Tuesday, February 24, 2009

Is the BN government taking a bigger chunk of your monthly pay?

Received from an accountant, which I am publishing verbatim as it sounds credible. Any other readers have similar experiences?

“The Inland Revenue Board (IRB) has issued a revised STD (Schedular Tax Deduction) table for the year 2009 and requested all the employers to follow the new table. The deductions under the new table are about 15 to 20% higher than the old table even though there is a tax reduction for 2009 (to confirm).

A lady from the IRB customer hotline explained that the previous table has assumed a 20% "discount" based on tax relief that tax payers may have, e.g. parents' medical fee, book and computer purchases, life insurance/EPF, etc. The new table is based on your gross pay less EPF (not sure whether they are using 9% or 11%).

However, there is an option for the EMPLOYEE to calculate his or her own monthly payment based on the tax relief applicable. For instance, if you have paid for your parents' medical fee of RM500 in Jan, you can fill in a form called Borang TP1 with your deduction of RM500 and submit to your employer, so that you will get relevant deduction and a smaller STD when you next get your pay.

You can also calculate your monthly tax deduction easily with Kalkulator PCB given in the IRB website. I did mine and deduction according to the new STD table is 18.5% higher than what it should be. Another call to the hotline has confirmed that the table would be higher as it assumed "average" (whatever it means) tax relief/allowances. I followed on to ask if it is the employees' right to ask the employer to use the correct deduction, the answer (after checking with her colleague) was no. Employers have the rights to follow the new table figures and there is nothing the IRB can help if they refuse to use your calculation.

I have heard pleasant and unpleasant stories about IRB refunds. My own experience was that IRB has given me 2 cheques for refund over the past 3 years and I have no idea how they come out with the amounts. I wrote to them as well as to Pemudah and I still haven't received any reply for more than 2 years! (Chi-Chang’s experience: I have yet to receive a refund cheque from the IRB for the past few years)

Although self declaration of tax for individual has already been in place for a few years now, I doubt many tax payers are aware of this change. If all employers were to disallow employees' calculation, effectively all hardworking Malaysia tax payers will be having a pay cut now without knowing when they will get their rightful tax refund from IRB."

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