FOR illustration purpose, appended below are the computations showing the tax position of a taxpayer under two scenarios, i.e, under separate and joint assessment:
1. For business and rental income, these income should be reported net of expenses wholly and exclusively incurred in the production of the said income.
Lee Voon Siong 2. If entertainment expenses are incurred with the company’s business, a claim for deduction can be made.
However, details such as persons entertained, purpose, matters discussed and the receipts must be available to support the claim when requested.
The amount deductible is restricted to the amount of entertainment allowance received.
3. Taxable dividend is normally received by taxpayer net of tax but for tax reporting, gross dividend must be declared.
The original dividend voucher must be retained to support the tax credit claim. If a loan is used to purchase the shares, the loan interest can be deducted against the gross dividend income.
4. Only donations to approved institutions are allowable. The approval is normally indicated on the donation receipts, which must be kept for verification.
5. For EPF and life insurance claim, a husband and wife can claim up to a maximum of RM6,000 each if they are separately assessed.
Under a joint assessment, the maximum allowed is RM6,000.
6. If a husband and wife are separately assessed, they are allowed to claim up to a maximum of RM5,000 each on medical expenses incurred on their parents.
The maximum amount claimable is restricted to RM5,000 under a joint assessment.
7. A tax rebate is given if the taxpayer’s chargeable income does not exceed RM35,000.
If the tax rebate exceeds the actual tax payable, the amount of tax rebate deductible is restricted to the actual tax charged.
8. From the above tax computations, it can be noted that the total tax payable is substantially lower under a separate assessment.
However, depending on their circumstances, married couples are advised to do their computations before deciding whether it is more beneficial to be separately or jointly assessed.
In view of the deadline April 30 for non-business cases and June 30 for business cases, taxpayers are advised to submit their tax returns early to avoid the last minute rush.
Penalties will be imposed for late submission of tax returns.
Lee Voon Siong is executive director of RKT Tax Consultants Sdn Bhd, an independent member firm of RSM International, an affiliation of independent consulting and accounting firms with the 7th largest worldwide network.
He can be contacted at
leevs@rsmi.com.my.
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