Tag Archives: Income tax

Malaysia Extends SSPN Tax Relief Until 2024!

Malaysia Prime Minister Anwar Ibrahim just announced the extension of the SSPN tax relief until 2024! Here is what you need to know!

Malaysia Extends SSPN Tax Relief Until 2024!

On Wednesday, 29 March 2023, Malaysia Prime Minister Anwar Ibrahim announced the extension of the SSPN tax relief until 2024!

The Prime Minister said that the decision was made after many quarters asked the government to consider the tax relief that was not included in the revised 2023 budget.

The SSPN tax break is expected to cost the government RM250 million (US$56.8 million) in tax revenue. The tax relief is limited to the first RM8,000, after being increased from RM6,000 in the 2019 budget.

I have agreed to extend this tax exemption until 2024 that will benefit 400,000 taxpayers and cost the government RM250 million.

Earlier : SSPN Tax Relief Missing From Malaysia 2023 Budget!

SSPN (Skim Simpanan Pendidikan Nasional) – the National Education Savings Scheme, is a government-backed savings scheme designed to help parents save and invest those savings for their children’s higher education.

In past years, parents in Malaysia who put away money into SSPN for their children’s higher education enjoyed tax relief on the first RM8,000 contributed to the fund for the year.

The re-tabling of Budget 2023 for Malaysia noticeably did not include an extension of the SSPN tax relief. The Finance Bill 2023, which the government is proposing to amend the Income Tax Act 1967 with, includes this amendment:

Subparagraph 4(a)(iv) seeks to delete paragraph 46(1)(k) of Act 53 as the amount deposited by an individual for his child into the Skim Simpanan Pendidikan Nasional shall no longer be allowed as a deduction under Act 53. This amendment has effect for the year of assessment 2023 and subsequent years of assessment.

As a result, SSPN earlier posted a notice on its website saying that it is seeking clarification from the government on the tax relief.

The announcement by the Prime Minister that the SSPN tax relief would be reinstated will definitely be a relief to parents who have had to put up with high inflation.

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Will Section 106A Let LHDN Access Your Bank Accounts?

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Will the Section 106A amendment let LHDN access your bank accounts, without consent or knowledge?

Let’s take a look at the controversial amendment, and find out what FACTS really are!

Section 106A : Does It Let LHDN Access Your Bank Accounts?

Section 106A was just added to the Income Tax Act 1967, with the passing of the Finance Bill 2021 on 15 December 2021.

This section empowers the Inland Revenue Board (LHDN or HASiL) to access bank account information for the purpose of making garnishee order applications.

The director-general may, by notice under his hand, require any financial institution to furnish, within a specified time in the notice, the bank account information of that person, if any, or the purpose of making an application to court for a garnishee order

A garnishee order is used by creditors to collect debts from debtors by “garnishing” their bank accounts, and is nothing new.

However, much was made about Subsection (2) which states that financial institutions ordered to furnish the bank account information will not be allowed to disclose to anyone that such a request has been made.

So what’s really going on?

Section 106A Lets LHDN Access Bank Accounts For A LIMITED Purpose…

Many people have been sharing articles on Section 106A, claiming that it will allow LHDN to collect information on how much money they really have, in order to collect additional taxes.

Some even suggested (jokingly or otherwise) that people should withdraw their cash to keep at home, to avoid LHDN “garnishing” their hard-earned money.

The truth is – Section 106A only lets LHDN access bank account information for a specific and LIMITED purpose.

Let me summarise the key points :

LHDN can only ask for your bank account information for the explicit purpose of making a garnishee order application.
Before such a garnishee proceeding can begin, you would have already undergone a civil proceeding, which ended with a judgement against yourself.
Hence, the requirement that the Director-General must have a “notice under his hand”, before LHDN can proceed with the garnishee order application.
Before LHDN can make a garnishee order application, it must know which bank accounts you have. This is where they use Section 106A to make that request to the bank.
Only once LHDN has obtained your bank account information, can it make an application to the court for a garnishee order, to recover the tax you owe.
Subsection (2) prohibits financial institutions from informing you about such potential garnishee proceedings, to prevent you from moving your money out of those bank accounts.

Section 106A does NOT allow LHDN to request for bank account information for other purposes, whether it is to determine how rich you are, or for tax audit purposes.

Section 106A is also limited to banks, including Islamic banks and development financial institutions. It does not extend to investment fund accounts, so it wouldn’t really help LHDN in looking for people evading taxes.

Section 106A Access To Bank Accounts : Official LHDN Statement

On 18 December 2021, LHDN issued a press statement clarifying its access to your bank account. It is in Bahasa Malaysia, so here is my English translation :

ACCESS TO TAXPAYER BANK ACCOUNT HAS LIMITS

Inland Revenue Board (HASiL) refers to several news reports about HASiL’s power to access taxpayer bank accounts without first obtaining the account holder’s consent.

HASiL would like to clarify that the new S106A amendment of the Income Tax Act (ACP) 1967 that was approved in the Finance Bill 2021 on 15 December 2021 has granted HASiL the right to obtain taxpayer bank account information only for cases that involve garnishee orders in any court that has decided to allow the garnishee proceeding.

Garnishee proceeding is a process to enforce monetary judgements by seizing or freezing debts that must be repaid to any party, in this case HASiL, if there are tax arrears that have not be paid by the taxpayer.

This new amendment will help HASiL administer the country’s direct tax system more effectiveness by minimising tax leakage by taxpayer’s failure to pay their existing tax arrears, while increasing the rate of voluntary tax compliance.

Nevertheless, the power under this new amendment does not give HASiL absolute power to access taxpayer bank accounts frivolously. It must undergo a specific judicial process, and is limited to accesses that have already undergone civil proceedings earlier.

Taxpayers who are willing to handle their tax obligations in an orderly manner do not need to worry about this S106A ACP 1967 amendment as it does not apply to them.

In conclusion, the new S106A ACP 1967 amendment only gives HASiL the power to obtain taxpayer bank account information after garnishee proceedings are permitted by the court. HASiL once again stress that taxpayer bank account information that do not involve garnishee action cannot be accessed by HASiL through this amendment.

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Dr. Adrian Wong has been writing about tech and science since 1997, even publishing a book with Prentice Hall called Breaking Through The BIOS Barrier (ISBN 978-0131455368) while in medical school.

He continues to devote countless hours every day writing about tech, medicine and science, in his pursuit of facts in a post-truth world.

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US Tax : How Much YouTube Income Will You Lose?

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YouTube will soon withhold up to 30% of income from non-US creators as tax for the United States!

Find out whether you will be double-taxed, and how much income non-US YouTube creators will lose!

YouTube To Tax Non-US Creator Income By Up To 30%!

On 10 March 2021, YouTube creators started getting this email :

We’re reaching out because Google will be required to deduct U.S. taxes from payments to creators outside of the U.S. later this year (as early as June 2021). Over the next few weeks, we’ll be asking you to submit your tax info in AdSense to determine the correct amount of taxes to deduct, if any apply. If your tax info isn’t provided by May 31, 2021, Google may be required to deduct up to 24% of your total earnings worldwide.

Yes, the alert says that up to 24% of your total worldwide earnings may be deducted, but the actual deduction could be as high as 30%.

It all depends on which bracket you fall into :

Those Who Submit US Tax Info

Foreign creators : 24% to 30% withholding tax, unless your country has a tax treaty with the US.
US creators : 0% withholding tax, because they have to pay taxes on their total income

Those Who Do NOT Submit US Tax Info

Business account (Foreign) : 30% withholding tax of US earnings
Business account (US Resident) : 24% of total worldwide earnings
Individual account (Foreign + US) : 24% of total worldwide earnings

This change only impacts the earnings of non-US YouTube creators, since US creators are already paying taxes on their income.

Why Are Non-US Residents Getting Taxed On US Income?

You may not be a US citizen or resident, but the US government requires income generated in the US to be taxed.

Since they cannot tax your income like they would an actual US resident, they require companies to withhold a portion of your US income as tax.

The general idea is that as long as you make money in the US, or from US residents, you must pay tax on that income.

Does This Mean Non-US Residents Will Be Double-Taxed?

Check the latest IRS list of countries with income tax treaties with the United States.

Unless your country has a Double Taxation Agreement (DTA) with the United States, yes, you will end up getting double taxed – by the US government and your own government.

Since YouTube will withhold part of your income, the double taxation impact is somewhat lessened because you will only pay your country’s income tax on what’s left over.

That is scant consolation because you are still getting double-taxed, and will end up with considerably less income.

How Much Tax Will Non-US YouTube Creators Have To Pay?

How much income non-US YouTube creators will lose depend on four factors :

whether they file their US tax info,
whether their country has a double tax treaty with the US,
whether they are an individual or a company, and
how much income they get from US viewers

YouTube shared a hypothetical example, but it is overly optimistic – assuming only 10% US traffic.

So we came up with our own scenarios of 25%, 50%, 75% and 100% US traffic. For simplicity, we eliminated ”discounts” eligible to countries with US tax treaties.

This table we created shows the maximum US withholding tax you have to pay, with a monthly YouTube income of US$1,000.

Tax Deducted From $1000 Income	% of US Traffic
Tax Deducted From $1000 Income	25%	50%	75%	100%
Did not submit tax info (24% worldwide)	$240	$240	$240	$240
Individual with Tax Info (24% US income)	$60	$120	$180	$240
Business with Tax Info (30% US income)	$75	$150	$225	$300

And this table shows how much income you will receive, after deducting the US tax, from a YouTube income of US$1,000.

Income Per $1,000 After Tax Deduction	% of US Traffic
Income Per $1,000 After Tax Deduction	25%	50%	75%	100%
Did not submit tax info (24% worldwide)	$760	$760	$760	$760
Individual with Tax Info (24% US income)	$940	$880	$820	$760
Business with Tax Info (30% US income)	$925	$850	$775	$700

There is no doubt that this is a massive tax that is going to cut deeply into the income of every non-US YouTube channel, because it is a non-progressive flat tax, with no deductions.

What Can You Do About This US Tax By YouTube?

This withholding tax is going to irk a lot of YouTubers who have never stepped foot in the US, or received any benefit from the US government.

More so for non-US creators in countries without a double tax treaty with the US, because they would get double-taxed.

YouTube creators may be incentivised to target non-US viewers by producing more localised content, but ultimately, US traffic still pays the best. So we don’t see shifting focus away from US viewers as a good strategy.

Unfortunately, there is nothing anyone can do but bite down and bear the pain, on top of what has already been a terrible 2020 and 2021.

But if you are ever in the US and get some shit about being a foreigner, I suppose you can send them this smackdown, “I have every right to be here! I pay taxes too!“.

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Personal Income Tax Guide in Malaysia 2016

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KUALA LUMPUR, 30 March 2016 – Preparing and filing your income tax in Malaysia can be a challenging and anxiety-inducing experience every year for most people. Most Malaysians are unaware of the differences between tax exemptions, tax reliefs, tax rebates and tax deductibles.

With iMoney’s ‘The Definitive Guide To Personal Income Tax in Malaysia For 2016’, you can be worry-free this income tax season as you go through their simple and easy-to-understand guide. The comprehensive guide which consists of 11 chapters will help you to understand how income tax works from what all the terms mean to how exactly you can file.

Lee Ching Wei, CEO and Co-Founder of iMoney said: “At iMoney, we understand the complexity of navigating through the income tax fling process, especially if you are a first-timer. We have put together a personal income tax guide filled with flowcharts and infographics to simplify concepts and help you file your taxes like a pro.”

Equipped with the correct knowledge, filing your taxes will no longer be a daunting task and most importantly you will be able to maximise on the tax reliefs available and get the tax savings you are eligible for.

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