Malaysia Income Tax Guide for First Timers

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Are you a first-timer when it comes to income tax? Have you heard people talking about it but have no idea whether you should be paying tax? Did you start working a year ago and it is now time to do your tax assessments?

Tax Season Always Comes

Take note of the date! If you are an income earner with no business operations, you start filling in your tax from 1 March each year and must complete this latest by 30 April. Unless stated otherwise like the COVID-19 pandemic when the government allowed an extension for income tax filing, the dates do not change. So, you should get your documents and calculations ready come March each year.

Getting started with income tax

The income tax in Malaysia is managed by the LHDN or Lembaga Hasil Dalam Negeri. Basically, you can complete your yearly assessment through 2 methods. The traditional method is done manually in which you print out the form, fill up the details and then submit them. The second is known as e-filing which is done online. As we are in the digital age, the latter is obviously faster and more efficient. A lot of talks have been going around about phasing out the manual method though.

What do you need?

Since this is your first time, you need to ensure that you have the following documents before you start filling in the blanks. In most cases, your employer would have ‘opened a file’ for you with income tax. Otherwise, you can register for one on the LHDN website. You will then be required to visit a branch to get a PIN number for your first login.

Once you have your login sorted out, you can proceed to fill up your income tax form. If you choose to do this manually, you can get the form at the office and then fill up whatever is applicable. You then need to calculate the total tax payable and then submit your form.

For salaried individuals with no business income, you should fill up Form BE.

Your other alternative (e-filing) is way more efficient where you need only to fill up the applicable areas and your amount is then calculated automatically. Do take note of the following areas as they can help you to reduce your total tax payable.

  • Parents – If you are staying with your parents, there is RM1,500 tax relief for taking care of them per parent.
  • Education – Tax relief of up to RM7,000 if you are furthering your studies at the Masters or Doctoral level. Do take note that not all programs are eligible for this.
  • Medical expenses for yourself, your spouse or your child is claimable. This also covers medical expenses for parents and complete medical checkups.
  • Lifestyle – You can claim up to RM2,500 for lifestyle expenses which cover the purchase of books, sports equipment, computers and smartphones. This also covers your monthly internet subscriptions and gym memberships for yourself, your spouse or your child. Do take note that there is an additional RM2,500 tax relief accorded for 2020 due to the COVID-19 pandemic. This is for the purchase of smartphones or computers.
  • Childcare – If you have kids, there are expenses that can be used for tax relief including equipment for breastfeeding, fees for daycare centers and such.
  • Contribution – Your contribution to EPF and SOCSO as well as the purchase of life, education or medical insurance are claimable.
  • Children’s Education – Tax relief is applicable if you have children (unmarried) above 18 years old in pre-tertiary or tertiary eduction.

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