maximise one’s claims when filing tax returns.

THANKS to the assistance of tax consultant company PremierOne, our readers’ questions have been answered. Below are some of the e-mailed questions. Due to space constraints, the rest will be answered next week.

Q. I AM really confused as to what type of insurance premiums are deductible for life insurance and medical insurance reliefs. I noticed that insurance policies nowadays have both life insurance and medical rolled into one. What is the Inland Revenue Board’s (IRB) new guidelines dated June 6, 2005, on this matter? Where can I get these guidelines? – JOHN LIM

A. THE total tax deduction for life insurance premiums and contribution to an approved pension/employees provident fund is up to a maximum of RM6,000. The total tax deduction for insurance premium for education and medical benefits is up to a maximum of RM3,000.

If you are holding a policy that provides both life insurance and medical coverage, you can request from your insurance company (through the agent that services you) a statement that will show a breakdown of the premium paid in respect of each of the coverage. From these breakdown amount, you may claim a tax deduction for the life insurance premium (together with your EPF contribution) up to a maximum of RM6,000. The medical premium may be claimed (together with the education policy premium, if any) as a tax deduction up to a maximum of RM3,000.

The IRB has issued two Public Rulings and two addenda on the computation of income tax for individuals, including the one you mentioned dated June 6, 2005 (Public Ruling no. 2/2005). The public rulings set out the IRB director-general’s interpretation on the particular tax matters and are issued to provide guidance for the public and IRB officers. All the public rulings can be found and downloaded from the IRB website at www.hasil.org.my under Law and Regulations/Public Rulings.

MY wife and I each bought a personal computer last year and would like to claim the RM3,000 rebate for each computer under our individual names.

However, we were told that we are only allowed to claim one personal computer as the rebate is based on family usage and not individual usage.

Can you please clarify this point?

Are my wife and I allowed to claim the rebate totalling RM6,000 for both of us as we each bought a new personal computer last year? Our taxes are filed separately. – FAN TEN YAU

THE current tax deduction for the purchase of a personal computer for non-business use of up to a maximum of RM3,000 is given on an individual basis once in every three years of assessment.

It is important to note that the RM3,000 maximum claim is for a tax deduction (i.e. to be deducted against your total income to arrive at your chargeable income) and not a rebate (i.e. a rebate is deducted from your income tax charge to arrive at your tax payable). Prior to year of assessment 2007, the relief given was a RM500 rebate given on a household basis once every five years.

In your case, where you and your wife elect for a separate assessment, each of you are eligible to claim a maximum deduction of RM3,000 for your respective purchase to be evidenced by a receipt for the respective claim.

DUE to the increase in petrol/diesel price, other things also increase in price. In order to lighten our expenses, our company pays a monthly allowance, called child transport allowance, for those who have school-going children. This allowance varies depending on the number of children going to school.

Can we claim tax exemption on this allowance? – JENNY

PURSUANT to the Budget 2009 announcement last year, allowance or subsidies received by employees from their employer for childcare in respect of children will be exempted from income tax with effect from year of assessment 2008. The exemption is restricted to RM2,400 per annum.

Although the relevant statutory order on the allowance is yet to be gazetted to date, the IRB has issued a second addendum to Public Ruling no. 1/2006 (dealing with perquisites from employment) which states that the child must be 12 years of age and below and must be a legitimate child, stepchild or legally adopted child.

The examples given in the ruling sets out situations where the allowance was given to employees for childcare centre, hiring a helper and employing a household domestic maid. Whilst the examples given may not be exhaustive, it is uncertain whether an allowance for child transportation would qualify, until further clarifications from the IRB.

EFFECTIVE from year of assessment 2008, taxpayers are given a relief of up to RM300 yearly for the purchase of sports equipment.

Equipment that are entitled to this relief are those used for sporting activities as defined under the Sports Development Act 1997. I would be pleased if you could provide some examples of the sports equipment that will be entitled to this relief.

It is interesting to note that in the guidebook for the year of assessment 2008 (Buku Panduan Borang B 2008 – pdf version), it is mentioned that sports shoes are excluded.

This may seem as an anomaly as a pair of running shoes may be a major “equipment” used in athletics, a sport defined under the Sports Development Act 1997. – FOOK

A TAX deduction is allowed for an amount limited to a maximum of RM300 in respect of expenses expended for the purchase of sports equipment for any sports activity as defined under the Sports Development Act 1997, as evidenced by receipts issued.

The term sports activity is listed in the First Schedule of the Sports Development Act 1997 and ranges from athletics, badminton, canoeing, fencing, golf, recreational, sepak takraw, table tennis to watersport, etc.

You are correct to point out that whilst equipment with short lifespan e.g. golf balls and shuttlecocks have been accepted by the IRB in the Buku Panduan, certain sports attire have specifically been excluded e.g. swimsuits and sports shoes.

MY company, X Sdn Bhd, was formed some time in mid-2006. There are only two directors in the company with equal sharing of the company shares. No profit was made in 2006. However, there was profit at the end of financial year 2007 and dividend was declared and distributed to the shareholders in July 2008.

I would like to know if I am eligible to claim for the difference in the taxed amount as my personal marginal tax is lower than the company tax, which is 20%. Or is it that the dividend distributed is under single-tier tax system of which I don’t even need to declare in the EA and BE form?

My accountant informed me that since the company is new, it should directly be under the new tax system. Is this true? – DARREN

IT is not correct to say that since the company is “new”, it would automatically be under the single-tier system.

The single-tier system took effect from year of assessment 2008 onwards. Under this system, there is no need for the company to deduct tax when paying dividends and any dividends distributed by the company will be exempt from tax in the hands of the shareholders.

However, transitional provisions in the tax legislation allow two options for companies with a credit balance in their section 108 accounts as at Dec 31, 2007 when they want to pay dividends to shareholders:

The company can continue to use such credits in the section 108 account to pay franked dividends to shareholders up to Dec 31, 2013 or until the section 108 credits are exhausted whichever comes earlier (subject to certain conditions e.g. dividends must be paid in cash and in respect of ordinary shares.) For small and medium companies, the tax on dividends paid to the shareholders is deducted from the section 108 credit balance based on the highest tax rate for the year of assessment (e.g. 27% for year of assessment 2007).

Alternatively, the company may at any time make an irrevocable election to forgo the right to distribute franked dividends by filing a Form R50 to the IRB and pay dividends under the single-tier system.

Since your personal marginal tax bracket rate is lower than the company tax rate, provided you have sufficient tax credits in the company section 108 accounts, it is more beneficial for the company to declare and pay franked dividends under the transitional provisions, instead of paying single-tier exempt dividend.

Please note that the company, upon paying the dividend, is required to furnish the shareholders with a certificate stating the gross dividend, tax deducted from the dividend and net dividend paid out.

I SEEK further clarification on my following concerns:

i) Travel allowance from home to work place of up to RM2,400: Does this apply to all employees who drive to work daily or only to those provided with such an allowance by the company? If I drive a company car, am I entitled to this exemption?

ii) Telephone and mobile usage: Does this again apply to all who use their mobile phone for company business? Totally or partly?

iii) I drive a company car and use company registered mobile phone. These are translated into income of RM3,000 and RM600 respectively as taxable income. Am I entitled to these extra exemptions? – C.C. YAP

THE tax exemption for travel allowance of up to RM2,400 a year is only applicable if you receive such travel allowance from your employer i.e. if your employer provides you such travel allowance, the allowance is not taxable to you. It does not apply to employees where no travel allowance is provided by their employers, though they drive to work.

Similarly, the tax exemption applies where your employer provides you the telephone and mobile phone or pays the bills for the telephone or mobile phone registered in the name of the employee or employer.

You are entitled to the tax exemption on the RM600 mobile phone benefits provided by your employer.

In relation to the company car, we understand that the IRB is currently considering whether to include the benefit value of motor vehicle (in your case the RM3,000) as part of the exempt allowance of up to a maximum of RM2,400 per annum. We anticipate the IRB to issue further guidelines on this.

I WOULD like to know which column in E-filing to fill in details of parking allowance, purchase of own company goods at discounted price and handphone/Internet/phone bills. Are those exempted from tax in YA2008? If so, where do I fill them in as I can’t seem to find an appropriate column to put those in? – ERIC

WITH effect from year of assessment 2008 parking allowance, telephone and mobile phone bills, and Internet subscription paid by employers are exempted from income tax.

The purchase of the company’s own goods at discounted price is also an exempted benefit-in-kind, up to a maximum of RM1,000 per year.

Such exempted allowances and benefits-in-kind are not required to be reported in your Form BE or under e- Filing.

Please note that Part G of the Form EA for year ended Dec 31, 2008 provided by your employer would specify the total amount of such exempted allowances/benefits-in-kind/ perquisites.

HOW could we in the private sector cut on our taxes as we fall in the maximum taxable bracket as compared to our peers in the government sector who earn the same and pay less tax as lots of the allowances are non taxable?

PURSUANT to the 2009 Budget announcement, with effect from year of assessment 2008, the Government has allowed tax exemptions on various allowances and benefits provided by employers to their employees.

Some examples include subsidised interest given by employers for housing, education or car loan up to RM300,000; travel and petrol allowance for travelling from work to home of up to RM2,400 per year; travel and petrol allowance and toll rate for official duties of up to RM6,000 per year; and allowance for meal, parking and childcare, etc.

I WISH to know whether I can claim on the following:

i) I spent a total of RM7,820.50 for both check-ups and delivery at a hospital for the birth of my son under Section D7 up to maximum RM5,000; and

ii) Cukai Seksyen 110 (lain-lain) dividend received from public listed shares. – CHONG SAU CHAN

THE deduction claim under Part D7 is in relation to expenses expended for a complete medical examination which is up to a maximum of RM500. The total deduction for medical expenses on serious diseases under Part D6 is limited to a maximum of RM5,000 and this includes the RM500 for complete medical examination (under Part D7).

The expenses you incurred for check-ups relating to your pregnancy and delivery of your son is not claimable since it does not fall within the two categories of expenses.

If the dividend warrant that you received from the public listed shares shows a gross dividend amount, tax deducted from the dividend and net dividend paid out, it means that the company has to opt to continue using its section 108 tax credits balance to pay franked dividends under the transitional provisions instead of electing to pay exempt dividends under the single-tier system.

Therefore, you should declare the dividend at gross in your tax return: for example, if in 2008 you received net dividend of RM74, you should declare RM100 (and not RM74) as dividend income in your return. However, you can deduct the section 110 tax credits of RM26 against your total tax. Any excess credit will be refunded to you.

I RETIRED in 2007. I have no employment income for YA 2008. My wife is still working. I have a child currently receiving college education. My questions are:

i) Since I have no income for YA 2008, can I elect for combined assessment so that my spouse can claim additional RM3,000 personal relief? Do I have to file separate forms officially to inform the IRB?

ii) Can my spouse claim the child relief as well as all the insurance premiums paid for life and medical policies?

iii) I understand that retirement gratuities received due to medical reason is exempted from income tax. Where do we disclose the amount received as there is no mention in the Borang BE?

iv) Will the retirement gratuities received due to medical reason be taxed if the person later decides to take up a new employment or start a business? – FRANCIS

SINCE you have retired and have no income for year of assessment 2008 and if you have received your tax return Form BE from the IRB, you should complete and file a “Nil” return to the IRB, together with a cover letter stating that you have no income for 2008. Your wife should fill code 4 = “Diri sendiri, suami tiada punca pendapatan” under Part A5 – “Jenis Taksiran” in her tax return. Your wife can claim the additional RM3,000 relief for you (as husband).

ii) Yes, your wife can elect to claim the child relief. Your wife is also entitled to a claim up to a maximum of RM3,000 for insurance premium paid for her and/or your medical policies as well as a claim up to a maximum of RM6,000 (together with her EPF contributions) for insurance premium paid for her and/ or your life policies.

iii) Sum received by way of gratuities on retirement from an employment, if the director-general of the IRB is satisfied that the retirement is due to ill-health, is exempted from income tax. In practice, your employer would have issued you a Form CP22A (notification of cessation of employment) and you should have obtained a tax clearance from the IRB before your employer released the gratuity sum to you.

There is no requirement to declare the exempted gratuity amount in your Form BE.

iv) There is no specific provision in the tax legislation to cover this position. However, the legislation clearly provides that the director-general of the IRB must be satisfied that the retirement is due to ill-health. Where this criterion has been met, the gratuity would not be taxable. Whether the subsequent taking up of another employment or starting a business may lead to a review by the IRB will depend on the prevailing facts and circumstances.

MY company is giving fuel card worth RM300 per month and mobile phone benefit of RM120 per month. This will not be included in the salary slip, so how do I fill up the EA form?

Also, how do I fill up for goods that I buy at discounted value for RM1,000?

And what is the tax relief for EPF Annuities scheme? – ANG

i) The fuel card of RM300 per month and mobile phone of RM120 per month provided by your company is exempted from income tax with effect from year of assessment 2008. There is no requirement to declare the exempt income in the Form EA or the Form BE.

ii) The purchase of company goods at discounted value up to a maximum of RM1,000 is exempted and not required to be disclosed in the Form EA or Form BE.

iii) The tax relief for EPF Annuities scheme is up to a maximum of RM1,000 per annum.

I HAVE two questions. Can I claim maternity expenses in 2008 if the expenses were borne by myself and not by my company? I have a parent in a nursing home. Can I claim the nursing home expenses borne by myself? It is the monthly sum paid to the nursing home for the care of my parent – LINDA

TAX deduction for medical expenses expended on own self, spouse or child of up to a maximum of RM5,000 is available only if it is in respect of treatment of serious diseases (see box for definition).

Since maternity expenses do not fall within this definition, it is not claimable as a tax deduction.

For your second question, tax deduction for medical expenses expended for own parents is up to a maximum of RM5,000.

Medical expenses that qualify for deduction would include medical care and treatment provided by a nursing home for your parents. You must keep the receipt(s) from the nursing home certifying that nursing home care was provided to your parents as evidence for your claim.

ONE of the points you highlighted in your article “How to pay Less Tax” (Sunday Star, March 15) was that medical benefits exempted from tax include expenses on traditional medicines such as ayurvedic and accupunture. And you mentioned that it is for the year of assesment 2008.

I would appreciate it if you could elaborate on this a little more. As I am taking my son for ayurvedic treatment, can I put it in?

My husband and I are paying for the treatment from our own savings and we are not asking our employer to cover it as a benefit. So, can we put it in our income tax form? What is the maximum amount we can claim and where do we put it? – TAX QUERY CITIZEN

MEDICAL benefits which include expenses on traditional medicines such as ayurvedic and acupuncture that are exempted from tax for employees applies only where such benefits are provided by employers.

In your case, since you (and not your employer) are paying for your son’s ayurvedic treatment, this exemption is not applicable to you.

In order to claim the tax relief for medical expenses for your son of up to a maximum of RM5,000, the expenses have to be expended on “serious diseases” (see definition in box). In addition, you are required to obtain a receipt or certificate from a medical practitioner who is registered with the Malaysian Medical Council.

Unless your son’s ayurvedic treatment is for a serious disease and the ayurvedic practitioner is registered with the Malaysian Medical Council, the expenses will not be deductible.


PremierOne is a tax consultant firm that offers a high level of personal attention and service. Together, the group of partners, originally from one of the biggest international accounting firms, has many years of experience and expertise.The executive directors of PremierOne Tax Consultants Sdn Bhd are Elizabeth Peter of Human Capital Services, Lim Kean Teong of Corporate Services and Antony Tong of Advisory Services. For professional consultation, e-mail info@premierone.com.my


What is serious disease?

Serious diseases is defined to include AIDS, Parkinson’s disease, cancer, renal failure, leukaemia and other similar diseases such as heart attack, pulmonary hypertension, chronic liver disease, fulminant viral hepatitis, head trauma with neurological deficit, brain tumour or vascular malformation, major burns, major organ transplant and major amputation of limbs.

Source: TheStar

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