When March 1 arrives each year, most working and eligible Malaysians are busy filling out tax forms with the Inland Revenue Board of Malaysia (LHDNM). This process is not just about declaring income but also about making additional tax payments or obtaining refunds if excess tax has been paid.
However, when assessing taxes, certain details may be overlooked, leading to inaccurate information being submitted in the Tax Return Form. Mistakes in tax forms can result in financial losses or even penalties. Here are some common tax filing mistakes and how to correct them.
Common Mistakes in Tax Forms
1. Failing to Report the Correct Income
One of the most common errors is either overstating or understating income. This includes failing to declare additional sources of income such as rental income, dividends, and royalties beyond an employer's salary.
2. Not Claiming Eligible Tax Deductions
There are various tax deductions available, including contributions to the Employees Provident Fund (EPF), life insurance, child deductions, and lifestyle expenses. Forgetting to claim these deductions may result in higher tax payments than necessary.
3. Misinterpreting Tax Laws
While tax deductions are allowed, some require proof of purchase receipts under your name. Expenses paid under someone elses name, such as a home internet bill, may not qualify for deductions.
4. Overclaiming Deductions or Donations
Claiming deductions or donations that do not qualify or exaggerating the claim amount is another common mistake. Only donations to specific approved organizations, government entities, and health treatment bodies are eligible for tax deductions.
5. Not Reporting Taxable Income Types
Besides salary, other taxable income, such as freelance earnings, rental income, or investment gains, must also be reported to avoid issues with tax authorities.
6. Providing Inaccurate Information on Tax Deductions
Falsifying tax-related information to reduce tax liability can lead to legal consequences. Ensure all deductions are accurate and supported by receipts or documentation.
7. Basic Information Errors
Mistakes such as incorrect bank account details, phone numbers, addresses, or personal identification information can cause processing delays.
8. Errors in Claiming Child Deductions
Only one parent can claim a child deduction for the same child. Double-check to ensure that deductions are correctly filed under either the husband or wife's tax form.
How to Amend Tax Form Errors
Mistakes in tax filing can be corrected through amendments. There are three main ways to make corrections, whether manually or online.
1. Manual Amendments
Manual amendments can be made to tax forms submitted either manually or online.
Steps:
Prepare a detailed letter explaining the mistake.
Attach relevant supporting documents, such as receipts or invoices.
Submit the letter and documents to the HASiL office handling your tax file or through the HASiL customer feedback system.
2. Online Amendments via e-Permohonan Pindaan BE
For certain cases, amendments can be made online through the e-Permohonan Pindaan BE system, available on the MyTax portal starting April 1.
Eligible amendments include:
Overreported income
Underclaimed tax deductions or rebates
However, this option is only available for e-BE forms. For other forms, appeals must be made manually at the nearest HASiL branch.
3. Amended Tax Return Form (BNT)
There are two amendment periods with different methods:
Before the Tax Return Form deadline: Corrections can be made manually using the steps mentioned above.
After the deadline: Amendments can still be made within six months by submitting the Borang Nyata Terpinda (BNT)
BNT is available on the HASiL website and must be submitted to the HASiL office managing the tax file. Self-amendments through BNT can only be made once and within six months from the deadline.
Self-amendments through BNT are allowed for:
Underreported or unreported income
Overclaimed expenses or deductions
Overclaimed capital allowances or incentives
However, for other types of corrections, manual amendments must be made instead.
Effects of BNT Amendments
Submitting a BNT may affect tax calculations and liabilities. Possible changes include:
A shift from non-taxable to taxable status
Additional tax assessments
A reduced tax refund amount
Taxpayers must also calculate tax penalties, which vary based on when the BNT is submitted:
Within 60 days of the Tax Return Form deadline: A 10% increase on the additional tax amount.
After 60 days but within six months: The tax increase follows this formula:
B + [(A + B) x 5%]
Where:
A = tax amount or additional tax
B = 10% of tax amount or additional tax (A x 10%)
To avoid unnecessary penalties and tax complications, it is crucial to ensure that all tax details are accurate before submission. If mistakes occur, timely amendments using the appropriate method can help rectify the issue and prevent further financial consequences. Filing taxes correctly and making necessary amendments can ultimately save taxpayers from legal and financial troubles.
Source: The Rakyat Post
