Personal Tax Relief YA2021

Just went to an online seminar about Tax Budget Proposal. Thought maybe I could share a few information about personal tax.  

1. New relief - S.46(1)(u): RM500 

Expenses for sport equipment, rental/entrance fee to sport facility and fee of any sport competition are able to claim in this section. This is a new relief in addition to the current lifestyle relief which you can claim sport equipment (subject to sport development act 1997). However, it seems that this new relief didn't require taxpayers to comply sport development act like lifestyle relief. 

2. Education fee: RM7,000 + Scope expanded

In general, you are able to claim your tuition fee for Degree, Master and Doctoral programmes. It is now expanded to include upskilling or self-enhancement courses other than those mentioned above. The conditions are:-

a) the course must be conducted by body recognised by the department of Skills Development of the Monistry of Human Resources

b) Only for YA2021 & YA2022

c) Maximum RM1,000 (part of RM7,000)

3. Medical expenses: increased to RM8,000

a) Including vaccinations (limited to RM1,000) i.e. HPV, Covid-19 etc

b) Maximum for complete medical check-up increased to RM1,000

4) Updates on other reliefs

a) Disabled spouce relief: increased to RM5,000

b) Medical treatment, special need and carer expenses for parent: increased to RM8,000

c) SSPN: Period extended (YA2019 - YA2022)

d) PRS contribution: Period extended (YA2012 - YA2025)

e) Child care fees: Increased from RM2,000 to RM3,000

Last but not least, for YA2020, there is an additional RM2,500 lifestyle relief deductible if you purchased computer, smartphone or tablet during June - December 2020. It was announced months ago to help families to purchase enough computer for children's online classes and parents' work from homes during MCO. 

卡关

这几天，不，这几个月我一直处于不安中

真奇怪~我的生活明明就超级舒适的啊

够用的薪水，还可以存钱去旅行，

也得到想要的文凭了，

工作上基本顺利，也达到职业规划中锁定的位置了

以前似乎都在掌握之中呀

可是这不安感到底从哪儿来？

哦~

我是不是就到此为止了？

不会再进步了？往后是不是都会照着计划慢慢前进

过着比上不足比下有余的人生？

“没进步”大概是我害怕的东西吧

所以我喜欢读书，这让我感觉自己成长

所以我喜欢比赛，这让我知道我的不足

所以我喜欢考试，慢慢的获取各种文凭

我还这么年轻 就打完游戏过关了？

不是的，是我卡关了！？

Tax Rate YA2020

The tax rate for YA2019 and YA2020 are

                                                                             YA2019                                YA2020

1. non-SMEs                                                            24%                                     24%

2. SMEs*

First rm500,000 chargeable income                        17%                                     

First rm600,000 chargeable income                                                                     17%  

The remaining chargeable income                          24%                                      24%

*Small and Medium Enterprise.

While non-SMEs don't have any changes in tax rate, the table shows that SMEs are likely to enjoy lower tax payable in YA2020. Let's do some Maths to prove that.

A company earned income of RM1.5 million in YA2019. It also earned RM1.5 million YA2020. The tax payables for YA2019 and YA2020 were:

YA2019

First rm500,000 chargeable income                      85,000  (500k x 17%)

The remaining chargeable income                      240,000  (1500k-500k)x24%       

Total Tax payable                                                325,000

YA2020

First rm600,000 chargeable income                   102,000  (600k x 17%)

The remaining chargeable income                     216,000  (1500k-600k)x24%       

Total Tax payable                                               318,000

The tax payable was rm7,000 lower in YA2020 with the same income earned.

However, the definition of SMEs has been amended so not as many companies as we expected benefit from the changes in tax rate. One of them is investment holding companies which were previously qualified as SMEs in YA2019 and prior years. In YA2020, investment holding companies are not qualified as SMEs anymore so they couldn't enjoy the lower tax rate of 17% for the first RM600,000 income. On the other hand, their incomes are subject to 24%, 7% higher than before. We will discuss more about the impact of changes in SMEs definition in next post.

Malaysian Tax - How Do You Compute Balancing Charge Part 2

Do you remember the formula of Balancing Charge? Let's revise it again.

Formula:

Balancing charge (hereinafter BC) = Disposal value > Residual value

You can check out my last post for more details😉

https://eric2921.blogspot.com/2020/10/malaysian-tax-how-do-you-compute.html

Now, let's talk about the tricky part. What should we do if the qualifying expenditure is different from the actual capital allowance (CA) claimed?

Formula:

BC = Diposal value* - Residual value

*Disposal value = qualifying expenditure/purchase price x selling price

For example, a reconditioned Vellfire was purchased at rm200,000. According to CA rules, the qualifying expenditure for a non-commercial motor vehicle is restricted to RM50,000 when the purchase cost was > RM150,000. Meaning to say, you can only claim CA up to RM50,000 only. Of course, under CA rules, your BC can't be more than the amount of CA claimed, that is RM50,000.

Here is the tricky part, after 4 years, when you claimed all the available CA RM50,000, the residual value = RM NIL. You later sold it off for RM100,000. Applying the normal BC computation, we can get an RM50,000 BC (RM100,000 - RM0, no more than RM50,000). 

Summary

Purchase price                    RM200,000

Qualifying expenditure      RM50,000 (restricted)

Selling price                       RM100,000

Well, there is more to it.

Since the Vellfire is sold in whole, we need to calculate the portion that selling price (RM100,000) is 'attached' to the car's actual value. Hence, disposal value = RM50,000/RM200,000 x RM100,000 = rm25,000 only. Applying BC formula, RM25,000 - RM0, (no more than RM50,000), the BC = RM25,000.

Easy right? I hope this helps when you are computing your client's tax. Do let me know if you need further clarification!

Malaysian Tax - How Do You Compute Balancing Charge

When a company disposes of its assets, it must make a tax adjustment to the capital allowance by computing the balancing allowance (Elaun Imbangan) or balancing charge (Kenaan Imbangan). In this article, we will only discuss Balancing Charge. 

Formula:

Balancing charge (hereinafter BC) = Disposal value > Residual value

A company purchased a machine for RM100,000. for its business use and claimed capital allowance (CA) over the years at, say, 20% each year. After five years, and the residual value = rm NIL. The company then sold the machine to a third party for RM5,000. Hence, the BC = RM5,000 (Disposal value) - RM NIL (residual value) = RM5,000.

Think of it this way - the asset was allowed for a tax deduction as a capital allowance in your previous years' tax computation. Now it should be deductible if you earn a profit from it. This is when we compute BC to adjust the tax payable when the disposal of the asset occurs. However, BC can never be higher than the total claimed CA-

Using the same example as above, the machine was disposed of at RM150,000 instead of RM5,000. Therefore, BC = RM100,000 only because the previously claimed CA was only RM100,000. The tax authority will the only clawback whatever tax deduction you made but not exceeding that.

We will talk more about the tricky parts of BC in the next post.

《鲸吞亿万》 - 读后感

终于读完这本 300多页《鲸吞亿万》了！
书中的人名实在是多的不行
尤其是西方人和东方人的中译名
看的我都不知道谁是谁了

不过看着他慢慢地无法掌控局势
还有最后真相一夕之间曝光
真的很舒服，活该！！
感谢那些勇敢的人，尤其是the edge 不畏强权的精神实在令人敬佩
可惜的是这个犯人到现在还在外面逍遥快活

读完后我就在想着一件事
后记提到（大致的意思）
“这些人仍然没有的到应有的惩罚
受伤的是企业股东和人民”

没错 这些肮脏的决定都是弄权者所作的
他们收到的贿赂远比罚款牢刑还来的多
这就是为什么贪污，无论是政商，永远没办法制止
而这现象已经持续了好几个世纪
难道所谓的民主主义就是让拥权者有机会贪污？

在我大学会计课里也曾讨论过这个问题
董事会和股东的期望利益（interest ）不一样
董事希望增加收入，而股东希望股息多，股价涨
乍看之下是一致的对吧？
但试想，如果董事舞弊，串改了公司财务报告
误导股东认为公司赚钱而奖赏所有董事
实际上公司已经入不敷出，股东们的利益便受损
理论上来说股东必须想办法将双方的利益合二为一
不过看来也只是空谈

暗地里这些现象并没有停止发生
而我们每每看到的 永远是善良的人没办法继续面对执掌者的压力而下台、辞职或被撤换
同样地，这也适用于人民与政府之间的关系
而当贪污事件发生时 我们人民唯一的权力就只是投票
但可想而知政府却有能力控制投票（比如划分选区，黑箱作业、贿赂等等）
原来人民的权力是那么地有限，想想都觉得可悲

可憎，这些卑鄙之人为了钱伤害他人
可悲，我们只能是受人摆布的那个
可恨，这个世界没有公平这件事
可笑，我们只能继续这么苟活

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

话说回来，这到引起了我对法务会计 （Forensic Accounting)的兴趣
是不是可以往这方面去发展呢？
我十分有信心不会被利诱，但却没信心不被威迫屈服
这么想想似乎又不适合了？

《鲸吞亿万》 第一章

有时候会感叹，一个人的成败与他的人脉有绝对直接的关系

读了《鲸吞亿万》第一章后
才知道到原来“假人脉”也可以帮助你成就
只要你表现得有钱有贵，有权有势
大家还是会贴近你待见你的

倒是让我想起了面试工作这件事情
就算你的能力强 学历高
别人还是不吃你这一套
他们吃的是认识的人的推荐
“我朋友介绍的人绝对比这些来历不明的人可靠”
这种想法绝对在面试官的脑海里转悠个不停吧

真不公平