Your year-end to-do list to be ready for the 2021 individual tax filing next year

DEC 20 — The end of the year 2021 is in sight. You are looking forward to things winding down with office work, and you have high hopes for the coming year that the Covid-19 pandemic will end. Bring on 2022, right? Not so fast! If you want to get ready for the 2021 individual tax filing, there are a few items you may wish to add to your to-do list this December. Completing these tasks will ensure that you will be filing your income tax return smoothly and stress-free next year.

Do you know what income is taxable?

Currently, income tax is imposed on individuals on income accruing in or derived from Malaysia such as business income, salaries, rental, etc. Income derived from sources outside Malaysia and received in Malaysia is currently exempt from tax.

It was announced in the Malaysian 2022 Budget on 29 October 2021 by the Minister of Finance that income derived from sources outside Malaysia and received in Malaysia by residents will no longer be exempt from tax and will be taxed at the following rates:-

  1. 3 per cent of gross income remitted from 1 January 2022 to 30 June 2022;
  2. and prevailing tax rate on such income remitted from 1 July 2022 onwards.

This proposal to tax foreign source income (FSI) would only affect Malaysian tax residents. FSI received by non-residents would continue to be exempted.

Although any foreign tax suffered on the income remitted can be claimed as a foreign tax credit, the impact of this proposal could have a significant impact on individuals. Common examples are Malaysian tax resident individuals living in Johor Bahru and working in Singapore who remit their employment income to Malaysia, and Malaysian tax resident individuals owning properties outside Malaysia who remit their rental income to Malaysia. These income remitted from overseas will be subject to tax with effect from 1 January 2022.

Hence, it is advisable to consider remitting FSI to Malaysia by 31 December 2021 before this key change to the tax system takes effect.

Have you registered an income tax reference number?

If you do not have an income tax reference number, registration can be made by submitting the application form CP600 together with a copy of identity card / passport at any Inland Revenue Board (IRB) branch or online via e-Daftar. The Form CP600 can be obtained from the IRB branch or downloaded from the IRB website at

After an income tax reference number has been registered, your income tax return can be filed manually  or online via e-Filing. For first time login e-Filing, you can apply for a Digital Certificate PIN number at any IRB branch or online at the IRB website together with a copy of identity card / passport and Form CP55D.

One welcome measure introduced in the 2022 Budget is the implementation of the Tax Identification Number (TIN).

A TIN will be issued to any person who is:-

  1. assessable and chargeable to tax;
  2. required under the Income Tax Act 1967 to furnish an income tax return;
  3. or a citizen and aged 18 years old and above.

Should you have an income tax reference number on or before 1 January 2022, you are deemed to be assigned a TIN and the income tax reference number is your TIN. The TIN was announced two years ago but this time, it is expected to be implemented beginning 2022.

Have you prepared the documents required to file your income tax return?

While spending quality time with family and friends during the holiday season, consider tidying up the documents you need to prepare your income tax return. Gather any receipts, income statements, and other related documents that have piled up in your desk drawers during the year. When it is time to file your income tax return next year, all the information you need will be readily available.

Whilst hard copies are unnecessary if the documents are available online, such records should be retained in an electronically readable form, readily accessible and convertible into writing. This being said, many of you may have kept documents much longer than you need to. As records are to be retained for a period of seven years, discard documents that you do not actually need! Doing this will allow you to start the new year with as little clutter as possible.

Do you know what tax reliefs you can claim?

Currently, individuals can claim a tax relief of up to RM1,000 for vaccination expenses incurred (as part of the tax relief of RM8,000 on medical expenses), RM8,000 for net deposits in Skim Simpanan Pendidikan Nasional (up to year of assessment 2022) and the lifestyle relief of up to RM2,500.

Two key measures announced in the 2022 Budget are the special tax relief of up to RM2,500 for purchase of personal computer, smartphone or tablet made between 1 January 2021 to 31 December 2022 and the tax relief of up to RM1,000 for complete medical examination to cover COVID-19 detection test including the purchase of Covid-19 self-detection test kit with effect from year of assessment 2021.

You can take advantage of the personal reliefs to mitigate taxes, thus alleviating the financial hardship arising from the pandemic. There are also other tax reliefs available at the IRB website.

So, don’t wait until the last day of filing your returns. The best time to start preparing your taxes is right now. If you just take a little time and energy to organise yourself early, you will be set and eliminate the stress and worry. Remember, if you have questions and need help, it is best to consult a tax professional to avoid making mistakes in the tax returns and the consequential penalties – it will be worth it!


Source: Malay Mail

About the author:

Christy Tan
Managing Consultant of Tricor Taxand Sdn Bhd

For more information, please contact:

Celine See
Tricor Services (Malaysia) Sdn Bhd
Director, Business Development

Tel: +6 03 2783 9191
Email: [email protected]

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