In Malaysia, the tax submission for individuals due in end of April, while corporation tax dues in end of June every year. These time of the year are probably not be the most wonderful time of the year, especially for SME business owners
Here’s the thing—as a business owner, your core activity is to keep your business running and try to make profits. There are busiest time of year where you do not keep your documents properly while thinking to arrange it later. If you managed to find to do it after the peak season, that's perfectly fine. If you don’t, you might end up with unexpected problems.
So how to we do a proper tax planning?
Let's focus on few important things to avoid a tax headache when the TIME comes. And if you ever forget them, come back to this post and re-read it to give yourself a reminder of what you need to do.
Step 1: Start a Filing System
Start a filing system to organize your documents. Any successful tax planning strategy requires you to maintain records of all transactions and receipts that may affect your tax return. This helps to keep track of important documents and avoid forgetting about transactions that occur months before the tax filing deadline.
Step 2: Understand tax deduction requirements
Before you get too far along in the tax year, you should evaluate all available Inland Revenue Board (IRB) deductions and the requirements to claim them. By doing this beforehand, you can be proactive in preparing to claim a deduction at the end of the year.
Step 3: Evaluate tax credit offered
Tax credits offer a significant opportunity to save money on income taxes since they reduce your actual tax bill on a dollar-for-dollar basis. The types of tax credits offered each year change more frequently than deductions and they are often available for a limited time and cover specific types of expenses.
On a yearly basis, Malaysian government would announce changes in tax relief for both personal and company during the Annual Budget announcement. Do pay attention on the items that are applicable to you as you may be entitled to a great tax savings from the tax relief!
Step 4: Use an IRA
Use an Individual Retirement Account (IRA) instead of a savings account. Many taxpayers put their savings into a typical bank account that earns taxable interest. However, you can avoid paying tax on the interest each year by depositing money into a traditional IRA account instead where the interest will accumulate tax-free. When you do, you are also eligible to claim a deduction each year for a certain amount of contributions you make to the account.
Last but not least, do submit your tax submission on time to avoid heavy penalty from Inland Revenue Board!
For further details, please refer to the official website:
http://www.hasil.gov.my/
