Taxpayer Definition

Taxpayer Definition:

A taxpayer is a person who earns income from Malaysia. The person will be charged to pay tax and is fully responsible to pay tax to the government of Malaysia.

Responsibilities of Individual taxpayer

The individual taxpayers are responsible to keep their records and documents accordingly, calculate the tax accurately and submit the return form on time. (Mahmood, 2012)

Section 77(1) and Section 77A(1) of the Income Tax Act 1967 it is stated that a prescribed form needs to be furnished to the Director General of Inland Revenue Board of Malaysia by every person specifying

1) The chargeable income and the tax payable (if any) for a year of assessment; and

2) Such particulars as may require by the Director General.

The prescribed return forms are such as BE (resident without business income), B (resident with business income), ME (non-resident individual without business income), M (non-resident individual with business income) and P (partnership). These forms are made public to the individual taxpayers in January of the following year. The deadline for the submission of forms for individual with business income is 30 April in the year following the year of assessment and the individual with business income is to be submitted by 30 June in the year following the year of assessment. (Mahmood, 2012)

Giving notice of chargeability

Section 77(3) of the Income Tax Act 1967 states that an individual arriving in Malaysia during a particular year of assessment

(a) is chargeable to tax for that particular year and should give notice to the Director General within two months of arrival.

Keeping of records and giving of receipts

Section 82(1) of the Income Tax Act 1967 states that :

Every person carrying on a business:

(a) Shall keep sufficient records for 7 years from the end of the related year

(b) if the sales of goods of the business is more than one hundred and fifty thousand ringgit or receives one hundred thousand ringgit from the performance of the service in the business, shall issue a serial numbered receipt for each amount received in the year of assessment for products sold or services performed.

Section 82(9) of Income Act 1967 states that records includes:

(a) Transactions recording receipts and payments of income or expenses.

(b) Invoices, receipts, vouchers and other related evidence needed to verify the transactions in the business

(c) Any other records that has been stated by the Director General and the Inland Revenue Board of Malaysia.

Notice of change of address

Section 89 of the Income Tax Act 1967 states that:

Every person who is chargeable to tax changes his address in Malaysia (previously provided to the Director General or Inland Revenue Board of Malaysia) to another address in Malaysia should inform the Director General within three months from the date of change.

Keeping of documents

Section 82A of the Income Tax Act 1967 states that:

Every taxpayer who is required to furnish a return of income for the year of assessment:

(1) Must keep require documents for 7 years from the end of that year of assessment.

Section 82A(6) of Income Act 1967 states that documents includes:

(a) Statement of income and expenses

(b) Invoices, vouchers and receipts and such other related documents that is needed to verify the particulars in a return.

The types of documents that are compulsory to be kept by the individual taxpayers are:

a) EA/AC form

b) Original dividend vouchers

c) Insurance premium receipts

d) Books purchase receipts

e) Medical receipts

f) Donation receipts

g) Zakat receipts

h) Children's birth certificate

i) Marriage certificate

j) Other supporting documents

k) Working sheets (if any)

Responsibilities of Corporate Taxpayers

The responsibility of calculating the tax owned by an individual has been changed from the Inland Revenue Board of Malaysia to the taxpayers. They are supposed to calculate their tax accurately based on the tax act and guidance which has been issued by the Inland Revenue Board of Malaysia.

Furthermore, corporate taxpayers are needed to fulfill a few tax requirements as is has been mentioned in the Income Tax Act 1967. The requirements mention includes filing tax returns forms, keeping records and documentations, estimating tax accurately and providing the help required during auditing.

Filing of Tax Return Forms

Taxpayers have the responsibility to fill up their tax return forms on time and calculating their related tax liability. Section 77A of the Income Tax Act 1967 needs corporate taxpayers to provide notice of chargeability of tax by filing up their annual tax return forms and to be submitted on time.

Overall, corporate taxpayers are needed to fill up their tax return form, laying out the chargeable income and the amount of tax that needs to be paid, for the year assessment within seven month following the end of the accounting period. Taxpayers are also needed to ensure to calculate their tax returns accurately. Penalties will be charged if fail to do so as is has been stated under Section 113 and Section 114 of the Income Tax Act 1967.

Keeping Records and Documentation

Despite the fact, approving documents may not be needed when submitting income tax return forms, taxpayers are needed to keep the documents required for seven seven years. This has been stated under Section 82 and Section 82A of Income Tax Act 1967. For the reason, records of documentation includes transaction of accounting receipts and payments, invoices, vouchers and other important documents that proves the accounting transactions [(Section 82 (9)]. After all, these related documents are only needed to be given if only it has been asked by the tax auditors.

Estimating Income Tax payable

Corporate taxpayers are needed to calculate their own income tax for that particular year of assessment. They are needed to let the income tax authority of the evaluation and are supposed to pay the estimated tax via monthly deductions. All companies is needed to fill up an estimate of income tax payable for the year of assessment on the prescribed form not after than 30 days before the starting of the basis period [Section 107C (2)].

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