income tax malaysia
Money Management

Personal Income Tax 2021: All You Should Know to File Your Taxes Right

It’s income tax season! I got some questions about how to do income tax in Malaysia, and I *was* going to write one myself, but I got lazy so many amazing guides already exist so I decided to compile them all for your easy reference.

Check out the resources below, covering all you need to know about income tax in Malaysia whether you are a first-time taxpayer or someone who have been doing taxes for a while but not really sure if you’re doing it right (me). Simply click the links to respective pages to read more.

#1 – For First-timers (Basic Knowledge)

I’m listing here multiple guides and videos suitable for first-timers – between them, you should have a better understanding of the whole income tax filing system in Malaysia.

Opening your account for the first time:

Helpful videos:

#2 – Knowing all the tax reliefs that you may be eligible for in 2021

After you learned the basics, now you can optimise your income tax filings so you don’t need to pay more than you should.

Reminder to never lie or cheat your income tax filing. If you happen to have bad luck, you might get audited. That’s NOT fun.

#3 – For very specific situations

Read this section if you’re not a salaried employee, or have additional sources of incomes aside from your day job. If your only income comes from your formal employment, you can skip this section.

For freelancers/self-employed/unemployed:

For other additional sources of income:

#4 – Financial Tools

How much will you have to pay for income tax? The annoying answer is it depends, but you can do a guesstimate – iMoney has a brilliant Income Tax Calculator that you can play around with to see a *rough* estimate of income tax you have to pay.

#5 – Comprehensive Income Tax Guides

And last but not least, here are more in-depth guides for those who want to learn the different terminologies in greater detail. You don’t *need* to read these comprehensive guides to file your taxes, but they are great for supplemental information.

#6 – Random things I learned along the way

a) If you have a business (even small scale or side hustles alongside main job), you MUST register it as a company if you want to claim business-related expenses. Depending on your nature of business, you can register as Sole Proprietorship, Limited Liability Partnership or Company.

For many small-scale online businesses in Malaysia, Sole Proprietorship (single owner) or Partnership (more than one owner) is enough, and the cheapest option. According to one tax professional, only consider Sdn Bhd if you make more than RM150,000 per year (can get better tax rate).

b) You may already know that zakat is a type of tax rebate. What you might not know is the receipt date matters – it must be the year before. If you pay zakat and the receipt is dated 2021, you can only use it for YA (Year Assessment) 2022 ie the next year.

Related: 33 Thoughts on Paying Zakat in Malaysia

Are there any other questions not answered about paying income tax in Malaysia? Let me know in the comments section! Coincidentally I just learned about it in my CFP course, I may be able to answer (or point you to someone who does!)

(If you have overly complicated questions, might as well ask LHDN yourself for the surest answer. Call the LHDN Hasil Care Line at 03-8911 1000 or email them from here)

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4 Comments

  1. I would like to know, just in case you got the new update too…
    Can the RM2,500 lifestyle combined with the new RM2,500 laptop/tablet/smartphone category and allow a single claim of RM5,000 laptop?

  2. Hi, if I’m working remotely from Malaysia for an international company whose entity not registered in Malaysia, do I still have to pay the tax?

  3. Hi Suraya, I wonder if you or any of the readers here know the definitive answer to this: if you are a self-published author in Malaysia and self-publish novels on international platforms such as Amazon and Google Books, would you be subject to being taxed in Malaysia for income derived from those platforms? For Malaysian self-publishers, Amazon automatically withholds 30% of the sales revenue for tax purposes in the US.

    Also, if you’re not subject to being taxed in Malaysia, should it then be necessary to register a company as a self-published writer who only publishes on international platforms like the above?

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