Female Insurance Agents Recruited To Party And Have Sex With Potential Clients

Pic is for decorative purpose only

According to Guang Ming Daily, female insurance agents are recruited by some insurance agencies in Johor to party and have sex with potential clients. The female insurance agents were required to party with prospects at nightclubs and karaoke joints to secure sales.

The female agents were recruited among those desperate for money, including middle aged divorcees and single mothers.

Apparently, agents who failed achieve sales targets must parade themselves in lingerie or pay fines of between RM1,000 and RM3,000 to their company.

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Old Women Cheated Of RM256,565

A 61 year old woman from Cheras was cheated of RM256,565 in money and valuables by 3 women.

The victim, Lee Yoke Chan, went to the morning market in Cheras last week when the women approached her.

In the pretext of asking for directions to a temple, they told Lee Yoke Chan that she would die in 3 days unless she goes through a cleansing ritual by a sifu at the temple as she had been followed by the ghost of a pregnant woman who had died in an accident.

The women persuaded her to hand over all her money and jewellery, which they said was essential for the cleansing ritual, but assured her that these will be returned to her after the ritual.

When Lee Yoke Chan agreed to their suggestion, the women followed her to the bank to withdraw RM186,565 and then followed her home to obtain the RM70,000 worth of jewellery.

Once the money and valuables were obtained, they returned to the market to meet other women. Upon some discussions, the women said the cleansing ritual could not be performed that day because the sifu wasn't at the temple. However, they assured Lee Yoke Chan that the sifu had already blessed the bag containing the money and jewellery, and everything was alright.

Then, without Lee Yoke Chan noticing, the women apparently the swapped the bag containing the money and jewellery with another bag filled a few oranges, packets of instant noodles, bread, a bottle of water and bottles of salt.

The women then returned the "bag" to Lee Yoke Chan and told her not to open it until the next day to avoid bad luck. She made a police report upon discovering the scam the next day.

Source: The Star

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What you should know about GST

Because the new tax is complex and broad-based, we have a lot to learn ahead of its introduction. As a start, StarBizWeek has asked some experts to each highlight five key points.

Pauline Lum

Director, BDO Tax Services Sdn Bhd

·GST is a consumption tax on imported goods, and on supplies of goods and services in Malaysia other than those exempted or zero-rated. It is mainly borne by the end-user/consumer, and therefore, is not intended to add cost to businesses.

·GST is applied at each level of the value chain. This tax will be applicable whenever value is added to goods or a service.

·Businesses are required to register for GST if their annual turnover exceeds RM500,000. They can claim the input taxes paid on purchases of intermediate goods or services, against the GST charged on the final goods or services that they sell.

·Preparations can include the setting up of a GST committee, staff training for all departments, and manuals/systems to ensure compliance. Businesses that do not have internal expertise should consider engaging external advisors.

l As co-head of the tax authority of France, Maurice Laure created the GST system in 1954, when he introduced the TVA (the French abbreviation for value added tax).

Dr Veerinderjeet Singh

President, Chartered Tax Institute of Malaysia

·GST is not a new tax for Malaysia. It is intended to replace the existing sales tax and service tax.

·It has built-in control mechanisms that help minimise tax evasion by traders.

·GST requires good and proper record-keeping by businesses that need to be registered. This can lead to improvements in the maintenance of proper accounts and financial records.

·The tax will not lead to inflationary pressures, that is, a persistent increase in prices.

·Once GST is effectively implemented for some time, there is the possibility of decreases in corporate and personal tax rates.

Ronnie Lim

Country tax leader, Deloitte Malaysia

·Exemption is bad for GST. Businesses should not ask for their output to be exempted as this will create more costs for them, arising from restricted input tax credit. Instead – and perhaps strangely – one should seek to be a taxable person with either zero-rated or standard-rated output.

·GST implementation is not as easy as merely activating an accounting software’s GST module. That system has to be tailored to the profile of the business and the Malaysian GST law.

·Most companies leave tax implications to the tax, accounting or finance departments. GST should be viewed differently as it has enterprise-wide effects.

The sales department has to revise selling prices exclusive of GST. The procurement unit must re-negotiate purchase prices. The legal team need to review long-term contracts. Therefore, the whole company must understand this tax.

·Much more administrative and documentation requirements arise from the introduction of GST. Compliance costs are bound to increase. Often, adverse situations arise when documentation is inadequate.

·GST can potentially reduce tax leakages, such as smuggling, as there could be checks before unusual credit claims are processed. Leakages will be further minimised if the Customs and the Inland Revenue Board are unified to create a powerhouse, as seen in Britain.

Dr Arjunan Subramaniam

Adjunct professor, Universiti Utara Malaysia

·GST is due when a person makes a taxable supply in the course of business. As a taxable person, you must charge GST to your customer when you supply to the customer. This supply is output and your charge to the customer is output tax.

·GST charged to you for your business purchases is called input tax.

·You must pay to the Customs the amount of your output tax minus your input tax. If the input tax is greater than the output tax, the difference is claimed from the department. So keep accurate records of all your sales and purchases.

·GST is a consumption tax. It is your customer who bears the burden of tax.

·Imports are subject to GST, while exports are exempt.

Khoo Chuan Keat

Tax leader and senior executive director, PricewaterhouseCoopers Taxation Services Sdn Bhd

·GST is a fiscal policy feature in over 140 countries. Many developing and emerging economies have been transforming their tax revenue bases by progressively moving from direct taxation to consumption taxes such as GST in recent years. Malaysia is in the minority segment.

·GST affects all functional areas of a business and is not just a finance issue. The GST implementation is not only about reconfiguring the computer system in order to charge output tax. In fact, businesses should re-assess their entire business processes, including supply chains, so as to optimise input tax recoveries. Otherwise, they may suffer input tax leakages, thus hurting their competitiveness and profitability.

·Consumers can expect to see a drop in prices of certain goods and services. Without realising it, the consumers are already paying sales tax and service tax embedded in the supply chain. Anti-profiteering measures should be implemented and strictly enforced to deter traders from taking advantage of GST to raise prices and increase profits.

·The GST input tax incurred by businesses is claimable as a credit if they make taxable supplies. This avoids the cascading tax effect of the current single-stage sales tax and service tax regime, which results in higher prices.

·Recognising the wide-ranging impact of GST, the Government has proposed an initial low rate of 4%, coupled with zero-rating and exemption of essential goods and services. Anti-profiteering legislation and other measures for qualifying persons in the lower-income groups may be introduced to alleviate the adverse impact of GST on consumers.

Dr Jeyapalan Kasipillai

Professor, Monash University Sunway campus

·GST is a multi-stage tax but is a cost only to the final consumer.

·The GST system is transparent, with a built-in mechanism to track down defaulters.

·The new tax will give the Government an opportunity to reduce corporate and individual tax rates.

·It will also enable the Government to subsidise essential controlled items for the poor and to improve healthcare for taxpayers.

·GST can be a good source of government revenue and will help shrink the deficit.

Nicholas Crist

Executive director, KPMG Tax Services Sdn Bhd

·GST and value added tax (VAT) are the same conceptually. Over 100 countries have GST/VAT as part of their tax systems.

·Malaysia’s proposed GST rate of 4% is among the lowest rates in the world. The highest rate currently is 25%.

·Basic necessities, such as food, are proposed to be zero-rated (0%). However, processed food, such as canned food, will be charged at the standard rate. Classification can lead to interpretational issues. For example, in Britain, the courts had to determine whether a Jaffa Cake, a biscuit-like cake, was a biscuit (standard-rated) or a cake (zero-rated).

·GST/VAT can be used as a tool to manage the economy. For example, Britain reduced its VAT standard rate from 17.5% to 15% in December 2008 to boost consumer demand during the financial crisis.

·The Government has indicated that the GST would provide an opportunity to reduce income tax rates. This has happened in other countries, such as Singapore.

Chas Roy-Chowdhury

Head of tax, Association of Chartered Certified Accountants

·In Europe, GST is known as VAT. Most of the rest of the world uses the term GST.

·GST rates may start off low, but in the global context, they have always risen. In the European Union (EU), the rates have increased considerably from the introduction of the tax. The rate in Britain, for instance, was once 10%. It is 17.5% today.

·When Britain introduced VAT in 1973 as a prerequisite to joining the EU, it was seen as a simple tax. Now, it is one of the most complex of taxes. Therefore, serious effort is needed to stop complexity from creeping into the system.

·Because most intra-EU goods are not subject to VAT, there is an opportunity for various types of tax fraud. It is thought that the amount involved could be as high as 100 billion euros.

·There is a debate in the United States over whether to introduce VAT, mainly as a way to address the country’s huge budget deficit.

Bhupinder Singh

Partner, Ernst & Young Tax Consultants Sdn Bhd

·GST will not burden the rakyat. For those currently consuming goods and services that are subject to sales/service tax, the impact of GST should be neutral if the rate is 4%. In fact, consumers should benefit if the suppliers pass on the savings from their ability to claim back input tax on their purchases.

Consumers should also be better off because some essential goods will be zero-rated, while certain items are exempted from GST.

·A business can claim an input tax credit on purchases irrespective of whether it has paid the suppliers, as long as the suppliers have issued tax invoices to the business.

There should be no adverse GST impact on a business that makes taxable supplies. In the long run, the cost of doing business will go down because the business will have the ability to claim input tax on the purchase of goods and services, which they cannot do under the sales/service tax regime.

·Businesses will experience a cash flow impact. They have to charge GST on sales and if the customers are late in paying, the businesses will have to pay the tax first.

·It is important to educate businesses, especially the small players, on the cost savings and potential cash flow savings aspects of GST. It is equally important to educate consumers so that they understand that the goods and services they buy may not necessarily be subject to a price increase because of GST.

·GST works on the affordability concept. As a consumer, you decide which goods and services to buy, and if these are subject to GST, you then have to pay it. This is no different under the current sales/service tax regime except that these taxes are embedded in the price of the goods and services, and the consumer may not realise that they, in fact, bear the taxes.

Source: The Star

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Tips On Filing Your Income Tax Q & A

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

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Easy Guide To Tax Filing Q &A

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.

More Tips On Lessening Your Income Tax Burden

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.

If You Pay Minimum EPF How Does It Affect You Taxes

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

Tips For Filling Your Income Tax Returns

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.

Money & Life

Money&life
What Is Money

For some, these videos and articles may change how you view life, the way you assess yourself and evaluate others.

Money is not real. It only exist in a system artificially created by human beings and has been manipulated by the elites to exploit others.

Watch this animated video explaining the origins of money.



This is an interesting 47 minute video by Paul Grignon which explains how money is artificially created.




The Credit Crisis And World Recession

This is is also an interesting 2 part video explaining how the credit crisis started and how it affects us.

Part 1




Part 2




As seen in the video, this is a primer of the financial crisis by the New York Times.

If you're interested to learn more, you can read the following articles:

Credit Crisis Timeline - From Foreclosures To Bank Failures

Credit Crisis — The Essentials


It looks like the best solution now is to begin looking for alternative ways of living less dependent on the money system. ie. grow your food and spend less on non essential stuff. :) We are lucky, in Malaysia, we have the option of living off the land if necessary. Singaporeans, for instance, do not have this privilege.

Please post your comments.

"Islamic Banking" Ah Longs

A local Malay tabloid reported that an Ah Long syndicate (Loan Shark) in Johor Bahru is misusing Islam in its advertising to misrepresent to the public, particularly Muslims, that its business is halal and trustworthy.

The Ah Long's advertisement apparently says that their money lending business is "Islamic Banking" compliant (based on the Bai’ al Wafa dan Al-Ijarah concept) - interest free loan.

To the general public, these Ah Longs appear to be adapting to the times by offering "Islamic financing". Unfortunately, these Ah Longs are not financial wizards. They are not introducing anything innovative to loan sharking; they are simply misrepresenting their business to the public, which tantamount to cheating (in addition to engaging in an illegal activity).

According to the tabloid, the Ah Long syndicate advertises its business by way of fliers distributed to houses in housing estates in hope of attracting new business particularly from unwary Muslims.

Please post your comments.

How To Get Rich

This post was taken from Mark Cuban's blog. Mark is a young Amrican billionaire. Here's what he says:

How To Get Rich

Thats what so many want. Right ? I’m certainly not going to lie and say it is not a whole lot better having lots of money. I had a whole lot of fun and loved my life when I was eating mustard and ketchup sandwiches and sleeping on the floor of a 3 bedroom apartment that housed me and 5 buddies.

I have a whole lot more fun now. It doesn’t suck to be rich.

The question everyone wants answered, is how to get there. There are ways to get there. But there is not a template that works every time for everyone. It works sometimes. Getting there requires being ready when opportunity presents itself.

IMHO, change and uncertainty create opportunity. Times like we are facing now, with complete financial uncertainty are perfect times to start on the road to getting ahead financially.

First, here is WHAT NOT TO DO:

There are no shortcuts. NONE. With all of this craziness in the stock and financial markets, there will be scams popping up left and right. The less money you have, the more likely someone will come at you with some scheme . The schemes will guarantee returns, use multi level marketing, or be something crazy that is now “backed by the US Government”. Please ignore them. Always remember this. If a deal is a great deal, they aren’t going to share it with you.

I dont broadcast my great deals. I keep them all to myself. The 2nd thing to remember is that if the person selling the deal was so smart, they would be rich beyond rich rather than trolling the streets looking to turn you into a sucker. There are no shortcuts.

So what should you do to get rich ?

Save your money. Save as much money as you possibly can. Every penny you can. Instead of coffee, drink water. Instead of going to McDonalds, eat Mac and Cheese. Cut up your credit cards. If you use a credit card, you dont want to be rich. The first step to getting rich, requires discipline.

If you really want to be rich, you need to find the discipline, can you ?

If you can, you will quickly find that the greatest rate of return you will earn is on your own personal spending. Being a smart shopper is the first step to getting rich. Yeah you have to give things up and that doesn’t work for everyone, particularly if you have a family. That is reality. But whatever you can save, save it. As much as you possibly can. Then put it in 6 month CDs in the bank.

The first step to getting rich is having cash available. You arent saving for retirement. You are saving for the moment you need cash. Buy and hold is a suckers game for you. This market is a perfect example. Right at the very moment when cash creates unbelievable opportunity, those who followed the buy and hold strategy have no cash. they cant or wont sell into markets this low, that kills the entire point of buy and hold. Those who have put their money in CDs sleep well at night and definitely have more money today than they did yesterday. And because they are smart, disciplined shoppers, their personal rate of inflation is within their means. Cash is king for those wanting to get rich

The 2nd rule for getting rich is getting smart. Investing your time in yourself and becoming knowledgeable about the business of something you really love to do. It doesn’t matter what it is. Whatever your hobbies, interests, passions are. Find the one you love the best and GET A JOB in the business that supports it. It could be as a clerk, a salesperson, whatever you can find. You have to start learning the business somewhere. Instead of paying to go to school somewhere, you are getting paid to learn. It may not be the perfect job, but there is no perfect path to getting rich.

Before or after work and on weekends, every single day, read everything there is to read about the business. Go to trade shows, read the trade magazines, spend a lot of time talking to the people you do business with about their business and the people they buy from.

This is not a short term project. We aren’t talking days. We aren’t talking months. We are talking years. Lots of years and maybe decades. I didn’t say this was a get rich quick scheme.
This is a get rich path.

Now you wait for times of uncertainty and change in your business. The time will come. It may come quickly, it may take years and years. But it will come. The nature of our country’s business infrastructure is that it is destined to be boom and bust. Booms are when the smart people sell. Busts are when rich people started on their path to wealth.

You will know when that time is here for you because you will know your business inside and out. You will be ready because you will have been saving up for this moment in time.

With all the change and uncertainty in the financial markets, there are people right now making more money than they ever dreamed of. They are the ones who have been living the real estate market and the financing behind it and understanding what actually what was going on. They re the one who understood the complexities of the credit markets. When everyone was following the crowd, they kept on saving their money and avoiding the temptation of groupthink.

Boom and busts happen to every industry. The question is whether you have the discipline to be ready when it happens for you ?

If you do, you will find out what it feels like to get lucky.

-----------------

What do you think, guys ? Please post your comments.

Indian Begger Gets Bank Account

When 60-year-old Laxmi Das recently deposited her earnings in an Indian bank in Calcutta, it was a bit more than the usual mundane money transfer.

Ms Das handed over 91kg (200lb) of coins - the produce of 44 years of hard begging - enabling her to open an account and qualify for a credit card.

Laxmi began begging near Hatibagan, a busy road junction in northern Calcutta, at the age of 16.

Officials say she could have saved as much as 30,000 rupees ($692).

"She would spend frugally from her daily collection and save the coins. She was very possessive about them," says her sister Asha.

Ms Das saved the coins in iron buckets covered with jute bags at her home in a shanty town near the crossing.

In all, she collected four buckets of coins - of all denominations - some even minted as far back as 1961 and now clearly out of date.

"But we will accept those coins as well because she is poor and needs all our support," said Central Bank of India spokesman Shantanu Neogy.

He says there is a directive from India's Reserve Bank to accept all such outdated coins and reimburse the depositor in full.

'Unique savings'

Ms Das told bank officials that she had stored the coins for when she reached "old age" and needed a pension plan for when she was too old to beg.

Old Indian coins fetch high prices in Bangladesh (Photo: Subhamoy Bhattacharjee)

She was encouraged to deposit the money by police who feared it could have been stolen from her home.

"It is not safe for her to have the coins in the shanty any more, now that people have come to know," said police officer Baidyanath Saha. "A bank account would be the best option for her unique savings."

Bank officials say they are still counting thousands of her coins and still do not know the exact amount.

They say that there are "a lot of coins to count".

Once her account is eventually opened, officials at the Central Bank of India will give her advice on how to use her money.

Ms Das chose to ignore - or did not know about - a thriving racket in this part of the world in which old Indian coins are smuggled and melted down in Bangladesh to make razor blades that sell for up to seven times their value as coins.

The scam has caused an acute coin shortage in eastern India, forcing government mints to cut down on the amount of metal they now use to make the coins.

Source: BBC

Please post your comments.

People Now Working At Two Jobs

Steven Tan is a course co-ordinator at Sunway College
but he is a skating instructor on weekends.

For some in the Klang Valley, the income from one job is no longer sufficient to keep up with the rising cost of living and maintain their fast-paced lifestyle.

Many have capitalised on their own talents and resources to explore second jobs.

Sunway College’s Canadian International Matriculation Prog-ramme (CIMP) co-ordinator Steven Tan has opted to give skating lessons on weekends to earn some extra income.

Steve Santana is a administrator at a skating outfit by day and runs a laundry service at night.

Mukhshirin Mohd Jauhari is a full-time personal assistant who is a part-time voice talent with a production company.

Betty Yasmine is a sales retail executive during the day and a receptionist at bar and restaurant, at night.

Stanley Selvakumar has 3 jobs: an income tax consultant, a clown and an insurance agent.

Mohd Hazri Shihabuddin is an account executive and is also the director of Soulful Symphony which manages local artist Dina.

Read the full story in the Star.

Are you be willing to get a second job to earn more money ?

Please post your comments.

For Those Who Like Money - Look At This !

$1 Million Pennies

Lets talk about money - everyone's favorite subject.

Just take a look at these 24 amazing pictures of money and the ways money is used - go here.

Some people believe that if you look at money often, it will attract money to you. I don't know if this is true, I'm waiting for someone to verify this.

Please post your comments.

A Mercedes Is Not Enough !

It is well known that protected animals in Malaysia are being hunted for their meat, hide, tusks etc for alleged medicinal purposes- in other words, the animals will end up dead.

Recently, however, it was reported in the Star that powerful towkays in Sarawak are buying endangered animals to be kept as pets.

Middlemen pay native trappers handsomely to capture these animals alive which are then sold in the black market, as demand has apparently increased in Sarawak.

The rich towkays display these exotic animals such as bears, rare monkeys, birds and reptiles in their homes as status symbols.

A private farm was reported to have a variety of animals including macaques and gibbons. Even sun bears were available.

Just as the famous psychologist Abraham Maslow said, humans strive to achieve a hierarchy of needs, in life. When basic needs such as food, shelter, clothing, safety etc are satisfied, people will pursue other goals - needs. In this day and age, money is pursued to fullfill these needs. Therefore when someone pursues money, he or she is not pursuing money per se but money to purchase goods and services to fulfill these needs that Maslow's theory describes. To Maslow, esteem needs - the need for respect ranks 2nd highest in his hierarchy of needs. These towkays are purchasing these animals to get status (respect) - they are therefore purchasing respect. Is it because they feel that they don't have enough of it ?

Related posts:

Do You Like To Eat Lan-Jiao ?

Will You Eat A Tiger ?

Please post your comments.

Jacky Ho's Father Died Believing In A Miracle

Jacky Ho is a 40 year old sales executive from Seremban. The Malay Mail recent report said that Jacky bought supplements from a direct selling company believing the supplements could cure his 70 year-old father who was diagnosed with a clogged artery.

Despite being told by doctors from University Kebangsaan Malaysia that his father had to undergo an immediate operation to avoid a heart attack, he decided to seek alternative treatment which resulted in his father death.

He sought the advise from a direct selling agent who convinced him that the supplements he was selling could heal his father. Jacky then decided to join the direct selling team and spent RM2,000 to purchase the supplements. He lost his money and lost his dad.

Malaysians are a gullible lot and are easily deceived by "snake oil salesmen" claiming to sell miracles in a bottle. Unscrupulous direct selling companies usually base their fantastic product claims on dubious scientific research findings and anecdotal evidence.

I once told a direct selling agent that if his supplements are so effective, they wouldn't need to sell it through the direct selling method because big pharmaceutical companies would buy the patents to the products and sell it directly to pharmacies and hospitals.

For instance, pharmaceutical giant Pfizer Incorporated doesn't have to sell Viagra through direct selling, do they ? They sell directly to hospitals and pharmacies. Simply because their product works.

Beware of con men not only in the direct selling industries but also in the "get-rich-quick" money making / start own business industries. You can normally find these "experts" selling money making courses through "free seminars" advertised in the local newspapers.

I knew a friend who went for a "free seminar" at a hotel where the speaker claimed that he could teach you to make millions with just your ideas. The speaker of dubious character and accreditation gave himself away when he forbid any attendees from asking questions during the free seminar (presumably to prevent anyone from exposing him as a fraud).

He gave the excuse that asking questions during the seminar would interrupt the concentration of the other attendees. Instead, he said, if anyone had any queries they should ask him privately after the seminar. If he had nothing to hide, why must any queries be asked in private ?

Anyway, if he knows how to make millions just by ideas, then he should be doing it himself, right ? Why bother teaching others at a seminar for just a few thousand ringgit ? Bill Gates and Warren Buffet don't make money by giving seminars, do they ?

Read also this interesting article by Australia's ABC .

There's another article in Yahoo about get-rich-quick seminars - read here.

Well, what do you think ? Please post your comments.

Boiler Room

This is a scene from the film Boiler Room



Post your comments.

The World's Secret Billionaire

Who is Chuck Feeney ?

You will not believe that Chuck Feeney is a billionaire. According to published sources, he carries plastic bag that serves as a briefcase, wears a $15 plastic watch, flies economy class and does not own a house or car. Chuck Feeney was born in New Jersey during the Depression to a blue-collar Irish-American family, he co-founded Duty Free Shoppers, the world's largest duty-free retail chain. In 1988 he was listed by Forbes Magazine as the 23rd richest American alive and worth $1.3 billion, richer than Rupert Murdoch and Donald Trump.

Thus far, Chuck Feeney has given billions away to schools, hospitals, universities, medical research and human rights from the United States and Ireland to South Africa and Vietnam.

He is obsessed in keeping his identity a secret. He incorporated his charitable foundation in Bermuda and attached confidentiality agreements and cabal-like vows of secrecy to his foundation's grants. After the cashier's checks cleared, there were no black-tie parties, no self-effacing speeches.

I have tried searching for his photo on the internet, but can't find even one - the photos listed on Google Image search, isn't him.

His photo is not even published on his charitable foundation's website The Atlantic Philanthropies

However, there is a rare group photo of him published by Time Magazine in 1997

According to news reports, Chuck Feeney made money in his youth selling Christmas cards door-to-door, clearing snow from driveways and caddying at golf courses. He loved the challenge of making money but had little use for it.

"The Billionaire Who Wasn't: How Chuck Feeney Secretly Made and Gave Away a Fortune" is a new book written by Journalist Conor O'Clery about this remarkable man.

Read more about Chuck Feeney in MSNBC and Business Week

What would you do if you had a million ringgit ? Comments please.

21 steps to a great retirement

GROW YOUR MONEY

In this final article on retirement planning, the Financial Planning Association of Malaysia (FPAM) puts forward 21 recommendations to help Malaysians prepare for their future.

EDMOND Cheah, immediate past president of the FPAM says, “If we’re fortunate to live long enough, we all have to retire one day. So, make realistic decisions on the timing of your exit from the workforce.” Here are 21 steps to help you plan well for the golden years.

1. Face your future honestly

Extensive retirement studies show that those who exercise control over when they retire live happier lives than those who wait to be put out to pasture by others.

It is important to not make dangerous assumptions about the future. U Chen Hock, President of the FPAM observes, “Malaysians generally still harbour expectations of their children looking after them in retirement. However, I advise parents to be pragmatic in planning for their children’s education to the extent they can afford it without jeopardising their own retirement funding plan.” Of course, there is no harm in aiming to tilt the odds in your favour (see recommendation 18)!

2. Exercise delayed gratification

Financial planner Rajen Devadason says, “Those who adopt a delayed gratification mentality early in life often discover a decade down the road that this mindset is the most dependable key to future wealth.”

3. Start yesterday, failing which start today

The time value of money tells us money today is worth more than the same amount tomorrow. This is best understood by realising RM1,000 today will be worth RM1,030 one year from now if it is deposited in a 3% one-year fixed deposit (FD) account. This ability of money to snowball over time is termed compounding. Mike Lee, managing director of CTLA Financial Planners Sdn Bhd, says, “Compounding your savings and your returns early in life is always a better strategy than hoping to catch up later.”

4. Save your money

Two effective ways to save money are to first set aside savings before allowing any other outflows each time you receive your salary, and second, to manage your cash flow effectively.

Even those who have let time slip by can benefit from saving money. Wong Loke Lim, honorary secretary of the FPAM, explains: “While it’s obviously better to start saving early, it is never too late to start even if you’re already close to retirement. This is because every ringgit saved will help cover retirement expenses.”

5. Teach yourself about financial planning

Take personal responsibility for educating yourself about financial planning. The bookstores are filled with awesome resources. Cheah says, “It is vital that those who are serious about succeeding in retirement begin thinking and reading about it as early as possible.”

6. Write down your goals

Retirement specialist Devadason says, “Over many years of consulting, I’ve discovered that my most successful clients have goals that are clearly written in personal, positive and present tense terms.” It is therefore wise to write down your own retirement planning goals in the same way.

7.Fine-tune your preferred future on paper

The earlier you begin writing down your dreams for the perfect retirement, the more time you will have to tweak those aspirations into concrete written goals. It is important that personal control is exercised in this matter. FPAM honorary secretary Wong says: “Loneliness, loss of respect, expensive medical bills – these are just some possible negative aspects of retirement which must be taken care of.”

As for the financial dimension, Cheah elaborates, Be practical; know that you will have to compromise and adapt to possible changes to your lifestyle.”

8. Beef up your net worth

Your net worth is measured by your net worth statement. This lists all your assets and all your liabilities. If you total each column, the difference between assets and liabilities is your net worth. In corporate terms this is equivalent to a company’s net book value. We should focus on boosting our store of productive assets that generate passive income for us in the form of dividends, rental and interest. At the same time, we should eliminate all forms of bad debt that suck up our financial resources.

9. Create your own pension

Some government servants can look forward to a lifetime public sector pension that’s equal to half of their final drawn salary. Others contribute to EPF, just as most private sector workers do. K.P Bose Dasan, Securities Commission-licensed financial planner with Standard Financial Planner Sdn Bhd, maintains, “Retirees must have a pension. No pension, no retirement!” So, those without a government pension must take personal responsibility for creating their own. Devadason says, “The goal for everyone should be to proactively create multiple sources of income from investments and, perhaps, privately-held businesses to channel through a future pipeline of passive income.”

10. Purchase appropriate life insurance

Ultimately, people should aim to be self-insured. But the road toward such a large level of wealth is not easy. Along the way, those who are gradually building their net worth (see recommendation 8) ought to ensure they’re managing disability and premature mortality risk appropriately. Michael Tan Lib Chau, CEO of RHB Unit Trust Management, says: “Besides setting aside some savings for investment, it is also crucial to protect the loss of earning capacity. In other words I would encourage them to seriously look at life insurance coverage.” Toward that end, many financial planners believe a “buy term and invest the difference” approach is the most cost-effective route.

However, the danger lies in a possible lack of discipline being exhibited by some adherents of D-I-Y financial planning: They might choose to buy relatively cheap term life policies but then squander the rest of the money. In many cases, then, it would be wise to work with a reputable financial planner

11. Prepare for future inflation

A major factor in retirement funding calculations is future inflation. Saving money in the bank, while a great initial step toward financial freedom, is unlikely to generate returns greater than inflation. Therefore, focus on educating yourself on the damaging effects of inflation and the need to accept some level of investment risk.

12. Manage your investment risk

It is unwise to take on so much investment risk that you lose sleep and begin to develop ulcers. On the other hand, accepting too little investment risk is likely to hurt your long-term portfolio returns. Educate yourself to gradually elevate your risk appetite to at least moderate levels. Tan Beng Wah, CEO of CIMB Wealth Advisors Bhd, explains why the quanta of accepted risk should change with age: “In funding for retirement, the investor may start with an aggressive portfolio, then switch to a moderate one half way toward retirement, and then to a conservative portfolio when he or she is a few years from retirement.”

Knowing how to do this wisely requires either active self-education or the help of a trusted advisor or, preferably, both.

13. Enslave your money

Don’t always work for your money. Make it work for you. Steve L. H. Teoh, deputy president of the FPAM, notes, “Failing to plan is planning to fail!” This piece of advice is relevant to those entering retirement. Teoh explains, “From that point on, the wealth a person has accumulated throughout his working life will now have to work for him instead.” The larger that pool of resources and the harder it works for the retiree, the better the quality of life in retirement.

14. Hone your career skills

Do what you can today to extend your employability through enhanced skills development.

15. Target greater tax efficiency

Bose, a tax specialist, notes, “To retire well, you have to accumulate a healthy sum in your retirement portfolio. It helps, therefore, to take advantage of all possible tax incentives available in Malaysia.” A tax specialist in retirement planning can be of great value in this endeavour.

16. Tame the credit beast

Unnecessary interest spent on consumer debt instruments, particularly credit cards, sucks money away from possible retirement plans. Manage your total liability situation well.

17. Aim to be debt-free

While there is such a thing as good debt that ends up enriching us, most people are wired in such a way as to benefit from living a debt-free life. Therefore, if the prospect of one day becoming free of all liabilities appeals to you, make it a written goal and then act in a manner consistent with that desire. Teoh says, “Work toward attaining zero gearing in as short a period as is practical. Certainly settle all credit card monthly dues promptly and in full! Remember, there is always a cost to borrowing.” He recommends settling all liabilities by age of 50, or earlier.

18. Train your children well

In the decades ahead, it will be difficult for even the most filial of children to fully fund their parents’ retirement needs. But if you are able to instil even a partial sense of responsibility in your children as they mature, you might be able to derive a steady, modest flow of income from them. This possibility should not in any way alleviate your own responsibility for funding your own retirement through intelligent saving and investing.

19. Clarify your legacy

Write a will. Consult a reputable will writer or a lawyer familiar with probate matters. Ong Eu Jin, chief operating officer and director of OSK Trustees, and author of Can Wealth Last Three Generations, says: “It is important to have a will. Also, parents with minor children should consider creating a testamentary trust under their will.” Such a trust may be used to set aside specified liquid assets like bank deposits, unit trust funds and life insurance proceeds to meet children’s maintenance and education requirements in the event of an untimely demise by one or both parents.”

20. Make a difference

Aim to retire from work, not from life! Always focus on continuing to live a life of significance. This requires careful long range planning.

21. Engage the right financial planner

Sue Yong, executive director of Equity Trust (Malaysia) Bhd, notes, “To enhance your chances of succeeding in retirement, focus on building a good working relationship with a financial planner for the long-term. Such a professional may also act as a coach when we have gone astray from the agreed plan.” Financial planner Ken Lo of Money Concepts Corporation adds, “Because most people have little time, discipline, knowledge or expertise to manage their own financial affairs, they need to work with professionals to reach their financial goals.”

The first step in becoming adept at financial planning is focusing on self-education. That commitment alone will help most people enormously. For those who might want to pursue things further, please visit FPAM’s website at www.fpam.org.my for a free downloadable copy of “Insights to Choosing A Financial Planner” as well as to search and access the directory listing for licensed and qualified financial planners.

FPAM will be conducting a Securities Industry Development Centre (SIDC) approved course titled “Equity Market Indicators” at Bukit Kiara Equestrian & Country Resort, KL on August 11(Saturday) by Anthony Dass, Head of Research, Inter-Pacific Research Sdn Bhd. For details, log on to www.fpam.org.my or call Cliff Tan 03-2095 7713

The Star

Future currency

By ZACK YUSOF

People’s definition of wealth is evolving.

WITHOUT sufficient funds in today’s money-orientated society, a person is severely handicapped in so many ways. So, most people choose to work hard for their cash.

But is money really that important? Does it really bring us that much happiness? Is money the post that most of us aspire towards, or is it merely a means to get where we want to be? How do we view money and relate to it?

These are all valid questions that DDB International Malaysia endeavoured to find answers to, in their latest report, Future Currency: Malaysians’ Money Stories.

This analysis of how Malaysians feel about money is based on thousands of “signs” collected by DDB Signbank sign-hunters, as well as interviews with people from all walks of life. It examines current and future consumer trends as well as “the emotional and physical significances in the context of finance”, says Wong Yee Thong, DDB International Malaysia’s brand planning director.

Here are some interesting revelations.

Money tomorrow

According to the report, people’s definition of wealth is evolving, for the better. The trend has been that we all work hard to get more money and try to keep it for as long as possible. But now, more and more people want their money to work for them instead.

The team identified five evolving stories about future currency:

Richness, not Rich focuses on the realisation that money will become more than a stepping-stone to the good life. People will begin to view it as a tool to broaden the mind and enrich the soul. People will want to acquire experiences that will give them more than just superficial returns. For example: 75% of those interviewed believe that enriching the self is more important than getting rich, whilst 58% would rather stay in boutique hotels than in typical five-star hotel chains.

Purpose, not Profit concerns people’s growing awareness of humanity and the need to give back to the community, be it money or time. Individuals and large corporations alike are trying to give back to society and change things for the better. According to the report, 67% of respondents would exchange all their birthday presents for donations to their favourite charity and 58% would choose to help build homes in a needy country rather than go to a beach resort for their vacation.

My Selectivity, not Mass Exclusivity is about not letting our lives be defined by luxury, be it expensive cars or posh holidays. Instead, people delight in their own definitions of luxury, which reflect their individuality. Tomorrow’s consumers will not abide by the “rules of richness” but instead, want to create their own. Most of the respondents (83%) believe that they define their own luxury, while 54% would consider putting their money on unconventional items as investment options.

In tomorrow’s world, a Transparency, not Transactional attitude will prevail, as people will become wiser about time. They will understand that there are more important things to do with their time than run around doing mundane chores – particularly if it concerns money. Fifty-five per cent would be willing to share their financial information if it means simplifying their lives, and another 57% would let a financial consultant handle their finances in favour of a simpler, responsibility-free lifestyle.

Time Rich, not Money Rich, is a reflection of shifting attitudes of Malaysians towards the significance of money. People are beginning to understand that time is precious. Trading money for time is no longer a feasible option: 51% would rather take an extra week-long holiday than get a monetary bonus for work, and 76% believe that time is more important than money.

The Star