Business

Tuesday April 28, 2009

Policies with better tax rebates for employees


PETALING JAYA: The Government aims to make the employee better off in its 2008 to 2010 list of tax allowances, deductions and exemptions.

Dr Choong Kwai Fatt, tax consultant and associate professor at the Faculty of Business and Accountancy, Universiti Malaya, said most businessmen and companies had tax consultants to help them in tax planning, but that was not so for many employees.

“So the Government wants to give more to the employee,” he said at a talk on personal tax filing, jointly organised by the Association of Chartered Certified Accountants and StarBiz.

He highlighted a list of 12 items, including petrol/travelling allowances deductible up to RM2,400 per annum, meal allowances and medical benefits for maternity and traditional medicine treatments.

The items are tax deductible for employees only if they are provided by the employer. They are not deductible if one receives a salary or bonus and pays for these expenses himself.

“So this year, you should ask your boss to give you medical or travel allowances instead of a bonus, because allowances are deductable.

“It is tax deductible for the employee and tax exempt for the employer,” he said.

Choong, who works with the Finance Ministry on tax policy, said the Government’s idea was for employers to “restructure” the staff compensation so that the employee would be better off in the current hard times at no extra cost to the company.

However, if the EA form was not structured in such a way and had been filed, then it was not possible to go back and change it, he said.

Among other things, Choong also noted that an overwhelming majority of the working public was below the tax threshold, “meaning that a lot of Malaysians are poor.”

“So you should avoid paying unnecessary tax,” he said.

Choong also advised that bonuses or directors’ fees paid in 2009 should be deducted from the tax filing for 2008.

“The tax is now based on received basis, so even if the payments are pertaining to 2008 it should be taxed in 2009,” he said.

The move means taxpayers do not have to go back and revise their tax computation for the previous year when a payment is made.

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