SEREMBAN: Some taxpayers who made maximum exemption claims on their assessment forms will get letters from the Inland Revenue Board (IRB).

The IRB wants to make sure the exemption claims are genuine.

IRB chief executive Datuk Hasmah Abdullah said those who made maximum claims, such as for books or medical bills, would have to justify them by providing original receipts or other proof.

The IRB launched the self-assessment system (SAS) for individual taxpayers this year. Under the SAS, taxpayers need not submit receipts or other supporting documents when filing their returns.

Hasmah said if the taxpayer was unable to provide proof, the IRB would reassess his remuneration for the previous year. The taxpayer would then be asked to pay a higher tax.

“Actually, there is a penalty for those who are unable to support their claim under the SAS. But since this is the first year, we will not impose any fine.

“The individual may have made a mistake or may be ignorant of the law,” she said after opening the IRB’s 32nd annual games in Paroi near here.

She added that first time offenders were required to pay 15% more in taxes.

Repeat offenders, including businesses, could be fined a maximum of 45% of their income for the year.

Asked if the IRB had uncovered any fraud by companies which began declaring tax under the SAS since 2001, Hasmah said the board was investigating several cases.

On a separate matter, Hasmah said taxpayers would be able to check their account with the IRB on-line soon, hopefully by next year.

On refunds, she said 20% of those who had overpaid would receive their money back before the end of the year.

“We have settled 80% of all claims for refunds. These 20% involve cases where we have asked them to support their claims with evidence,” she said, adding that some of the claims were baseless.

Earlier, Deputy Finance Minister Datuk Dr Awang Adek Hussin commended the IRB for collecting RM60.9 billion in taxes until Oct 31, compared to the RM55.27bil for the corresponding period last year.

By Kang Beng Hoe The first article dealt broadly with how the new single-tier system will work with regard to dividends and the effect the change will have on a broad spectrum of corporate and individual shareholders.

As there are a number of issues arising from the proposed introduction of this new system (other than the lack of a tax refund for individuals who are not taxable or taxed at a low marginal personal tax rate and thus entitled to claim the tax credit attached to taxable dividends), this article elaborates on some specific aspects of the system. (more…)

Deloitte Touche Tohmatsu Tax Services Sdn Bhd managing director Ronnie Lim defines the new singletier corporate tax system (STS) and compares it with the former two-tier imputation system (TTS)

Ronnie Lim

THE new corporate tax system is called the STS because profits earned by companies are only taxed once, i.e. on the company that gained those profits. When that company declares dividends, the profits thus distributed are no longer taxable on the shareholders of the company.

In contrast, under a TTS, companies pay normal corporate tax on their profits. Dividends distributed by those companies are not tax exempt and shareholders are again taxable thereon whether at their marginal rates or some reduced rate in respect of dividends. This creates a TTS because profits earned by companies are taxed twice – once at the company level and later in the hands of the shareholder who receives a distribution of profits by way of a dividend. A TTS will discourage payment of dividends, especially in the case of family-controlled companies. (more…)

StarSpecial: The Economic Report 2008

KUALA LUMPUR: Prime Minister Datuk Seri Abdullah Ahmad Badawi tabled the RM176.9bil Budget 2008, themed “Together Building The Nation and Sharing Prosperity”, in Parliament on Friday.

Abdullah, who is also Finance Minister, said the budget is focussed on three main strategies: Enhancing the nation’s competitiveness, strengthening human capital and ensuring the well-being of all Malaysians.

The amount allocated for Budget 2008 is 10.9% higher compared with 2007. (more…)

By DANNY YAP KUALA LUMPUR: Malaysia needs to reduce income tax if the government wants to reintroduce the goods and services tax (GST), according to Malaysian Institute of Certified Public Accountants (MICPA) president Datuk Nordin Baharuddin.

He said if GST was implemented income tax should be reduced because GST would burden consumers,” he told reporters at the MICPA Bursa Malaysia business forum on Monday.

Asked if Malaysia was prepared for GST, Nordin said: “MICPA has been preparing for it for sometime but the timing of the GST implementation was not “suitable” for the government.”

GST was introduced in Budget 2005 as an indirect tax on consumer for goods and services.

Commonly known as value-added tax, GST was supposed to come on stream in January 2007, but the government postponed the implementation of GST to a date to be announced.

On the possibility of GST implementation in Budget 2008, Nordin said: “We have no confirmation that it would be implemented soon.”

However, Nordin said MICPA hoped for a reduction in the tax rate for individuals and companies in Budget 2008.

“There was talks of a reduction in tax for individuals but we don’t know by how much,” he said.

On his expectations in Budget 2008, Nordin said the new budget should provide incentives for the agriculture industry, particularly in areas like biotechnology and the manufacturing and services industries.

On the recent of listed companies that were suspected of fraud, he said it was important for corporations to keep good record of transactions.

by WONG CHUN WAI

PUTRAJAYA: A home for every Malaysian – that will be the main agenda for Budget 2008 that will be unveiled by Prime Minister Datuk Seri Abdullah Ahmad Badawi at the Dewan Rakyat today.

A home-financing scheme is expected to be announced to allow wider house ownership.

It is regarded as the Government’s commitment to ease the housing burden of Malaysians, especially for the lower and middle-income groups.

Treasury officials have remained tight-lipped over the details of the initiative, regarded as the biggest Merdeka gift for the people.

The home-financing scheme could possibly be made through monthly deductions through the Employees Provident Fund.

In a further boost for house buyers, Abdullah, who is also the Finance Minister, is likely to announce further reductions for stamp duties, which made up a substantial amount of expenses for buyers.

Sources said the Government was aware that owning a house was a necessity for the rakyat and it should not be a burden, as paying housing loan instalments made up the largest portion of a person’s monthly budget.

A source described the mechanism as “interesting and broad based” which would make it easier for “those wanting to buy their first house or already owning one.”

There is further good news – Abdullah is also expected to announce details of how the self-employed who may not have EPF contributions or those with inadequate financial records such as salary slips to prove their repayment ability can get housing loans.

Officials have downplayed suggestions that the Budget would be perceived as a general election budget, saying the Government had always ensured that every Budget would help the people.

The broad framework of the Budget essentially covers three areas:

CIMB Research expects pro-business and investment growth budget

BUDGET 2008’s theme is Enhancing Competitiveness and Sharing Economic Prosperity – a continuation of previous policies aimed at sharpening the nation’s competitive edge while creating a favourable investment climate for companies to realise their potential and venture into new growth areas and innovate. –>

By DAVID TAN

LANGKAWI: Budget 2008 is expected to contain a host of “grassroots goodies” to bolster disposable income and address today’s higher cost of living.

Aseambankers chief economist Suhaimi llias said: “Budget 2007 cut corporate tax to 28%. This round we expect a cut in personal income tax to increase disposable income and spending. (more…)

By NICHOLAS CRIST

Whatever the contents, Budget 2008 will be delivered against the backdrop of the golden jubilee of independence. We should therefore be looking forward to a budget that complements a nation that is well into adulthood (more…)

By SEAH SIEW YUN To keep pace with the increasing demands and complexities in the globalisation arena, business laws are being reviewed and tax systems reformed.

FROM the old way of allowing the deduction of revenue expenses while capital expenses are added to tax, investors are now looking at a more sensible, tax-friendly system. (more…)