personal income tax (2012) the purpose of income tax is to provide financing for government...
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PERSONAL INCOME TAX (2012)The purpose of INCOME TAX is to provide financing for government expenditure.
The taxable incomes are from the employment such as salary.
An individual can claim the deductions for cash donation to Government, State Government or an approved charitable institution or organization and the claim must be substantiated with original receipts. There is no maximum limit for the donation.
Taxable Income
Deduction on Donation
RELIEF
TYPES OF RELIEF LIMIT EXPLANATION
Self RM9,000 Granted automatically and for disable taxpayer another RM6000 is allowed.
Wife/husband(Joint assessment only)
RM3,000 Granted automatically if wife/husband has no income and for disable wife/husband another RM500 is allowed
Child Relief:Below 18 years
18 years andstudying in aninstitution of higherEducation
Disable child
RM1000
RM4,000
RM5,000
•Unmarried child
• No restriction on the number of children.
• The wife is eligible to claim child relief if she is assessed separately
Contribution to EPF and Life Insurance Premiums (LIP)
RM6,000 maximum
Insurance policy secured on the life of the individual or spouse
Medical Expenses for Parents
RM5,000 maximum
Receipt has to be certified by medical practitioner and the expenses can be claimed by more than one individual
Purchase of supporting equipment for disabled self, spouse, child or parent.
RM5,000 maximum
Claim must be supported by receipt
Full personal medical checkup
RM500 maximum
SSPN RM6,000 maximum
Nett saving
Personal computer
RM3,000 maximum
Every 3 years only
Books and megazines
RM1,000 maximum
Annual Internet Fee
RM500 maximum
REBATES
TYPES OF REBATE
LIMIT EXPLANATION
Self / personal rebate
RM400 maximum.
Taxpayer is entitled to the relief if chargeable income does not exceed RM35,000
Wife/husband rebate
RM400 maximum.
Eligible if the income of the wife/husband is assessed under joint assessment.
Zakat/Fitrah rebate
NIL Claims must be supported by receipt from Religious Authority.
TAX RATE SCHEDULE FOR PERSONAL INCOME
Taxable Income (RM) Rate Tax (RM)
On the firstOn the next
2,5002,500
0%1%
025
On the firstOn the next
5,0005,000 3%
25150
On the firstOn the next
10,00010,000 3%
175300
On the firstOn the next
20,00015,000 7%
4751,050
On the firstOn the next
35,00015,000 13%
1,5251,950
On the firstOn the next
50,00020,000 19%
3,4753,800
On the firstOn the next
70,00030,000 24%
7,2757,200
On the firstOn the next
100,000150,000 27%
14,47540,500
On the firstExcess over
250,000250,000 28%
54,975
COMPUTATIONAL OF INCOME TAX
Formula
Total Income = Aggregate Income – Donation
Total Relief = Self + spouse + Children + EPF + LIP + Parent Medical
Chargeable Income = Total Income – Total Relief
Amount of Tax = use Tax Rate Schedule to compute.
Tax payable = Amount of Tax – Total Rebates
Total Rebate = self + spouse + zakat + computer rebates
TWO TYPES OF ASSESSMENTS
A) JOINT ASSESSMENT
Only one assessment for both of them and their incomes must be combined. Whatever deduction claimed will be limited to the amount stated except for EPF + LIP (husband + wife) are limited to RM6,000 only.
B) SEPARATE ASSESSMENT ( individual assessment )
Both husband and wife make their own assessment as a single person. In the case of children when wife is assessed separately, she may elect the appropriate deduction be allowed to her. If she so elects, relief in respect of the relevant child will be given fully to her. EPF + LIP are limited to RM6,000 to the husband and RM6,000 to the wife.
Example ( AL/OCT 2003/MAT112 – modified )
Zamri and his wife have 3 children below 18 years old. Their income for the year 2004 are as follows:
Zamri Wife
Monthly salary RM10,000 per month RM3,000 per month
EPF monthly RM1,000 per month RM300 per month
LIP monthly RM 20 -
Approved donation RM5,000 -
Zakat RM2,000 RM50
Calculate their tax payable for the assessment year 2005 if they elect separate assessment.
Separate Assessment
Zamri
Total Income 120,000
Less deduction
Self 8,000
Children
3 x RM 1,000 3,000
EPF + LIP 6,000
Approved donation 5,000 (22,000)
Chargeable Income 98,000
Using tax schedule
On the first RM70,000 7,275
On the next RM28,000 x 24% 6,720
Tax Amount 13,995
Less Rebate
Zakat (2,000)
Tax Payable 11,995
Wife
Total Income 36,000
Less deduction
Self 8,000
EPF + LIP 3,600 (11,600)
Chargeable Income 24,400
On the first RM20,000 475
On the next RM4,400 x 7% 308
Tax Amount 783
Less Rebate
Personal rebate 350
Zakat 50 (400)
Tax Payable 383
Example ( CS/MAR 2005/MAT112 – modified )
En Harris has 5 children and his wife is a housewife. His eldest child is studying in UiTM while the rest are still schooling. His income and expenses for the year 2004 were as follows:
RM
Salary 48,000
EPF 5,280
LIP 1,000
Parent medical fees 2,000
Donations 500
Zakat 200
Calculate the tax payable for the assessment year 2005.
Joint Assessment
En Harris and his wife
Total Income (Husband + Wife) 48,000
Less deduction
Self 8,000
Wife 3,000
Children
1x4,000 – University
4x1,000 – below 18 years old
4,000
4,000
EPF + LIP 6,000
Parent Medical Fees 2,000
Approved donation 500 (27,500)
Chargeable Income 20,500
Using tax schedule
On the first RM20,000 475
On the next RM500 x 7% 35
Tax Amount 510
Less Rebate
Personal Rebate
Wife Rebate
350
350
Zakat 200 (900)
Tax Payable 0
No tax payable for the assessment year 2005
Example
A couple with 3 children aged below 18 years old had an annual income as follows
Husband Wife
Annual Salary 50,000 40,000
EPF (Employee Provident Fund) 5,000 4,000
LIP (Life Insurance Premium)) 1,500 1,200
Parent Medical Bill 300 6,000
Zakat 60 50
Computer - 3,500
Donation - 100
Compute their tax liability if they choose
a) Joint Assessment
b) Separate Assessment
a) Joint Assessment on husband’s nameTOTAL INCOME RM90,000
Self Relief RM8,000
Wife Relief RM3,000
Children Relief 3 x RM1,000 RM3,000
EPF + LIP (husband+wife) maximum RM6,000
Parent Medical Bill Husband only RM300
Donation RM100 (RM20,400)
CHARGEABLE INCOME RM69,600
Tax
On the first RM50,000 RM3,475
On the next RM19,600 x 19% RM3,724
TAX AMOUNT RM7,199
Rebates
Zakat (RM50 + RM60) RM110
Computer RM500 (RM610)
TAX PAYABLE RM6,589
b) Separate assessment - Husband
TOTAL INCOME RM50,000
Self Relief RM8,000
Children Relief 3 x RM1,000 RM3,000
EPF + LIP (husband) maximum RM6,000
Parent Medical Bill RM300 (RM17,300)
CHARGEABLE INCOME RM32,700
Tax
On the first RM20,000 RM475
On the next RM12,700 x 7% RM889
TAX AMOUNT RM1,364
Rebates
Self Rebates RM350
Zakat RM60 (RM410)
TAX PAYABLE RM954
b) Separate assessment - Wife
TOTAL INCOME RM40,000
Self Relief RM8,000
EPF + LIP ( RM4,000 + RM1,200) RM5,200
Donation RM100
Parent Medical Bill maximum RM5,000 (RM18,300)
CHARGEABLE INCOME RM21,700
Tax
On the first RM20,000 RM475
On the next RM1,700 x 7% RM119
TAX AMOUNT RM594
Rebates
Self Rebates RM350
Computer RM500
Zakat RM50 (RM900)
TAX PAYABLE RM0.00