Welcome back to another edition of our comprehensive annual income tax guide, this time to help you out with your tax filing process in 2024 for the 2023 year of assessment (YA)! It’s undeniable that tax filing can be a painstaking process for many people, and can even be intimidating for some, but with some assistance and guidance, you can file taxes with confidence and ease – and maximise tax refunds where possible.
As with previous years, we’ll once again highlight various key details that you should take note of during different stages of the process, so that you don’t miss out on things. With that, let’s get started.
Do you need to pay income tax?
Individuals who earn more than RM34,000 per annum after EPF deductions (approximately RM2,833.33 per month) are required to register a tax file. This figure does not only encompass your monthly salary, but also all other types of income, including earnings from your business or profession, employment, dividends, interest, discounts, rent, royalties, premiums, pensions, annuities, and others.
In the case of salaried individuals, make sure to also calculate any other taxable earnings on top of your salary, such as bonuses, overtime, and commissions. Freelancers and part-timers, too, are not spared from registering and filing their taxes if their annual income exceeds the RM34,00 mark.
Meanwhile, individuals who are earning income from abroad (foreign-sourced income) are exempted from paying taxes – but only if you are already taxed in the country of origin. This arrangement will be valid until 31 December 2026.
If you’re not sure which income needs to be declared for tax purposes, we’ll be sharing more on this in a later sub-section of this guide (“How To File Income Tax In Malaysia” >> “Declare Your Income”), so hang tight for now!
Malaysia tax rates & chargeable income (YA 2023)
The tax rate that is applicable to you as an individual taxpayer is determined by your chargeable income (also known as taxable income). It is calculated by taking your total annual income, and subtracting all the tax exemptions and tax reliefs that you are entitled to.
Here are the updated tax rates for YA 2023:
As you can see, the tax rate you are charged with increases as your chargeable income does. As such, the more you reduce your chargeable income – through tax reliefs and other eligible incentives – the lesser your final tax amount will be.
Here’s an example: let’s say your chargeable income is RM48,000. This means that your tax rate is 8%, and the total income tax that you must pay is RM1,380 (RM600 + RM780). However, if you’re able to claim RM13,500 in tax deductions and tax reliefs, then your chargeable income will drop to RM34,500, which means that your tax rate, too, will be lowered to 3%. In turn, the amount of tax that you need to pay is decreased to RM585 – almost RM800 in difference!
For YA 2023, it’s important to note that the tax rates have been amended under Budget 2023, with a reduction of 2% for those who fall under the M40 income group, and an increase of between 0.5% to 2% for selected higher income brackets. This decision was meant to help M40 individuals cope with the rising cost of living by providing them with more disposable income.
Tax filing for foreigners (residents & non-residents)
Foreigners and expatriates who have worked and earned income in Malaysia for a specified period are required to pay income tax too.
Those who have been working in Malaysia for more than 182 days (referred to as residents) are eligible to be taxed under normal Malaysian income tax laws and rates – just like the regular Malaysian taxpayer.
Meanwhile, if you stay in Malaysia for less than 182 days and are employed for at least 60 days (referred to as non-residents), you are subjected to a flat rate based on your types of income:
For further clarification, foreigners will not be taxed if they meet the following conditions:
- Employed in Malaysia for less than 60 days
- Employed on board a Malaysian ship
- Age 55 years old and receiving pension from Malaysian employment
- Receiving interest from banks
- Receiving tax exempt dividends
How to file income tax in Malaysia
Now let’s get down to the actual tax filing process. The tax return form that you need to use is dependent on the type of income that you earn. Specifically:
- Resident individuals who do not carry on a business: BE Form
- Resident individuals who carry on a business: B Form
- Non-residents (foreigners): M Form
There are more forms and classifications to this, but more on this under the “Accessing e-Filing and your ITRF” sub-section below!
In the meantime, note that the deadline for filing income tax in Malaysia will vary according to the type of form that you’re filing. For those who are filling in the BE Form (residents who do not carry on a business), your deadline falls on either 30 April 2024 (manual filing) or 15 May 2024 (e-Filing). Meanwhile, those who are filling in the B form (residents who carry on business) are required to do so by 30 June 2024 (manual filing) or 15 July (e-Filing).
Next up, we’ll go through the whole tax filing process with you, step by step:
1) Registering as a first-time taxpayer on e-Daftar
For those who are filing their taxes online for the first time, there are two things that you must have before you can start:
- Income tax number (to indicate that you are a registered taxpayer)
- One-time PIN to register for e-Filing (the platform where you submit your income tax return form (ITRF))
Let’s start with the first: your income tax number. To get this, you’ll need to first register as a taxpayer on e-Daftar (which you can access on LHDN’s one-stop portal, MyTax). Once you’ve received your income tax number, you can then obtain your PIN for e-Filing either online or by visiting a LHDN branch. For a more detailed explanation on how to register as a first-time taxpayer, check out our comprehensive guide here.
Otherwise, you can also check out this infographic, which summarises the whole journey of registering as a taxpayer and obtaining your PIN for e-Filing:
2) Accessing e-Filing and your ITRF via MyTax
Existing taxpayers, meanwhile, can skip Step 1 above, and go straight to the MyTax website to access e-Filing and start filling up their income tax return form (ITRF). Just a note, remember that you can toggle the language for the MyTax and e-Filing website (including your ITRF) between Bahasa Malaysia and English, so opt for whichever you’re most comfortable with – this will make your tax filing journey much easier!
Upon logging into your MyTax account, you’ll be taken to your dashboard, which will display information such as your tax balance and refund amount. To access e-Filing, click on “EzHasil Services”, and then click on “e-Filing” in the dropdown list.
Once you’re on the right page, go ahead and click on “e-BE Year of Assessment 2023” (or whichever form that is applicable to you) to get to your ITRF quickly. Those who do not have the quick link, or need to choose a new form because their source of income has changed will need to click on “e-Form” to select their ITRF instead.
As you make your selection, be sure to choose the right type based on the category of income that you fall under:
You can also find the full list of other types of forms (including for partnerships, associations, and deceased persons’ estate) on the LHDN website here.
On top of choosing the right form, make sure to also select the right year of assessment: YA 2023! Remember, you’re declaring your income earned for the previous year.
3) Filling up your ITRF
Now let’s get right down to the bottom of filling out your income tax form (for residents earning income without a business)! We’ll take you through the different sections in your form:
i) Particulars of individual
This section is all about your basic personal details. Some of them will have already been filled out for you – such as your identification number and date of birth – but it’s always good practice to double check for accuracy. You should also make sure to select the right type of assessment, which determines whether you are filing as a single person, or filing together/separately with your spouse.
ii) Other particulars
This continues from the previous section. In this section, be sure to check that your handphone number is correct as you will need to obtain a TAC from LHDN when you sign and submit your e-form later.
Additionally, ensure that your bank account number is accurate so that you’ll get your tax refund (if any) without any mishaps. You can also choose to receive your tax refund via DuitNow, if you prefer; simply select your preferred method under “Method of payment for tax refund”, and fill in the necessary information.
Make sure to also update the Employer’s Number if you’ve changed employers in the previous year. Also, be sure to tick “yes” under “Tax borne by employer” if your job comes with the benefit of having your income tax paid by your employer (i.e. tax allowance is part of your gross income from your employment).
Meanwhile, the disposal of asset under the Real Property Gains Tax Act 1976 will only apply to you if you’ve sold any properties in the previous year.
You’ll also find the section for Incentive Claims under paragraph 127(3)(b) and subsection 127(3A) here, which is related to specific exemptions made under gazette orders and exemptions given by the Minister of Finance. Leave this section blank if it is not relevant to you.
iii) Declare your income
Fill in your total income earned for the year under statutory income; this includes what you’ve earned through your employment, rents, and other sources in the respective boxes. This is where your EA form will be come into play as it states your annual income earned from your employer.
Be aware, though, that although the EA form is helpful, you will still need to scrutinise the figures prior to keying them into your ITRF. This is because for some individuals, the annual income stated in the EA form may not necessarily be the final figure for your statutory income from employment. You are also required to declare any non-salary related benefits that can also count as “income from employment” – meaning they, too, must be added to your income figure. These include income from rents, interests, discounts, royalties, premiums, pensions, periodical payments, as well as payments received for part-time and occasional jobs (broadcasting, lecturing, writing, and so on).
Conversely, remember to exclude any income that is entitled to tax exemptions on your form. For example, perquisites (which cover things like parking, medical, and travel/transport allowance) and benefits-in-kind (such as cars, personal drivers, accommodation, and so on) are taxable under law, but the government has provided some tax exemptions for them. Your severance package, too, may be exempted from tax under certain conditions.
The form will automatically total up all the figures that you’ve keyed in to show you your aggregate income (total income that you’ve earned in the year). The next step is to calculate the tax deductions that you may be entitled to, so that you can reduce your aggregate income. If you’ve donated to registered charity organisations or gifts to eligible entities, then you can make a tax deduction from your aggregate income. This will give you your total income.
In this section, you’ll also have to key in the total monthly tax deductions (MTD) that you’ve paid during your year of assessment, which you can find in your EA form. MTD is also known as Potongan Cukai Bulanan (PCB), and it is a compulsory mechanism where employers deduct monthly tax payments from a taxable employee’s salary.
Some other particulars that you may also see within this page include things like non-employment income of preceding years that you’ve not declared, approved investment under angel investor tax incentive, and self-instalments. There is also a section where you can declare foreign-sourced income (tax exempted, provided you’ve been taxed in the origin country). Fill these in only if they are relevant to you; otherwise, you can move on to the next section.
iv) Claim for tax reliefs and tax rebates
This section is the main reason why you need to look through all your spending receipts from the previous year and keep the relevant ones! As we’ve mentioned earlier, tax reliefs will help to reduce your chargeable income (and therefore your tax rate and tax amount), so be sure to claim everything that you’re eligible for.
You can find the full list of tax reliefs that you can claim for YA 2023 here (along with detailed explanation for each relief), but we’ve also prepared an infographic for those who just want a checklist for quick reference – you can check it out here:
Once you’ve claimed all your tax reliefs, you’ll arrive at your chargeable income – which determines the tax rate that is applicable to you, as well as the amount of tax that you need to pay for YA 2023. With some luck (and a lot of diligence on your part), you would – hopefully – have reduced the amount of tax payable by a fair bit!
Don’t forget to also check on any of the tax rebates that are applicable to you, which are deducted straight from amount of tax that you need to pay. As you can see in the infographic above, you will be eligible for a tax rebate of RM400 for yourself if your chargeable income does not exceed RM35,000. Zakat and fitrah, too, can be claimed as tax rebates for the actual amount expended (up until the total tax amount).
So let’s put this into an actual scenario to help you see how it all works. Let’s assume that your total income for YA 2023 stands at RM50,000, and you have claimed RM15,000 in tax relief. This brings your chargeable income down to RM35,000 – which mean that the amount of tax you must pay is RM600. As your chargeable income is borderline RM35,000, you will not be eligible for the RM400 tax rebate provided for individuals who earn less than RM35,000. However, if you did contribute RM400 on zakat in the previous year, then you can deduct that as tax rebate. Ultimately, you will end up with a final tax amount of RM200 to pay.
v) Check your summary
Now that you’re at the summary page, your tax filing work for the year is almost done! On this page, you should see the final tax amount displayed. Do not worry if your tax amount is in the negative; this is due to the advanced tax payments that you have already made through MTD (it means that you will get a tax refund from the government).
If you notice any mistakes at this stage, you’re still free to go back to previous sections of your ITRF to make amendments; the form will automatically update the final tax amount on the summary page. Once you’re confident that your form is error-free, click “Next”.
On the declaration page, request a TAC via the number that you’ve registered with LHDN and key it in. Then, click the “Sign and Submit” button, enter your identification number and password in the pop-up window (remember to allow pop-ups on your browser for this), and press the sign button.
And with that, congratulations on fulfilling your duty as a responsible citizen! Just one last thing before you exit the website and proceed to pay your taxes (if you need to): save and print the acknowledgement and e-BE form for record purposes, and keep them together with your collected receipts! These receipts must be kept for a minimum of seven years in case LHDN wishes to audit and clarify matters with you.
Amending your income tax form
Here’s a reminder for you to be as careful as possible when filing your taxes, but if you happen to find any errors in your ITRF not too long after submitting it, no need to panic! You can still fix the mistake(s) by sending in an appeal for amendments by 30 April 2024. Just take the following steps:
- Print your e-Form and make the relevant corrections on the form (you will also need to initial these corrections to verify them)
- Manually calculate your taxes up to the “Tax Paid” level
- You’ll also have to prepare a letter of appeal to clarify the corrections and changes that you’ve made
- Send the amended form and letter of appeal to the LHDN branch that is handling your tax file (or you can visit a LHDN branch personally, if you prefer)
- Remember to also attach all the supporting documents required (e.g. a copy of your EA form, receipts, invoices, and others)
It is also possible for you to submit these documents through the LHDN Customer Feedback Portal (via “Enquiry”). Note that LHDN will go through each error appeal as part of the audit process, and the time taken for the amendments to be approved/reflected will depend on the accuracy of the information and documents submitted. You can actually also make online amendments via e-Filing, but note that this is only applicable for two specific circumstances: over-declaration of income and underclaimed tax relief or rebates. Additionally, you must have submitted your BE Form before the submission deadline in order to use this method.
To access this service, just head on over to your MyTax dashboard, click on e-Filing, followed by “e-Application for Amended BE”. Fill in the form and submit it.
As for those who need to amend their ITRF after 30 April, you’re still allowed to submit an amended return form (ARF) within six months from the ITRF submission deadline. Your ARF must also be sent to the branch that handles your income tax file, and only taxpayers who have submitted their ITRF on time for the year is allowed to send in an ARF. Again, this ARF is only necessary for the following errors:
- Under declared or undeclared income
- Overclaimed expenses or other claims
- Overclaimed capital allowances, incentives, and reliefs
If you’ve made other errors aside from those listed above, you’re not required to send in an ARF. Instead, you can forward a detailed letter on the mistakes made and enclose any relevant documents to support your application.
Paying your income tax
Now that your taxes are filed, and your final tax amount determined, you’ll find yourself in one of the following situations:
1) You may receive a tax refund
For those who’ve been paying MTD/PCB every month, you may find that your tax reliefs and rebates can sometimes reduce your final tax amount to the point where it is less than the total MTD that you’ve paid throughout the year. If this happens, then you’re eligible for a tax refund because you’ve overpaid your taxes. The refund will be automatically credited to the bank account that you’ve provided in your tax form, usually within 30 days after your tax submission.
2) You need to pay taxes
On the other hand, if you find that after the filing, you still owe more taxes, you’ll have to pay them before the due date. Here are several ways for you to make your payments conveniently:
As mentioned, credit card payments are currently unavailable online until a date to be notified later. Do note that almost all banks do not provide benefits (cashback or rewards points) for government-related spending on their cards. However, some allow such expenses to included as part of your monthly or annual spend requirements that go towards unlocking higher cashback tiers or annual fee waivers – so it’ll be on you to evaluate if it would make sense for you to pay your taxes using a credit card!
Also, take note that the government has now made it mandatory to use bill numbers as the reference for your tax payments, as opposed to your tax identification number (TIN) – which was previously the case. This change has been implemented since 1 January 2023, but to help ease the transition, we are still allowed to use TIN as our payment reference for now – also until further notice.
