Thursday, April 23, 2009

Tips On Filing Your Income Tax Q & A

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Part 2 Q & A

This is the second of a two-part article to guide employees on common tax issues

On short-notice payment and child-care allowance

Q: In November 2008, I voluntarily ceased my employment and had to pay short notice of RM2,000 (supported by an official receipt). However, I was compensated with a sign-in bonus of RM6,000 from my new employer.

The problem is the sign-in bonus is stated in my EA form but the short notice of RM2,000 is not deducted from the form. Can I automatically net off the amounts and disclose RM4,000 as my sign-in bonus because RM2,000 is my actual expense?

A: Sign-in bonus is capital in nature and not taxable in the event the salary that you receive subsequently upon commencement/exercising of employment with the new company is at the commercial rate. The amount is not to be included in the EA form.

However, if the sign-in bonus is in lieu of reduced salary, the amount is income in nature and subject to income tax. In this scenario, the amount is to be included in the EA form.

The amount paid by you as compensation for short notice of resignation is not deductible as it is not directly incurred in deriving employment income as you have stopped working in your old company.

My former company did not disclose my travelling allowance of RM1,500 in my EA form as tax-exempt benefits. Upon calling it, the company refused to issue a fresh EA form to me. What can I do?

Travelling/petrol allowance received by an employee for travelling from home to workplace and vice-versa is exempted up to RM2,400 while travelling/petrol allowance received for travelling in exercising employment, is exempted up to RM6,000.

In your case, if the amount is authentic and verifiable, even without a revised EA form, you may straight away deduct the amount from your total income reported in the EA form. The adjustment is at column C1 where, the amount is represented by: Total income (as per EA form) – travelling allowance incurred (RM1,500) = Total income from employment (C1)

I paid RM280 per month for my four-year-old daughter’s nursery in 2008. I understand that child-care is exempted from tax up to RM2,400 per year. Can I claim it (since I paid for it and it’s not an allowance)?

Child-care allowance of RM2,400 is tax exempted if provided by employer to staff. In your case, no deduction is available as such allowance was not paid by your employer. You have only incurred a domestic expense which is irrelevant in computing your employment income tax. Domestic expense is not deductible.

I sought treatment using the “Tui-Na” therapeutic massage for my left leg. The total cost of treatment was RM89.60. Can this sort of expense be treated as a form of medical expense tax relief under the traditional acupuncture and ayuverdic categories?

The medical benefit (including Chinese Tui-Na) is tax exempt provided it is given by the employer to the employee. Benefits cover ayurvedic and acupuncture effective YA2008. However, you cannot claim this expense when computing your employment income, since it is paid by you and not your employer.

If a self-employed person makes a contribution of 12% to the EPF under his firm, is the contribution deductible to the proprietor firm and is there any limit?

If you are earning business income as a sole proprietor, you may utilise the B form to submit your tax return. BE form is for individuals earning employment income. In both cases, the total EPF contribution by the employee or the self-employed person plus the amount of insurance premium paid are deductible up to the aggregate of both amounts (up to a maximum of RM6,000).

Where the employer is concerned, a Sdn Bhd firm is entitled to claim the EPF contributions for employees as a full deduction from their business income and the maximum contribution is 19%, as governed by Section 34 (4) of the Income Tax Act, 1967. However, for the sole proprietor, the amount is not deductible when computing business income.

How do I disclose interest subsidies on housing, car and education loans?

Interest subsidies on housing, education or car loans provided by the employer to the employee are all tax-exempted in full, provided the aggregate amount of loans from all of the above does not exceed RM300,000.

If you qualify for exemption and your documentation is verifiable, you may deduct the appropriate amount from your total income reported in the EA form. The adjustment is at column C1 where the amount is represented by:

Total income (as per EA form) – exemptions entitled (subject to maximum) = Total income from employment (C1)

How do I apply for retrenchment benefits for my husband?

As long as the compensation is given by the employer to the employee (your husband), he is entitled to claim the exemption. No prior approval from Inland Revenue Board is required. The computation is as follows: Employment income as per EA form – (RM10,000 x the years of completed service) = Total employment income (column C1 in BE form)

I understand that the payment of bonus/directors’ fees related to 2008 in year 2009 has the tax savings advantage of 1% if the annual income is RM250,000 and above. Please explain.

If the chargeable income is more than RM250,000, the tax rate is 28% for YA2008. However, the tax rate will be 27% in YA2009. Hence, if your bonus is disclosed in the EA form in 2009, you will save 1% since your chargeable income is assessed on 27% (YA 009) instead of 28% (YA2008).

Source: The Star

See Part 1

Please post your comments.

Wednesday, April 22, 2009

Easy Guide To Tax Filing Q &A

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Part 1 Q&A

The ACCA Easy Guide to Taxation for Employees published last week drew a deluge of queries. This is the first of a two-part article featuring commonly-asked questions.

Q: As a sales and marketing executive with a financial institution, I am paid a basic salary and sales commission and am not entitled to any claims (petrol, toll, parking and car maintenance). I use my own car to do my job. My average monthly expenses for sales and marketing activities are about RM500.

I understand that with the new provisions under Budget 2009, the employee is entitled to tax exemption for certain benefits. Since my company does not provide such benefits, can I claim marketing and travelling expenses under “Perbelanjaan Keraian”?

A: The actual amount you incurred can only be deducted provided that you received either entertainment or travelling allowances from your company. In your case, the amount you incurred is not deductible.

I understand that meal allowances can only be claimed for tax relief for outstation travel or overtime. I am being transferred to a branch in Klang next month from my present workplace in Puchong, and my employer has agreed to give me an additional monthly amount of RM800 as meal allowance.

Can I deduct my meal allowances since I reside in Subang Jaya and don’t do overtime? My working hours are 9am-5pm and I work six days a week.

Your meal allowance for employment in the Klang branch will not be eligible for deduction as it is not in respect of working overtime or travelling outstation.

What are the tax exempt employee benefits in relation to employees who have been given a fully-expensed company car and a company petrol card? I know that I will be assessed on the Scale Car and Fuel benefits for the use of the company car. For YA2008, am I entitled to the relief of RM2,400 for the tax exempt petrol card?

If so, can this RM2,400 be deducted from the Scale Fuel charge in YA2008 so that the Scale Fuel benefit assessed in the tax year will be lowered by RM2,400?

If (1) above is allowed and my actual petrol card expenses for the year exceed RM2,400, can the balance of actual petrol bills spent under the petrol card be deducted from the Scale Fuel benefit up to the maximum of exhausting the amount of the Scale Fuel benefit?

The benefits in kind with regards to the car benefit and fuel benefit are to be taxed. These cannot be deducted as additional tax exempt benefits.

Monthly parking claims and fixed mobile-phone allowances are submitted to my company at the end of the month and these will be reimbursed into our salary in the following month. These claims are subject to EPF contribution. Therefore, are they tax-exempt for YA2008 and do they need to be disclosed under the tax-exempt benefits in the EA form?

Both parking and phone allowances up to the actual amounts incurred which are borne by the employer are tax exempt with effect from YA2008. The amount is to be disclosed as tax exempt benefits in the EA Form.

Can interest on housing loans and car loans be deducted from gross salary on the EA form? Are medical expenses such as maternity expenses deductible?

Interest on housing and car loans are deductible only if paid by the employer on a total loan amount of up to RM300,000. Similarly, medical expenses are only deductible if the amount incurred has been paid by the employer and this benefit is extended to maternity and traditional medical expenses. However, should these expenses be paid personally by the employee, they are not tax deductible.

My organisation is a resident company and our expatriate Japanese director and technical manager has two types of income – salary from Malaysia and salary from Japan. Please advise whether we have to declare our Japanese director’s income in total (i.e. Malaysia and Japan) or just Malaysia-derived income to the Malaysian government?

All employment income derived by the Japanese expatriate for exercising employment in Malaysia is subject to income tax, including the amount paid in Japan, if it is related to the exercising of employment in Malaysia.

Is the tax benefit on childcare allowance up to RM2,400 a year to be deducted directly from the EA form? Is this applicable if there is no such benefit from the company I work for?

The childcare allowance is only tax exempted if you receive such an allowance from your employer; otherwise the exemption will not be applicable to you.

In the event you do receive the childcare allowance, the amount (the lower of the actual amount received or RM2,400) is to be excluded from the employment income and disclosed in section C1 of the Form BE.

I bought a comprehensive insurance policy (life + medical + investment) and the insurer is unable to split the premium payment into life insurance and medical insurance. Can I treat this totally as a medical premium as I have already disclosed RM6,000 for my life insurance premium and EPF deduction?

In the event that the amount cannot be segregated, the amount is to be disclosed either as life or medical insurance premiums based on the description stated in the insurance premium receipt.

Source: The Star

See Part 2

Please post your comments.

Eating Biawak

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The Pahang Wildlife Protection and National Parks Department seized 210 live biawak (monitor lizards) kept in nylon bags at Kampung Menchupu an orang asli village near Pekan, last week.

The 210 biawak were worth RM10,500 in total as each lizard fetches between RM30 and RM50 on the black market.

The biawak, of the varanus bengalensis species are protected under the Wildlife Protection Act.


The Biawak is a very common reptile in the jungles and villages in South East Asia.

Biawak
curry and deep fried biawak are delicacies at some restaurants in Malaysia. In the Kampungs, when a biawak is caught, it is normally just roasted over the fire and eaten immediately - BBQ Biawak.

Some people claim that biawak meat taste like chicken. The traditional believe that Biawak meat is an aphrodisiac of sorts has caused its demand to soar.

In the Klang Valley, a regular portion of Biawak curry cost between RM15 - RM30.

Please post your comments.

Sunday, April 19, 2009

Rent A Wife Package

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The Pic is for illustrative purpose only

Prostitutes in Kuala Lumpur go wholesale as the credit crunch gropes Malaysia.

Brothels and pimps in Kuala Lumpur are marketing prostitutes as "rent a wife" packages for 6 to 24 hours, says a local tabloid.

Most of these women are from poorer Asian countries. A foreign "wife" costs between RM480 for 6 hours and RM980 for 24 hours. However, the prettier ones will cost more.

Spas, massage centres, and vice syndicates in the city have started offering this new package presumably due to the sluggish business in the economic recession where the normal hourly rate of RM180 per hour has become expensive for most customers.

For regulars, the new package is more economical - RM480 for 6 hours amounts to only RM80 per hour and RM980 for 24 hours is even cheaper, at only RM40 per hour.

It appears that the brothels and pimps are selling their merchandise at wholesale prices in a desperate attempt to stimulate business. It is not known if enterprising customers can resell the merchandise to others at the normal "retail hourly rate" and make a profit.

Please post your comments.

Saturday, April 18, 2009

Estimated 50,000 To Lose Their Jobs This Year

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In the above video, the Star interviews Human Resources Ministry’s Deputy Director-General of Labour (I) Datuk Sheikh Yahya Sheikh Mohamed about Malaysia's current job market and strategies taken to reduce the impact of the current global financial crisis.

Last month, the Reuters reported that 26,000 jobs has been lost since since the start of the global financial crisis in September last year. Its is estimated that 50,000 employees could lose their jobs this year as manufacturing companies downscale production.

However, the news agency quoting a senior government stated that job cuts in the current recession is not as bad as during the 1997/98 Asia financial crisis. Then, Malaysia lost 84,000 jobs.

The Prime Minister Datuk Seri Najib Razak said that Malaysia’s unemployment rate would raise to 4.5% this year from 3.7% last year. Based on the latest third-quarter labour figures, this apparently amounts to approximately 500,000 people jobless this year.

Most of the job loses are in the manufacturing industry.

Despite the pessimism in the job market, major Malaysian job vacancies websites still post plenty of jobs on offer.

Please post your comments.

Friday, April 17, 2009

More Tips On Lessening Your Income Tax Burden

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Part 3

This is the final of a three-part ACCA Easy Guide to Tax Filing for Employees, which looks at income tax threshold, child relief and penalties

FOR YA2008, employees need to make a minimum annual salary of RM26,804 before triggering income tax.

Married couples should ensure that the higher-earning spouse claims child relief to lessen the tax burden. Remember to abide by income tax regulations to avoid heavy penalties.

Income Tax Threshold

For YA 2008, an employee is required to file Form BE by or before April 30 through electronic filing or actual submission of the tax return form to the Pusat Pemprosesan at Pandan Indah, Cheras.

The employee is entitled to the following tax reliefs:

Employees must make a minimum salary of RM26,804 to be liable for income tax for YA 2008.

Example 1: An individual with only EPF contributions as relief

An employee may not be required to pay tax on employment income exceeding RM26,804 if said individual employee incurred other tax reliefs on books, medical check-ups or life insurance premiums.

Example 2: Assuming an individual with a salary of RM30,062 has tax reliefs other than EPF contributions, he may not be liable for income tax. His tax payable is:

An employee earning annual salary exceeding RM30,062 may also not be liable to pay income tax if he incurred the following expenses:

(a) Medical expenses for parents RM5,000

(b) Medical or educational insurance for taxpayer, spouse, child RM 3,000

(c) Basic supporting equipment for taxpayer, spouse, child, parents RM3,000

An employee with an existing SG income tax reference number may need to file in a nil return on Form BE even though his annual salary for YA 2008 is below RM30,062.

Child Relief

Married couples can claim child relief for maintaining any child during the calendar year 2008 whether the child is their own, a stepchild, or a legally adopted child.

The amount of child relief is:

18-years-old or less (RM1,000); above 18 and studying in university or college (RM4,000).

Child relief is given for any number of children who are not married.

Child relief for disabled children is RM5,000.

An additional RM4,000 is granted if the disabled child is studying in university or college.

To minimise tax payable, child relief should be claimed by either spouse who has the highest taxable income.

Example: Li and Choo have three children below 18 years. Li’s total income is RM90,000 and Choo’s RM60,000 for YA 2008. The child relief entitlement is RM1,000 x 3 = RM3,000. (see charts above)

Penalties

The Income Tax Act 1967 imposes various penalties for non-compliance. These include:

(a) Non-submission of return

Return Form BE for YA 2008 needs to be submitted by or before Apr 30, failing which taxpayers incur a:

(i) Penalty that is 3 times of tax

(ii) Fine between RM300 to RM2,000

In practice, the tax authorities impose 2%-20% on the tax payable as the penalty instead of the statutory formula of 300%.

(b) Non-payment of final tax

The employer deducts the employee’s monthly tax which is paid to IRB on the 10th of every month. The difference between the actual tax and the total tax deducted by the employer must be paid to IRB on / before Apr 30. Failure to pay the final tax on Apr 30 will result in a late payment penalty of 10% being imposed.

An additional 5% will be imposed if the final tax or penalty is still not paid by June 30 (60 days after Apr 30)

(c) Not keeping sufficient records

Under the self assessment system, an employee is required to keep sufficient records on his tax affairs for seven years. Only the tax return Form BE is submitted to IRB by or before Apr 30.

These records comprise a copy of Form BE, salary slips, Form EA (Statement of Employment Income), and credit card statements in relation to petrol claims, travelling, parking, and toll charges incurred in relation to official duties.

Failure to maintain sufficient records is an offence and the penalty will be:

(i) A fine between RM300 to RM10,000 or

(ii) Imprisonment ≤ 1 year.

  • Dr Choong Kwai Fatt is a tax consultant and associate professor, Faculty of Business and Accountancy, Universiti Malaya. For further enquiries or feedback please email to
    info@my.accaglobal.com

  • Source: The Star

    See Part 1

    Please post your comments.

    Thursday, April 16, 2009

    Singapore's Toy Boy Clubs For The Tai Tai

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    Toy boy clubs or Tai Tai clubs are mushrooming in Singapore presumably taking advantage of the growing demand by rich liberated older women for younger men.



    There are news reports recently of some well heeled Singaporean women spending hundreds of dollars each night to flirt with toy boys at
    KTV clubs catering specially for women.



    Apparently there are approximately 15 such clubs that have sprouted in Singapore, most of which only opened last year in Katong, Jalan Besar, Shenton Way and Tanjong Pagar in the republic.



    Young, handsome, athletic men sing, dance and cuddle up with the Tai Tai (rich married women) at these Tai Tai clubs and make them feel like royalty.



    The women interviewed were married with children and claim to be happily married to their rich husbands. Most say that flirting with these young men makes them feel young, attractive and desirable. It is really sad to learn that these rich mature women have to purchase affection and attention from young men who are obviously only working for the money.



    At these toy boy clubs, like its typically girlie KTV counterpart, stage entertainment is part of the offering. But unlike the normal Karaoke clubs, young male hosts parade the stage instead of female hostesses. Every 2 hours, between 2o to 30 Asian males from China, Malaysia, Thailand, Indonesia, the Philippines and Singapore take turns to parade themselves on the stage to customers, akin to a horse auction.



    While these male hosts sing and dance on stage, customers "bid" for these toy boys by buying flower garlands or shahes for them - a garlands of plastic flowers cost between $30 (RM70) to $80 (RM190). Sashes start from $100 (RM240) and can go up over $1,000 (RM2,400) each.



    These clubs sell a fantasy to neglected rich mature women at a very high price. A customer claimed that the bill for about 3 hours of chatting, light petting, 2 bowls of dessert and 4 cocktails cost about S$300 (RM720).

    According to rumours, regular customers spend an average of $1,500 (RM3,600) each night at these toy boy clubs. The more service a customer wants, the more she has to pay. It cost $150 (RM360) per hour for a male host to escort the customer out of the premises for "private chats" or supper.

    Although there are no overtly vulgar activities in the club premises, it is understood that sexual services can be privately arranged between the male host and the customer outside the club.

    While there are generally no similar toy boy clubs in Kuala Lumpur as yet, it is known that well heeled Malaysian women do organise their own private "hen's party" in hotels among close friends and aquintences where male escorts are hired to entertain them.

    Please post your comments.







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    If You Pay Minimum EPF How Does It Affect You Taxes

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    Part 2

    INDIVIDUAL taxpayers need to be alert to amendments to the income tax regulations relating to bonuses and directors’ fees.

    Taxpayers also need to consider the tax consequences if they elect to pay the mandatory minimum contribution of 8% to the Employees’ Provident Fund (EPF).

    By opting to contribute 8% to EPF instead of the previous 11%, they lose out on dividends, decrease the potential size of their retirement nest egg, and could suffer additional income tax.

    Bonus/directors’ fees

    Employees receiving director fees or bonuses in 2009 in relation to work performed in 2008 or prior to 2008 will only be taxed in year of assessment (YA) 2009 under a new amendment to the Income Tax Act 1967 to ease filing under the self assessment system via the Finance Act 2009 (gazetted on Jan 8, 2009).

    These director fees or bonuses would be included in the EA Form 2009 to be submitted on April 30, 2010. They must not be treated as income in 2008 and should never be included in EA Form 2008.

    Example 1:

    Karmen Sdn Bhd pays a special bonus of RM8,000 to Fionna on April 1, 2009 for her excellent performance in 2008. The bonus of RM8,000 will be treated as income for 2009.

    Example 2:

    Yie Lin receives director fees of RM300,000 in relation to 2004, 2005, 2006, 2007, 2008 (or five years’ total) on March 1, 2009. The total director fees of RM300,000 will be treated as income in 2009.

    The employer is required to deduct the monthly tax deduction in the year 2009 (year of payment) and pay the net amount to the employee or director.

    There is a new monthly tax deduction table issued to take effect on Jan 1, namely Income Tax (Deduction From Remuneration) (Amendment) Rules 2008 [PU(A) 468/2008].

    Paying bonuses and directors’ fees related to 2008 in year 2009 has the advantage of tax savings of 1% if and only if the annual income of such employees is RM250,000 and above.

    EPF contributions: 11% or 8%?

    With effect from Jan 1, the EPF Act 1991 has been amended to allow employees to contribute 8% of their salary to EPF.

    Previously, the mandatory contribution was 11% of salary.

    The employer will continue to contribute an amount equal to 12% of the employee’s salary to EPF.

    Under the existing Income Tax Act 1967, income to be assessed remains at 100% of salary although the employee only receives 92% of salary.

    Salary 100%

    Less: 8% of salary to EPF (8%)

    Net salary 92%

    The employers’ contribution of 12% is not taxable on employees. The amount of EPF contributed by employees (8%) is available as tax relief.

    EPF plus life insurance premiums paid on the life of the taxpayers or their spouses will be granted a maximum tax relief of RM6,000 in a particular YA (EPF + life insurance = RM6,000).

    Although the Government meant well by lowering the EPF contribution from 11% to 8% to ease the taxpayer’s financial burden, taxpayers may ultimately end up paying additional tax due to reduced EPF contributions.

    Assuming that an individual does not have life insurance premiums, full utilisation of the RM6,000 relief will require an individual to earn an annual salary of RM54,545 (computed as follows: RM6,000/11% = RM54,545).

    An individual earning an annual salary below RM54,545 will end up paying additional tax if he reduces his EPF contribution from 11% to 8%.

    Example:

    Melissa earns an annual salary of RM50,000. She pays 11% of salary, or RM5,500, to the EPF and pays RM500 in premiums on her life insurance. Effective Jan 1, she is required to pay only 8% of RM50,000 to EPF.

    The differences in tax payable as a result of contributing either 11% or 8% to EPF are shown in the table

    Taxpayers need to think twice before opting to contribute just 8% to EPF.

    Although employees whose income exceeds RM54,545 don’t pay additional tax if they contribute 8% to EPF, they risk losing out on a substantial retirement sum since their contributions will be lower by 3% (11%-8%) and interest will compound annually on a smaller lump sum.

    EPF paid a dividend of 4.5% in 2008 and 2007. Although the EPF Act 1991 sets the mandatory contribution by employees at 8%, employees have the right to request their employers to continue deducting 11% of their salary for EPF to meet tax savings and retirement planning goals.

    Dr Choong Kwai Fatt is a tax consultant and associate professor, Faculty of Business and Accountancy, Universiti Malaya. For further enquiries or feedback, please email to
    info@my.accaglobal.com

    Source: The Star

    See Part 1 and Part 3

    Please post your comments

    Wednesday, April 15, 2009

    Tips For Filling Your Income Tax Returns

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    Part 1

    This first of a three-part ACCA’s Easy Guide to Tax Filing for Employees looks at additional goodies for taxpayers

    IT’S tax season again! Employees are required to submit their tax return Form BE for year of assessment (YA) 2008 on or before April 30, where the income assessed is in relation to the basis period of Jan 1 to Dec 31, 2008.

    This time around, taxpayers get to enjoy additional tax goodies as part of the Government’s effort to cushion the impact of the economic downturn and higher cost of living on Malaysians.

    Specifically, the Government announced via the Budget 2009 proposal and the second stimulus package on March 10, 2009, the following tax benefits for employees, which will take effect in YA2008. These benefits will help reduce taxable income and, consequently, the amount of tax payable.

    Compensation for loss of employment

    The tax burden is eased for retrenched employees as well as those who opt for voluntary separation schemes.

    Employees who are retrenched on or after July 1, 2008 will be granted an income tax exemption of RM10,000 for each completed year of service with the employer or companies in the same group. This also applies to payments for employees who opted for voluntary separation schemes.

    Example:

    A is a salesperson working in Star New Enterprise from April 1, 2006. Due to the economic downturn in 2009, A was retrenched on Nov 1, 2008 and was paid compensation of RM25,000 for loss of employment. The amount to be taxed in YA2008 will be:

    Compensation RM25,000

    (Less) Exemption

    1.4.2006 – 31.3.2007

    1.4.2007 – 31.3.2008

    (2 completed years of service)

    X RM10,000 RM20,000

    RM5,000

    If the retrenchment was before July 1, 2008, then the amount exempted for each year of service will be RM6,000.

    Tax-exempt employee benefits — allowances

    The following tax benefits provided to employees from Jan 1, 2008 to Dec 31, 2008 will be tax deductible against business income for employers AND exempted from tax on employees. These benefits are also available for YA2009.

    (a) Petrol card/petrol allowance/travel allowance

    An employer providing petrol cards, petrol allowance or travelling allowance to employees to travel from home to workplace or office will be allowed up to RM2,400 a year.

    (b) Meal allowance for working overtime, travelling outstation.

    (c) Parking allowance.

    (For (b) and (c), the allowance must be reasonable and justifiable depending on the nature of work and position of employee.)

    (d) Medical treatment for employees, spouses and children to include traditional medicine such as ayurvedic treatment and acupuncture.

    (e) Interest subsidies on housing, car and education. The total loan amount is restricted to RM300,000.

    (f) Childcare allowance up to RM2,400 a year.

    (g) Employers’ products or services which can be provided free or at a discount which must not exceed RM1,000 a year.

    Employers involved in the manufacture of food and car accessories may consider providing the products to employees to reduce their cost of living in the current economic slowdown.

    These allowances need to be disclosed in the Form EA as tax-exempt benefits although they are not taxable on employees.

    Official duties – travelling allowance

    When employers provide petrol cards, petrol allowance or travelling allowance to salaried personnel, such as reporters and other employees, to carry out official duties, this form of allowance is taxable on the employee and must be reflected in their respective EA Forms.

    Employees must keep a record of the actual expenses incurred in relation to official duties and set off the amount incurred against the allowance received. This is an added burden and responsibility on the employee. The records have to be kept for a period of seven years.

    Employees may end up paying additional tax under the self-assessment system if they report the employment income as per the EA Form without deducting the actual travelling expenses incurred while on official duty to carry out the employers’ business.

    In the Budget 2009 announcement, the Government said petrol cards, petrol allowance, travelling allowance and toll cards for official duties up to RM6,000 a year will be tax-exempt.

    This means that the employer will exclude RM6,000 a year from the taxable income of employees as reported in the EA Form. However, the employer needs to disclose this RM6,000 as a tax-exempt benefit in the EA Form.

    Employees receiving travelling allowances not exceeding RM6,000 a year will no longer be required to keep the required receipts to substantiate their claims.

    This incentive applies from YA2008.

    However, if the employer provides, for official duties, petrol card, petrol allowance, travelling allowance and toll card exceeding RM6,000 a year, the employer is required to report in Form EA in two sections:

    (a) Tax exempt benefits: RM6,000

    (b) Part of taxable employment income – salary, bonus, entertainment allowance – and the petrol/travelling/toll amount in excess of RM6,000

    In this case, the employee is now required to keep all receipts to substantiate her claims.

    Example:

    Ming Hui has marketed agricultural products for Duck Rich Sdn Bhd since 2007. She receives a travelling allowance of RM14,000 per year.

    For the year ended Dec 31, 2008, the company will provide Ming Hui with Form EA disclosing taxable income of RM8,000 as part of employment income and a tax-exempt benefit of RM6,000.

    Ming Hui incurred RM9,000 for travelling expenses to carry out official duties for YA2008. She is required to set off these travelling expenses against the amount received from her employer of RM14,000 (and not RM8,000). The amount taxable on her is RM5,000 (RM14,000 – RM9,000).

    Ming Hui is required to maintain the receipts of RM9,000 for a period of seven years.

  • Dr Choong Kwai Fatt is a tax consultant and associate professor, Faculty of Business and Accountancy, Universiti Malaya. For further enquiries or feedback please email to info@my.accaglobal.com

  • Source: The Star

    See Part 2

    Please post your comments.

    Tuesday, April 7, 2009

    Kuala Selangor Fireflies - Kelip Kelip Review

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    Please note that as the original fireflies are not visible in the picture,
    I've artificially added my own "fireflies" just for illustrative purposes.

    Kuala Selangor and its fireflies (locally called Kelip-Kelip).

    Kuala Selangor is a quaint old town situated at the delta of the Selangor river, 67km southeast of Kuala Lumpur.

    According to history, Kuala Selangor began as a Bugis settlement under the leadership a matriarch called Upu Chendera Burung which over the years became a well known mercantile centre attracting traders and merchants from all over the world.

    Today, tourists head to Kuala Selangor to see the Kelip-Kelip at Kampung Kuantan or Kampung Bukit Belimbing and to eat at the numerous seafood restaurants, especially at Pasir Penambang, well known for good food at moderate prices.

    Visitors take a boat ride through the Selangor river to see the kelip-kelip by the river bank. Although there is no entry fees to see the fireflies, the boat ride cost RM40 per boat, which seats 4 persons. The boat ride starts at 8PM and ends at 11PM. It is advisable to bring along mosquito repellents to ward off armies of mosquitoes waiting to feasts on you.

    For further detials about Kuala Selangor, you can call the Majlis Daerah Kuala Selangor at 03-3289 1439/1549/2423/4328 from Monday - Friday, during office hours.

    Malacca's Vanishing Trades

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    With economic advancement our society, many trades that were once common in Malacca are fast disappearing.

    The above streets are a major part of Malacca's commercial district more than 50 years ago. This part of town is now just a living museum for tourist to witness the past struggling to survive in the present.

    Please post your comments.

    Monday, April 6, 2009

    Bull's Head Susuk Cream

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    There is a new face cream primarily for men in the Malaysian market - "the krim susuk kepala kerbau" literally meaning the bull's head susuk cream.

    In Malay culture, susuk is a supernatural ritual where needles charmed by a Shaman or Bomoh are inserted into the soft tissues of the face to act as talismans. As the practice of susuk pre-dates Islam and is considered a pagan practice, Muslims are thus prohibited from using susuk.

    Despite its name, the krim susuk kepala kerbau which originates from Thailand, is not made from bull's head at all. Rather, it is made from the Munggal tree bark and includes human bones as main ingredients. This magic cream is not cheap, it is reportedly sold from RM2,500 to RM5,000 a jar in Thailand.

    Unfortunately you can't buy it from your local Guardian pharmacy or through the normal retail channels. This product is so exclusive that only those in the inner circle of bomohs will know where to purchase it.

    According to the article by a Malaysian tabloid, the bull's head susuk cream apparently has the same effect as the susuk using needles - it is believed the susuk will make one appear charismatic, charming and attractive to others due to its supernatural powers. The krim susuk kepala kerbau is popular despite its price because its convenient to use - one just has to apply the cream to one's face and recite a given Thai mantra, in addition to observing its pangtang-larang (prohibitions).

    Considering its comprehensive benefits i.e. charisma, charm and beauty, RM5,000 a jar is a bargain. The down side is that there is no money back guarantee if the stuff doesn't work. Further, if anything goes wrong, you'd have to look for the bomoh who sold it to you.

    I can imagine this cream being popular with ambitious metrosexual men in particular.

    Please post your comments.

    Sunday, April 5, 2009

    Malaysian Made Air Rifle

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    This air rifle pic is for illustration only


    The police raided an illegal air rifle factory in Kampung Paya Jaras, Sungai Buloh, Selangor last week, reported a local news tabloid.

    The factory was operating from a wooden house in that kampung for about a year.

    Technically, an air rifle i.e air gun is different from a firearm. This is because it shoots metallic projectiles by means of compressed air. Most air rifles use metallic projectiles such as screws and ball barings as ammunition.

    According to the news report, the illegally made air rifle, which was sold at RM300 each, uses up to 15 screws as ammunition for each shot and can hit a target as far as 50 meters.

    Presumably an air rifle is classified as a firearm in Malaysia, as the culprits operating the illegal factory were charged under section 12 and section 33 of the Firearms Act 1960 for manufacturing and possessing firearms without a license. If found guilty, the accused can face up to 7 years jail or death.

    Please post your comments.

    Saturday, April 4, 2009

    Laptop Thief Caught On Camera

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    The above is the modus operandi of thieves operating in Kuala Lumpur. Watch how the boy, on the right, steals the laptop on the table while his 2 friends, in front, distract the company's employee by trying to sell her something.

    Plese post your comments.

    Friday, April 3, 2009

    Najib Tun Razak Is Malaysia's 6th Prime Minister

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    Pic source: the sun

    Datuk Seri Najib Tun Razak was sworn in as Malaysia’s 6th prime minister yesterday, taking over from Datuk Seri Abdullah Ahmad Badawi who lead Malaysia for more than 5 years.

    At Datuk Seri Najib Tun Razak's swearing in ceremony at Istana Negara, Datuk Seri Abdullah Badawi was conferred the the Seri Maharaja Mangku Negara (SMN), while his wife Datin Seri Jeanne Abdullah received the Seri Setia Mahkota (SSM), both awards carries the title Tun.

    Thursday, April 2, 2009

    Tongue Piercing In Malaysia

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    The above is a tongue piercing procedure done in Malaysia. A tongue piercing is done usually directly through its center.

    Historically, tongue piercing has been a long religious and cultural practice. The Aztecs practiced this as well as other perforations as a part of their religious ritual. Islamic Fakirs and Sufis from the Middle East are also known to practice tongue piercing. Asian Spirit Mediums of the Far East pierce their tongues as an offering to their deities and proof of being in the state of trance.

    In recent years, in short of better fashion ideas, youngsters in Western countries and "wannabe western" Asian countries have been persuaded to adopt tongue piercing as a social ritual with fashionable implications.

    Please post your comments.
     

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