INCOME TAX: A Millennial’s Rite of Passage

by Roshan Kanesan

“It’s tax season!”

That's probably the most common phrase I've heard thrown around since the start of March. Yes, the exclamation mark is mine. No, no one ever talks about tax season with anything remotely resembling excitement (except, maybe, me).

Now first things first, before you get all worked up about the idea of taxation, check if you’re taxable. There’s no point stressing if you don’t even need to pay taxes. If you’re an employee and only earn income via your salary, then it’s simple: you’ve got to file taxes if you make more than RM34,000 annually, after EPF deductions. If you don’t then, like me, you’re fortunately (or unfortunately, if you really think about it) off the hook for now.

Remember, all income is taxable.

So yes, that side gig money you received for a photo shoot, or emceeing, or running a quiz on the side? All of that is taxable income. If you earn money in the country, it is taxable. So all in, as an individual, if you make more than RM34000 after EPF, you’ve got to declare. Businesses need to file irrespectively.

If you, like some of the people I know, are thinking that the government can’t possibly find out about the extra two hundred bucks you made on the side, I’ll just say this: The penalty for evading tax can be severe, so why take the risk?

Doing your taxes for the first time is daunting. If you happen to be employed in a company that pays income tax for you directly, then great! All you have to do is file for your tax reliefs. If you're self-employed or a freelancer, then it's a little harder- but at the end of the day, the important thing is that it's not the end of the world if you make a mistake.

When in doubt, go to your closest LHDN office and ask them for help. Don’t be afraid or intimidated by the idea of going to ‘the tax man’; they’re there to help you.

Especially if it leads to you paying your taxes, because, well, they want your money and it saves them the hassle of possibly coming after you later.

To get a better understanding of chargeable income, listen to Dr. Veerinderjeet Singh, experienced tax consultant and academic, as he explains that here.

Now, for an existential question:

Why do we even pay taxes? Why should I be giving the government a piece of my salary?

The answer to that is in essence, we pay taxes because we live in this country and it’s our civic duty to help fund the government and its operations. However for a better explanation, check out the latest episode of Rumit, linked below this page, where Dr Veerinder does a much better job of breaking it down.

However, even with that in mind, why are some of us resistant to paying taxes? Well, why don’t you let us know on Twitter @bfmradio, using the hashtag #RumitLah.

So now that we’re done with the existentialism, let’s take a look forward. If you were less than efficient with your taxes this time around, nevermind, it’s done. Just learn from it and look forward to next year.

Here are some simple, quick and easy things to do that could help you for next year’s tax season.

Look through the current reliefs and take note of the ones that apply to you, or the ones you’d like to use next year. Keep in mind these could change at the next budget, but we’ll deal with that later. For now, just get some perspective.

Pro Tip:

Create simple folder separators with A4 paper and file documentation by category (type of relief) and then date, it will be easier to locate later.

As the year goes on, keep your receipts and documentation for the reliefs you’d like to use. Buy a book, keep the receipt.

Pro Tip:

I’d highly encourage photocopying receipts, because some receipts fade and you’ll need to keep these documents for up to 7 years. Plus photocopying them will make it easier to file. That said, keep the original, just staple it to the photocopy.

Follow Ringgit and Sense on the BFM app, Spotify or your usual podcast app, and keep up to date with all the latest tips and advice on taxes and personal finance.

On that note, if you’d like more tips and advice on how to better plan your finances and maybe save a little more, legally of course, tune in to Ringgit and Sense on Thursdays at 9:30pm.

check out RUMIT’s full video on Income Tax!

Dr. Veerinderjeet Singh, Chairman of Axcelasia Inc, shares what it actually means to pay tax and how do it RIGHT.

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