Malaysian Maid In Hong Kong Wins RM12 Million Lottery

Citing a China Press story, The Star reported that a Malaysian maid working in Hong Kong had won more than HK$30 million (or RM12 million) in lottery money.

The middle-aged maid is employed at the mansion of casino tycoon Stanley Ho's fourth wife, Angela Leong.

According to her employer's family, the maid purchased a Mark Six lottery ticket on her birthday.

However, Angela Leong was reported saying she was unaware that any of her Malaysian workers had won the lottery.

The maid said she would continue to work as a maid at the mansion as she has for over 10 years as she did not want to part with Angela Leong's eldest daughter, Sabrina Ho Chiu-ying, whom she had cared for since she was a little girl.

Please post your comments.

Property Bubble In Malaysia ?

This pic is for illustration only

In 2008, Giovanni Cozzi (a University of London’s department of economics PhD candidate) has warned that there could be a property bubble in certain parts of Kuala Lumpur because banks had been over-lending to the sector.

Last month, the Star reported that although the local housing market has not reached an unrealistically high like in Hong Kong, Shanghai and Singapore, prices of landed houses in some popular areas in the Klang Valley, Penang and Johor have appreciated by 10% to 30% over the past 6 to 8 months. Because of this, Bank Negara is keeping a close watch on the mortgage loan market to ensure that banks do not aggressively lend in this sector which will cause a bubble.

Under Budget 2010, the RPGT (Real Property Gains Tax) was reintroduced in January this year (albeit modestly) presumably to control property speculation. All property sold within the first 5 years of purchase will now attract a 5% tax.

Although Malaysian property prices are almost hitting the roof, housing developers, bankers and "real estate experts" are still telling us that there is no fear of the property bubble here. They say that the Malaysian housing market is sustainable and that the current buying trend is backed by sound economic fundamentals and genuine purchasers.

In an article in iProperty, Donald Han, the Managing Director of Cushman & Wakefield Singapore said that a litmus test to see if a market is indeed in a bubble is whether the rental can support the price one is paying for the mortgage of the property.

What do you think ? is a property bubble forming in Malaysia ?

Please post your comments.

SME Microfinance Institutions

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For Malaysian entrepreneurs, apart from the conventional loans by banks, the above is the list of Malaysia's financial institutions providing microfinancing to Small and Medium Size Enterprises (SMEs).

For further information visit SME Info.

Please post your comments.

Tokay Geckos For Sale

The current local market price for a Tokay gecko above 300 grams is at least RM25,000. What price it fetches abroad is anybody's guess.

A kampung folk who has a marketable sized Tokay gecko for sale will not have to wait long for serious buyers to make him an offer.

In light of its high market value, catching and trading in Tokay geckos have become a lucrative side business especially for villagers in the northern West Malaysian states and in East Malaysia.

Residents in northern towns of Peninsular Malaysia such as Pendang in Kedah and Balik Pulau in Penang have seen the gecko business grow into a cottage industry after news reports revealed that overseas buyers are willing to pay up to RM1 million for each reptile.

As the supply is getting scarce in Malaysia, agents have started to head towards Thailand to source for fresh supplies. Just drive into border towns such as Bukit Kayu Hitam in Kedah and you can easily sport wildlife trappers and agents advertising the Tokay gecko for sale.

While numerous gecko species are sold as pets at nominal prices, the highly prized specie in demand for its medicinal value is the Tokay gecko.

Tokay geckos are in high demand by the traditional medicine industry abroad as it is believed that the reptile’s tongue can cure AIDS. Some believe that its meat is also an aphrodisiac while its blood and bile suppresses tumors in cancer patients.

Despite the on going rumours of the medicinal cures of the gecko, Augustine Tuuga, the deputy director of Sabah Wildlife Department, was quoted in one news report saying that there is currently no scientific evidence to verify the claims.

Villagers who are involved in this business say that although the Tokay gecko is difficult to find and capture, those who manage to find this illusive reptile can expect to sell it at a lucrative price while the current gecko market is still sizzling.

As buyers are only interested in Tokay geckos weighing 300 grams and above, those possessing smaller Tokay geckos would rear the reptiles hoping to sell them once their weight exceeds 300 grams. Although Tokay geckos usually feed on insects such as crickets, cockroaches and grasshoppers, the Tokay geckos in captivity are also fed chicken liver to speed up its growth process.

The Tokay gecko (also known as the Gekko gecko) is a nocturnal arboreal gecko whose native habitat is the rain-forest trees and cliffs. The Tokay gecko is commonly found in northeast India and Bangladesh, throughout Southeast Asia and western New Guinea.

According to a news report, Rahim Ahmad, the director of the Department of Wildlife and National Parks of Peninsular Malaysia (Perhilitan) in Kedah, said that the Tokay gecko is not classified as a protected species of animals and it is thus not an offence to capture and rear the reptile.

The typical current prices for Tokay geckos are as follows:

300 grams - 399 grams = RM25,000 - RM35,000
400 grams - 499 grams = RM80,000 - RM120,000
500 grams - 599 grams = RM200,000 - RM400,000
600 grams - 799 grams = RM500,000 - RM700,000
800 grams - 999 grams = RM800,000 - RM980,000
Above 1000 grams approximately RM1 million.

At the moment there is no indication whether the Tokay gecko business will continue to grow as an industry or will fizzle out just as the Flowerhorn ornamental fish business did a few years ago. For those who remember, during the peak of the Flowerhorn craze, mature cichlids were sold for up to hundreds of thousands of Ringgit.

Despite the current demand for the Tokay gecko, the Ministry of Agriculture and Agro-Based Industry has thus far not taken any steps to assist people to formally commercialise the business.

Anyway, if anyone of you have a Tokay gecko for sale, just shoot me an email. I have genuine buyers waiting impatiently to purchase mature Tokay geckos.

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Gecko Deals

New: Join this page for the latest updates on genuine geckos buyers.

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Please post your comments.

The Real Hitch

In the film Hitch, Will Smith plays Alex 'Hitch' Hitchens, a specialist dating guru for men who makes shitloads of money coaching successful but socially inept men find love.

Evan Katz is like Alex 'Hitch' Hitchens in real life. He is a dating coach who is "a personal trainer for people who want to fall in love" reports Agence France-Presse.

According to another dating coach, Jennifer Viemont, the people who employ the services of a dating coach are generally more educated and relatively high up on the socio-economic ladder as the fees for the dating coach relatively high.

Viemont who charges US$200 (approximately RM700) for 2 phone calls and unlimited email support for one month says that although her clients are successful in their careers, they are clueless when it comes to finding a soulmate.


Katz, whose fees are much higher Viemont, says that people who employ dating coaches have focused so much on their careers that they have ignored their emotional side of life.

A dating coach will generally start out with some questions and advice either by phone or email.

While Katz encourages his clients to meet people online, Viemont recommends that her clients meet potential mates in off-line activities, such as wine-tastings or dance classes.

Dating coaches apparently have their own, professional association, datingcoach.org, founded a few years ago.

I don't know if there are any professional dating coaches in Malaysia, but there are hundreds of dating agencies which organise dates between their clients from their database.

There are also marriage agencies who arrange marriage partners for men with women from Vietnam. But I've not heard of any specilising in finding husbands for women.

I do not think there is a demand for dating coaches in Malaysia as singles in the higher salary scale would rather "purchase" their mates rather than spend money on being coached to find love. No matter how socially inept they are they can always buy friends and also romantic relationship.

Despite the hype about finding soulmates and true love. I think the key is having money. I know lots of women who won't admit this but their first priority is money. Most will say they like good looking, funny, caring, pet loving etc etc kind of men...but they always end up with bastards with money. This is instinctive, and since time immemorial women have gone for security first. And in today's world, money is security.

According to a recent study by Indiana University cognitive scientist Peter Todd, men go for beauty and women choose wealth and security - read this. Yes, they actually had to do a study to confirm this !

Another news report says that women prefer rich men because they are better in bed. "Rich men are powerful and successful and confident and charismatic. They know what they want, and they go out and get it. That translates to being fantastic in bed.” said a 27 year old female lawyer. The newspaper reported that science is showing that a rich man’s money has aphrodisiac qualities as well as purchasing power. read this.


However, despite the usual story of women looking to "marry up", today, there is a growing trend (at least in the US) that Men now are increasingly likely to marry wives with more education and income than they have, and the reverse is true for women - read this. Men are getting smarter. They now know that they can get hitch to a financially productive woman and have an easy life.

Really, when you cut all the bullshit...everything comes down to money. With money, a fei-chai becomes a leng-chai and a fei-por can become a leng-lui.

Please post your comments.

Robert Kuok's Notes On Business

I received this in an email about Malaysia's richest man, Robert Kuok.

Robert Kuok Hock Nien of the Kuok Group, aka the "Sugar King", is the riches man in Malaysia with a wealth of RM42.76 billion.

This was his speech at Kuok Group’s 60th Anniversary in April last year:

1. My brothers and I owe our upbringing completely to Mother. She was steeped in Ru-Jiao – the teachings of Confucius, Mencius, Laozi and other Chinese sages. Ru-Jiao teaches the correct behaviour for a human being on his life on earth. Mother gently, and sometimes strongly, drummed into the minds of her three boys the values of honesty, of never cheating, lying, stealing or envying other people their material wealth or physical attributes.
2. Father died on 25 December 1948 night without leaving a will. Following the Japanese surrender, he had re-registered the firm as a sole proprietorship. We went to court to get an appointment as managers, permitting us to continue to manage Tong Seng & Co. The judge said that, as there were two widows, the firm and the estate should be wound up.
3. We decide to establish Kuok Brothers Limited. In mid-January 1949, five of us met at a small roundtable in our home in Johore Bahru. Present were my MOTHER, cousin number five HOCK CHIN, cousin number twelve HOCK SENG, my brother HOCK KHEE nicknamed Philip (a.k.a. cousin number seventeen), and myself (a.k.a. cousin number twenty). We sat down and Mother said, “Nien, would you like to start?” I said, “Fine, yes I will start.” To cut the long story short, we got started, and commenced business from a little shop house in Johore Bharu on 1 April 1949.
4. As a young man, I thought there was no substitute for hard work and thinking up good, honest business plans and, without respite, pushing them along. There will always be business on earth. Be humble; be straight; don’t be crooked; don’t take advantage of people. To be a successful businessman, I think you really need to brush all your senses every morning, just as you brush your teeth. I coined the phrase “honing your senses” in business: your vision, hearing, sense of smell, touch and taste. All these senses come in very useful.
5. Mother was the captain of our ship. She saw and sensed everything, but being a wise person she didn’t interfere. Yet she was the background influence, the glue that bound the Group together. She taught my cousins and my brothers and me never to be greedy, and that in making money one could practise high morality. She stressed that whenever the firm does well it should make donations to the charities operating in our societies. She always kept us focused on the big picture in business. For example: avoid businesses that bring harm, destruction or grief to people. This includes trades like gambling, drugs, arms sales, loan-sharking and prostitution.
6. We started as little fish swimming in a bathtub. From there we went to a lake and now we are in the open seas. Today our businesses cover many industries and our operations are worldwide but this would not have been possible without the vision of the founding members, the dedicated contributions and loyalty of our colleagues and employees, and very importantly the strong moral principles espoused by my mother.
7. When I hire staff I look for honest, hardworking, intelligent people. When I look candidates in the eye, they must appear very honest to me. I do not look for MBAs or exceptional students. You may hire a brilliant man, summa cum laude, first-class honours, but if his mind is not a fair one or if he has a warped attitude in life, does brilliance really matter?
8. Among the first employees were Lau Teo Chin (Ee Wor), Kwok Chin Luang (Ee Luang), Othman Samad (Kadir) and an Indian accountant called Joachim who was a devout Roman Catholic and who travelled in every day from Singapore where he lived.
9. I would like on this special occasion to pay tribute to them and in particular to those who were with us in the early days; many of whom are no longer here. I have already mentioned Lau Teo Chin (Ee Wor) and Kwok Chin Luang (Ee Luang) and Othman Samad (Kadir), there are others like Lean Chye Huat, who is not here today due to failing eyesight, and Yusuf Sharif who passed away in his home country India about one and a half years ago and the late Lee Siew Wah, and others who all gave solid and unstinting support and devotion to the Company. It saddens me that in those early difficult years these pioneers did not enjoy significant and substantial rewards but such is the order of things and a most unfortunate aspect of capitalism. However through our Group and employee Foundations, today we are able to help their descendants whenever there is a need to..
10. I have learnt that the success of a company must depend on the unity of all its employees. We are all in the same boat rowing against the current and tide and every able person must pull the oars to move the boat forward. Also, we must relentlessly endeavour to maintain and practise the values of integrity and honesty, and eschew and reject greed and arrogance.
11. A few words of caution to all businessmen and women. I recall the Chinese saying: shibai nai chenggong zhi mu (failure is the mother of success). But in the last thirty years of my business life, I have come to the conclusion that the reverse phrase is even truer of today’s world: chenggong nai shibai zhi mu. Success often breeds failure, because it makes you arrogant, complacent and, therefore, lower your guard.
12. The way forward for this world is through capitalism. Even China has come to realise it. But it’s equally true that capitalism, if allowed to snowball along unchecked, can in many ways become destructive. Capitalism needs to be inspected under a magnifying glass once a day, a super-magnifying glass once a week, and put through the cleaning machine once a month. In capitalism, man needs elements of ambition and greed to drive him. But where does ambition end and greed take over? That’s why I say that capitalism, if left to its own devices, will snowball along, roll down the hill and cause a lot of damage. So a sound capitalist system requires very strongly led, enlightened, wise governments. That means politician-statesmen willing to sacrifice their lives for the sake of their people. I don’t mean politicians who are there for fame, glory and to line their pockets.
13. To my mind the two great challenges facing China are the restoration of education in morals and the establishment of a rule of law. You must begin from the root up, imbuing and infusing moral lessons and morality into youth, both at home and from kindergarten and primary school upward through university. Every Chinese needs to accept the principle of rule of law; then you have to train upright judges and lawyers to uphold the legal system.
14. Wealth should be used for two main purposes. One: for the generation of greater wealth; in other words, you continue to invest, creating prosperity and jobs in the country. Two: part of your wealth should be applied to the betterment of mankind, either by acts of pure philanthropy or by investment in research and development along the frontiers of science, space, health care and so forth.

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Please post your comments.

Joe Choo's Feng Shui Advice For Property

Joe Choo, President of Malaysian Institute of Geomancy Sciences talks about feng shui.

Please post your comments.

The History Of Money In Malaysia

This is an informative article about the history of money in Malaysia written by 14 year old Devan Tisdale, of Heidelberg, Germany which was published in the NST:

Throughout history, money has been the pulse of civilisations. The earliest form of money was not the paper bills and coins that we know today. They were possessions and objects such as cows or pottery. These were traded for anything the owner might have been in need of.

Unfortunately, unless you were a shrewd negotiator, this method wouldn’t favour you. Also, changes in the value of certain objects, too, could not work in your favour. Soon, as a result, coin-based currency began to take hold.

Among the earliest civilisations to use coins were the Greeks and the Chinese.

The Romans caught on later, and soon the practice spread around the globe, although it did not completely replace the bargaining method or barter trade.

Early coins were usually made of a mix of metals, and, later, the coins were made of gold or silver.

Forgery became a problem but this was solved when mints made coins with ridged edges which were hard to duplicate.
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But then, changes in the weight and purity of coins caused inflation and it became harder to control.

The ancient banking systems in Europe collapsed after the fall of Rome and did not resume until the Crusades.

The Chinese became the first to develop paper money due to a severe shortage of copper (circa A.D. 815). The idea behind paper money is that each bill would be backed by its value in gold or silver by the government.

China was forced to abandon paper money around A.D. 1455 due to severe inflation but started again a while later.

Other governments had similar problems when they adopted paper money, but eventually the system settled down to become what we are familiar with today.

Malaysian Money

The history of Malaysia’s money is even more interesting. Originally, tin cubes of varying size were the currency of Malaysia. Over time they were made in many different styles.

Did you know that Malaysia once had coins shaped like animals such as crocodiles and elephants?

Another distinct style of the period is the “coin tree”. This was a metal rod with “branches” of coins. When needed, these coins could be broken off and used. The spare metal was then turned into more coins.


The first actual money to arrive in Malaysia was in the form of bronze coins brought by Chinese merchants. Eventually the Malacca Sultanate began to issue their own currency of gold, silver, and bronze coins.

This in turn was replaced, as the colonial powers came to Malaysia, with each one introducing its own currency.

Portuguese, Dutch, and English money have been the currency of Malaysia at one time or another.

However, the first paper money was once again from the Chinese banks that had opened branches in Malaysia.

During the rule of the Government of the Straits Settlements, the main forms of money were the Spanish Dollar, the Dutch Doit, and the Singapore merchant tokens.

Eventually, after the departure of the British, Malaysia began circulating what we know now as the Malaysian Ringgit (it was originally called the Malaysian dollar and represented with the sign M$). Malaysia has even issued its own gold bullion called the Kijang Emas after the barking deer.

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Having read the above article, you might be interested to watch some videos on how money is created today and how it affects your life.

Please post your comments

Malaysia's Top 10 Richest People

Tan Sri Robert Kuok

According to "Malaysian Business" magazine survey, the Malaysia's 40 richest people had seen an increase in total fortunes to RM156.7 billion as at Jan 15, up from RM96.3 billion last year.

The survey also mentioned 8 new billionaires this year. The top 10 riches people in Malaysia are as follows:

Tan Sri Robert Kuok, of the Kuok Group, aka the "Sugar King", is still the riches man in Malaysia with a wealth of RM42.76 billion.

Ananda Krishnan is second with RM27 billion.

Tan Sri Lee Shin Chen of IOI Corporation Bhd's was third with a wealth of RM11.92 billion.

At fourth place is Public Bank's Tan Sri Teh Hong Piow at RM10.86 billion.

Genting Group's Tan Sri Lim Kok Thay is fifth at RM10.38 billion.

Tan Sri Quek Leng Chan of Hong Leong Group is sixth with RM7.09 billion.

At seventh place is Tan Sri Syed Mokhtar Albukhary of the Albukhary Foundation, at RM6.01 billion.

Lim Goh Tong's widow Puan Sri Lee Kim Hua is eighth.

Tan Sri Tiong Hiew King of Rimbunan Hijau Group and Tan Sri Vincent Tan of Berjaya Group are at the ninth and tenth place respectively.

Source: BERNAMA

Tiger Year Chinese Zodiac 2010

Pic by wertzateria.com

In the previous post, the feng shui aspect of the year of the Metal Tiger was explained by prominent feng shui masters. In the Malay Mail a few days ago, feng shui master Joey Yap revealed what the Tiger year means to you according to the Chinese zodiac. According to master Joey Yap, it will be a good year for those born in the year the Tiger, Rabbit, Snake, Horse, Goat, Rooster, Pig and OX. However, for people born under the zodiac signs of the Dragon, Monkey, Dog and Rat, it seems that the year of the Tiger will bring some challenges.

Listen to master Joey Yap on BFM 89.9 as he predicts what to expect in the Tiger year:



Listen also to what BFM 89.9 CLSA's Feng Shui Index Report says:



Please post your comments.

Tiger Tiger 2010 Feng Shui Tips

This year marks the year of the metal tiger in the Chinese zodiac. Some businesses are doing a roaring trade in tiger trinkets and merchandise. I predict a sharp surge in the sale of cats in pet shops similar to that of dogs during the dog year a few years back.

From the feng Shui point of view, this year of the metal tiger (also called the golden tiger), seems good.

Feng shui grandmaster Yap Cheng Hai told the Star recently, that the Metal Tiger ushers in a year of good prospects. It is a year of “thunder-fire abundance.

Grandmaster Yap Cheng Hai, one of Asia's top feng shui master, says thunder signifies prosperity and progressiveness, while fire symbolises brightness.

Grandmaster Yap Cheng Hai's son, Yap Boh Chu explained that the Golden Tiger years bring with it a time of "greatness and abundance". As this abundance will happen as sudden as the thunder, one must thus seize the moment as it presents itself.

Yap Boh Chu also adds that the year 2010 is the culmination of past efforts. All previous efforts done will bear fruit this year, according to him.

While Yap Jr. predicts more legal suits this year, Yap Sr. explains that earth related industries, such as those in timber and plantation will do well. Yap Cheng Hai also speculates good fortune for the electronics, beauty and education industries.

Yap Boh Chu however adds that the real estate and mining industries will remain static. He predicts more natural disasters involving volcanic eruptions and earthquakes.

Feng shui master Gan Wai Kwang says that earthquakes, tsunamis, volcanic eruptions etc will happen sometime in April and August and among those countires to be affected are Indonesia, South Korea, Japan, Taiwan, the Philippines, South Africa, India, North-East of America, North-East of Canada, Australia, Nepal, Bangladesh and Myanmar.

Feng shui master Wong Keen Ming also predicts a good finances year. But, unlike Yap Cheng Hai, he is pessimistic about the metal businesses such as those in electronics, telecommunications, banking, automobile and insurance.

Master Wong Keen Ming is more in favour of water-related businesses like shopping malls, transportation, fisheries, construction, import and export businesses, and automobile workshops as these businesses are more likely to do well.

Read also what master Joey Yap has to say about the Tiger year.

This is not a good year to get married - no fu (meaning bitter and it also means tiger in Cantonese) marriages and tiger babies says feng shui master, Yap Jr.

Chinese zodiac expert, Ruth Q. Sun says that it is more compatible for those born in the year of the Tiger to marry those born in the year of the Horse, Dragon, Dog, Rat, Ox, Rabbit, Tiger, Goat, Rooster or Boar, but never a Snake or a Monkey

Datuk David Hew, co-founder of Visiber Sdn Bhd, a numerology based services company says that says that this year presents plenty of opportunities for changes in careers and personal relationships and it is the time for taking action.

Some people say Tiger beer and Maybank are estimated to see an increase in business. Tiger Woods is so expected to make a strong comeback this year.

Please post your comments.

Old Women Cheated Of RM256,565

A 61 year old woman from Cheras was cheated of RM256,565 in money and valuables by 3 women.

The victim, Lee Yoke Chan, went to the morning market in Cheras last week when the women approached her.

In the pretext of asking for directions to a temple, they told Lee Yoke Chan that she would die in 3 days unless she goes through a cleansing ritual by a sifu at the temple as she had been followed by the ghost of a pregnant woman who had died in an accident.

The women persuaded her to hand over all her money and jewellery, which they said was essential for the cleansing ritual, but assured her that these will be returned to her after the ritual.

When Lee Yoke Chan agreed to their suggestion, the women followed her to the bank to withdraw RM186,565 and then followed her home to obtain the RM70,000 worth of jewellery.

Once the money and valuables were obtained, they returned to the market to meet other women. Upon some discussions, the women said the cleansing ritual could not be performed that day because the sifu wasn't at the temple. However, they assured Lee Yoke Chan that the sifu had already blessed the bag containing the money and jewellery, and everything was alright.

Then, without Lee Yoke Chan noticing, the women apparently the swapped the bag containing the money and jewellery with another bag filled a few oranges, packets of instant noodles, bread, a bottle of water and bottles of salt.

The women then returned the "bag" to Lee Yoke Chan and told her not to open it until the next day to avoid bad luck. She made a police report upon discovering the scam the next day.

Source: The Star

Please post your comments.

What you should know about GST

Because the new tax is complex and broad-based, we have a lot to learn ahead of its introduction. As a start, StarBizWeek has asked some experts to each highlight five key points.

Pauline Lum

Director, BDO Tax Services Sdn Bhd

·GST is a consumption tax on imported goods, and on supplies of goods and services in Malaysia other than those exempted or zero-rated. It is mainly borne by the end-user/consumer, and therefore, is not intended to add cost to businesses.

·GST is applied at each level of the value chain. This tax will be applicable whenever value is added to goods or a service.

·Businesses are required to register for GST if their annual turnover exceeds RM500,000. They can claim the input taxes paid on purchases of intermediate goods or services, against the GST charged on the final goods or services that they sell.

·Preparations can include the setting up of a GST committee, staff training for all departments, and manuals/systems to ensure compliance. Businesses that do not have internal expertise should consider engaging external advisors.

l As co-head of the tax authority of France, Maurice Laure created the GST system in 1954, when he introduced the TVA (the French abbreviation for value added tax).

Dr Veerinderjeet Singh

President, Chartered Tax Institute of Malaysia

·GST is not a new tax for Malaysia. It is intended to replace the existing sales tax and service tax.

·It has built-in control mechanisms that help minimise tax evasion by traders.

·GST requires good and proper record-keeping by businesses that need to be registered. This can lead to improvements in the maintenance of proper accounts and financial records.

·The tax will not lead to inflationary pressures, that is, a persistent increase in prices.

·Once GST is effectively implemented for some time, there is the possibility of decreases in corporate and personal tax rates.

Ronnie Lim

Country tax leader, Deloitte Malaysia

·Exemption is bad for GST. Businesses should not ask for their output to be exempted as this will create more costs for them, arising from restricted input tax credit. Instead – and perhaps strangely – one should seek to be a taxable person with either zero-rated or standard-rated output.

·GST implementation is not as easy as merely activating an accounting software’s GST module. That system has to be tailored to the profile of the business and the Malaysian GST law.

·Most companies leave tax implications to the tax, accounting or finance departments. GST should be viewed differently as it has enterprise-wide effects.

The sales department has to revise selling prices exclusive of GST. The procurement unit must re-negotiate purchase prices. The legal team need to review long-term contracts. Therefore, the whole company must understand this tax.

·Much more administrative and documentation requirements arise from the introduction of GST. Compliance costs are bound to increase. Often, adverse situations arise when documentation is inadequate.

·GST can potentially reduce tax leakages, such as smuggling, as there could be checks before unusual credit claims are processed. Leakages will be further minimised if the Customs and the Inland Revenue Board are unified to create a powerhouse, as seen in Britain.

Dr Arjunan Subramaniam

Adjunct professor, Universiti Utara Malaysia

·GST is due when a person makes a taxable supply in the course of business. As a taxable person, you must charge GST to your customer when you supply to the customer. This supply is output and your charge to the customer is output tax.

·GST charged to you for your business purchases is called input tax.

·You must pay to the Customs the amount of your output tax minus your input tax. If the input tax is greater than the output tax, the difference is claimed from the department. So keep accurate records of all your sales and purchases.

·GST is a consumption tax. It is your customer who bears the burden of tax.

·Imports are subject to GST, while exports are exempt.

Khoo Chuan Keat

Tax leader and senior executive director, PricewaterhouseCoopers Taxation Services Sdn Bhd

·GST is a fiscal policy feature in over 140 countries. Many developing and emerging economies have been transforming their tax revenue bases by progressively moving from direct taxation to consumption taxes such as GST in recent years. Malaysia is in the minority segment.

·GST affects all functional areas of a business and is not just a finance issue. The GST implementation is not only about reconfiguring the computer system in order to charge output tax. In fact, businesses should re-assess their entire business processes, including supply chains, so as to optimise input tax recoveries. Otherwise, they may suffer input tax leakages, thus hurting their competitiveness and profitability.

·Consumers can expect to see a drop in prices of certain goods and services. Without realising it, the consumers are already paying sales tax and service tax embedded in the supply chain. Anti-profiteering measures should be implemented and strictly enforced to deter traders from taking advantage of GST to raise prices and increase profits.

·The GST input tax incurred by businesses is claimable as a credit if they make taxable supplies. This avoids the cascading tax effect of the current single-stage sales tax and service tax regime, which results in higher prices.

·Recognising the wide-ranging impact of GST, the Government has proposed an initial low rate of 4%, coupled with zero-rating and exemption of essential goods and services. Anti-profiteering legislation and other measures for qualifying persons in the lower-income groups may be introduced to alleviate the adverse impact of GST on consumers.

Dr Jeyapalan Kasipillai

Professor, Monash University Sunway campus

·GST is a multi-stage tax but is a cost only to the final consumer.

·The GST system is transparent, with a built-in mechanism to track down defaulters.

·The new tax will give the Government an opportunity to reduce corporate and individual tax rates.

·It will also enable the Government to subsidise essential controlled items for the poor and to improve healthcare for taxpayers.

·GST can be a good source of government revenue and will help shrink the deficit.

Nicholas Crist

Executive director, KPMG Tax Services Sdn Bhd

·GST and value added tax (VAT) are the same conceptually. Over 100 countries have GST/VAT as part of their tax systems.

·Malaysia’s proposed GST rate of 4% is among the lowest rates in the world. The highest rate currently is 25%.

·Basic necessities, such as food, are proposed to be zero-rated (0%). However, processed food, such as canned food, will be charged at the standard rate. Classification can lead to interpretational issues. For example, in Britain, the courts had to determine whether a Jaffa Cake, a biscuit-like cake, was a biscuit (standard-rated) or a cake (zero-rated).

·GST/VAT can be used as a tool to manage the economy. For example, Britain reduced its VAT standard rate from 17.5% to 15% in December 2008 to boost consumer demand during the financial crisis.

·The Government has indicated that the GST would provide an opportunity to reduce income tax rates. This has happened in other countries, such as Singapore.

Chas Roy-Chowdhury

Head of tax, Association of Chartered Certified Accountants

·In Europe, GST is known as VAT. Most of the rest of the world uses the term GST.

·GST rates may start off low, but in the global context, they have always risen. In the European Union (EU), the rates have increased considerably from the introduction of the tax. The rate in Britain, for instance, was once 10%. It is 17.5% today.

·When Britain introduced VAT in 1973 as a prerequisite to joining the EU, it was seen as a simple tax. Now, it is one of the most complex of taxes. Therefore, serious effort is needed to stop complexity from creeping into the system.

·Because most intra-EU goods are not subject to VAT, there is an opportunity for various types of tax fraud. It is thought that the amount involved could be as high as 100 billion euros.

·There is a debate in the United States over whether to introduce VAT, mainly as a way to address the country’s huge budget deficit.

Bhupinder Singh

Partner, Ernst & Young Tax Consultants Sdn Bhd

·GST will not burden the rakyat. For those currently consuming goods and services that are subject to sales/service tax, the impact of GST should be neutral if the rate is 4%. In fact, consumers should benefit if the suppliers pass on the savings from their ability to claim back input tax on their purchases.

Consumers should also be better off because some essential goods will be zero-rated, while certain items are exempted from GST.

·A business can claim an input tax credit on purchases irrespective of whether it has paid the suppliers, as long as the suppliers have issued tax invoices to the business.

There should be no adverse GST impact on a business that makes taxable supplies. In the long run, the cost of doing business will go down because the business will have the ability to claim input tax on the purchase of goods and services, which they cannot do under the sales/service tax regime.

·Businesses will experience a cash flow impact. They have to charge GST on sales and if the customers are late in paying, the businesses will have to pay the tax first.

·It is important to educate businesses, especially the small players, on the cost savings and potential cash flow savings aspects of GST. It is equally important to educate consumers so that they understand that the goods and services they buy may not necessarily be subject to a price increase because of GST.

·GST works on the affordability concept. As a consumer, you decide which goods and services to buy, and if these are subject to GST, you then have to pay it. This is no different under the current sales/service tax regime except that these taxes are embedded in the price of the goods and services, and the consumer may not realise that they, in fact, bear the taxes.

Source: The Star

Please post your comments.

4D Lucky Fish

Picture from asiaone

Magnum 4D, Sports Toto, and Da Ma Cai punters' latest strategy in attracting luck is not in rearing the blood parrot fish (locally called feng shui fish), or the flowerhorn, but in the "4D fish".

Malaysian and Singaporean 4D lottery punters have been rearing 4D fish to forecast the winning 4D numbers. These molly fish, imported from Thailand and introduced early last year, have a single-digit number (from 0 to 9) tattooed their bodies.

Customers apparently buy 4 fish which were tattooed with his own lucky numbers. Some just buy 4 fish with random numbers. These punters are hoping that by watching the fish swim, the winning combination at the weekly Magnum 4D, Toto, and Da Ma Cai draw would emerge . Each 4D fish costs RM7 and the tattoo can last up to 4 months.

I can imagine Malaysians sitting at home patiently watching the 4D fish swim round and round the acquirium while writing down what they think would be the winning 4D numbers.

An ornamental fish retailer said that mollys are easy and cheap to look after. They are not fussy eaters or sensitive to the water quality and temprature. All you need is a small aquarium with basic apparatus.

I believe that as most customers who bought the 4D fish were hoping that the fish would bring them luck and had no genuine interest in rearing fish, they would neglact the fish should they not win anything in the lottery. In Asia, people will even rear cockroaches if they can be persuaded that cockroaches can bring luck.

Please post your comments.

Tips On Filing Your Income Tax Q & A

Part 2 Q & A

This is the second of a two-part article to guide employees on common tax issues

On short-notice payment and child-care allowance

Q: In November 2008, I voluntarily ceased my employment and had to pay short notice of RM2,000 (supported by an official receipt). However, I was compensated with a sign-in bonus of RM6,000 from my new employer.

The problem is the sign-in bonus is stated in my EA form but the short notice of RM2,000 is not deducted from the form. Can I automatically net off the amounts and disclose RM4,000 as my sign-in bonus because RM2,000 is my actual expense?

A: Sign-in bonus is capital in nature and not taxable in the event the salary that you receive subsequently upon commencement/exercising of employment with the new company is at the commercial rate. The amount is not to be included in the EA form.

However, if the sign-in bonus is in lieu of reduced salary, the amount is income in nature and subject to income tax. In this scenario, the amount is to be included in the EA form.

The amount paid by you as compensation for short notice of resignation is not deductible as it is not directly incurred in deriving employment income as you have stopped working in your old company.

My former company did not disclose my travelling allowance of RM1,500 in my EA form as tax-exempt benefits. Upon calling it, the company refused to issue a fresh EA form to me. What can I do?

Travelling/petrol allowance received by an employee for travelling from home to workplace and vice-versa is exempted up to RM2,400 while travelling/petrol allowance received for travelling in exercising employment, is exempted up to RM6,000.

In your case, if the amount is authentic and verifiable, even without a revised EA form, you may straight away deduct the amount from your total income reported in the EA form. The adjustment is at column C1 where, the amount is represented by: Total income (as per EA form) – travelling allowance incurred (RM1,500) = Total income from employment (C1)

I paid RM280 per month for my four-year-old daughter’s nursery in 2008. I understand that child-care is exempted from tax up to RM2,400 per year. Can I claim it (since I paid for it and it’s not an allowance)?

Child-care allowance of RM2,400 is tax exempted if provided by employer to staff. In your case, no deduction is available as such allowance was not paid by your employer. You have only incurred a domestic expense which is irrelevant in computing your employment income tax. Domestic expense is not deductible.

I sought treatment using the “Tui-Na” therapeutic massage for my left leg. The total cost of treatment was RM89.60. Can this sort of expense be treated as a form of medical expense tax relief under the traditional acupuncture and ayuverdic categories?

The medical benefit (including Chinese Tui-Na) is tax exempt provided it is given by the employer to the employee. Benefits cover ayurvedic and acupuncture effective YA2008. However, you cannot claim this expense when computing your employment income, since it is paid by you and not your employer.

If a self-employed person makes a contribution of 12% to the EPF under his firm, is the contribution deductible to the proprietor firm and is there any limit?

If you are earning business income as a sole proprietor, you may utilise the B form to submit your tax return. BE form is for individuals earning employment income. In both cases, the total EPF contribution by the employee or the self-employed person plus the amount of insurance premium paid are deductible up to the aggregate of both amounts (up to a maximum of RM6,000).

Where the employer is concerned, a Sdn Bhd firm is entitled to claim the EPF contributions for employees as a full deduction from their business income and the maximum contribution is 19%, as governed by Section 34 (4) of the Income Tax Act, 1967. However, for the sole proprietor, the amount is not deductible when computing business income.

How do I disclose interest subsidies on housing, car and education loans?

Interest subsidies on housing, education or car loans provided by the employer to the employee are all tax-exempted in full, provided the aggregate amount of loans from all of the above does not exceed RM300,000.

If you qualify for exemption and your documentation is verifiable, you may deduct the appropriate amount from your total income reported in the EA form. The adjustment is at column C1 where the amount is represented by:

Total income (as per EA form) – exemptions entitled (subject to maximum) = Total income from employment (C1)

How do I apply for retrenchment benefits for my husband?

As long as the compensation is given by the employer to the employee (your husband), he is entitled to claim the exemption. No prior approval from Inland Revenue Board is required. The computation is as follows: Employment income as per EA form – (RM10,000 x the years of completed service) = Total employment income (column C1 in BE form)

I understand that the payment of bonus/directors’ fees related to 2008 in year 2009 has the tax savings advantage of 1% if the annual income is RM250,000 and above. Please explain.

If the chargeable income is more than RM250,000, the tax rate is 28% for YA2008. However, the tax rate will be 27% in YA2009. Hence, if your bonus is disclosed in the EA form in 2009, you will save 1% since your chargeable income is assessed on 27% (YA 009) instead of 28% (YA2008).

Source: The Star

See Part 1

Please post your comments.

Easy Guide To Tax Filing Q &A

Part 1 Q&A

The ACCA Easy Guide to Taxation for Employees published last week drew a deluge of queries. This is the first of a two-part article featuring commonly-asked questions.

Q: As a sales and marketing executive with a financial institution, I am paid a basic salary and sales commission and am not entitled to any claims (petrol, toll, parking and car maintenance). I use my own car to do my job. My average monthly expenses for sales and marketing activities are about RM500.

I understand that with the new provisions under Budget 2009, the employee is entitled to tax exemption for certain benefits. Since my company does not provide such benefits, can I claim marketing and travelling expenses under “Perbelanjaan Keraian”?

A: The actual amount you incurred can only be deducted provided that you received either entertainment or travelling allowances from your company. In your case, the amount you incurred is not deductible.

I understand that meal allowances can only be claimed for tax relief for outstation travel or overtime. I am being transferred to a branch in Klang next month from my present workplace in Puchong, and my employer has agreed to give me an additional monthly amount of RM800 as meal allowance.

Can I deduct my meal allowances since I reside in Subang Jaya and don’t do overtime? My working hours are 9am-5pm and I work six days a week.

Your meal allowance for employment in the Klang branch will not be eligible for deduction as it is not in respect of working overtime or travelling outstation.

What are the tax exempt employee benefits in relation to employees who have been given a fully-expensed company car and a company petrol card? I know that I will be assessed on the Scale Car and Fuel benefits for the use of the company car. For YA2008, am I entitled to the relief of RM2,400 for the tax exempt petrol card?

If so, can this RM2,400 be deducted from the Scale Fuel charge in YA2008 so that the Scale Fuel benefit assessed in the tax year will be lowered by RM2,400?

If (1) above is allowed and my actual petrol card expenses for the year exceed RM2,400, can the balance of actual petrol bills spent under the petrol card be deducted from the Scale Fuel benefit up to the maximum of exhausting the amount of the Scale Fuel benefit?

The benefits in kind with regards to the car benefit and fuel benefit are to be taxed. These cannot be deducted as additional tax exempt benefits.

Monthly parking claims and fixed mobile-phone allowances are submitted to my company at the end of the month and these will be reimbursed into our salary in the following month. These claims are subject to EPF contribution. Therefore, are they tax-exempt for YA2008 and do they need to be disclosed under the tax-exempt benefits in the EA form?

Both parking and phone allowances up to the actual amounts incurred which are borne by the employer are tax exempt with effect from YA2008. The amount is to be disclosed as tax exempt benefits in the EA Form.

Can interest on housing loans and car loans be deducted from gross salary on the EA form? Are medical expenses such as maternity expenses deductible?

Interest on housing and car loans are deductible only if paid by the employer on a total loan amount of up to RM300,000. Similarly, medical expenses are only deductible if the amount incurred has been paid by the employer and this benefit is extended to maternity and traditional medical expenses. However, should these expenses be paid personally by the employee, they are not tax deductible.

My organisation is a resident company and our expatriate Japanese director and technical manager has two types of income – salary from Malaysia and salary from Japan. Please advise whether we have to declare our Japanese director’s income in total (i.e. Malaysia and Japan) or just Malaysia-derived income to the Malaysian government?

All employment income derived by the Japanese expatriate for exercising employment in Malaysia is subject to income tax, including the amount paid in Japan, if it is related to the exercising of employment in Malaysia.

Is the tax benefit on childcare allowance up to RM2,400 a year to be deducted directly from the EA form? Is this applicable if there is no such benefit from the company I work for?

The childcare allowance is only tax exempted if you receive such an allowance from your employer; otherwise the exemption will not be applicable to you.

In the event you do receive the childcare allowance, the amount (the lower of the actual amount received or RM2,400) is to be excluded from the employment income and disclosed in section C1 of the Form BE.

I bought a comprehensive insurance policy (life + medical + investment) and the insurer is unable to split the premium payment into life insurance and medical insurance. Can I treat this totally as a medical premium as I have already disclosed RM6,000 for my life insurance premium and EPF deduction?

In the event that the amount cannot be segregated, the amount is to be disclosed either as life or medical insurance premiums based on the description stated in the insurance premium receipt.

Source: The Star

See Part 2

Please post your comments.

More Tips On Lessening Your Income Tax Burden

Part 3

This is the final of a three-part ACCA Easy Guide to Tax Filing for Employees, which looks at income tax threshold, child relief and penalties

FOR YA2008, employees need to make a minimum annual salary of RM26,804 before triggering income tax.

Married couples should ensure that the higher-earning spouse claims child relief to lessen the tax burden. Remember to abide by income tax regulations to avoid heavy penalties.

Income Tax Threshold

For YA 2008, an employee is required to file Form BE by or before April 30 through electronic filing or actual submission of the tax return form to the Pusat Pemprosesan at Pandan Indah, Cheras.

The employee is entitled to the following tax reliefs:

Employees must make a minimum salary of RM26,804 to be liable for income tax for YA 2008.

Example 1: An individual with only EPF contributions as relief

An employee may not be required to pay tax on employment income exceeding RM26,804 if said individual employee incurred other tax reliefs on books, medical check-ups or life insurance premiums.

Example 2: Assuming an individual with a salary of RM30,062 has tax reliefs other than EPF contributions, he may not be liable for income tax. His tax payable is:

An employee earning annual salary exceeding RM30,062 may also not be liable to pay income tax if he incurred the following expenses:

(a) Medical expenses for parents RM5,000

(b) Medical or educational insurance for taxpayer, spouse, child RM 3,000

(c) Basic supporting equipment for taxpayer, spouse, child, parents RM3,000

An employee with an existing SG income tax reference number may need to file in a nil return on Form BE even though his annual salary for YA 2008 is below RM30,062.

Child Relief

Married couples can claim child relief for maintaining any child during the calendar year 2008 whether the child is their own, a stepchild, or a legally adopted child.

The amount of child relief is:

18-years-old or less (RM1,000); above 18 and studying in university or college (RM4,000).

Child relief is given for any number of children who are not married.

Child relief for disabled children is RM5,000.

An additional RM4,000 is granted if the disabled child is studying in university or college.

To minimise tax payable, child relief should be claimed by either spouse who has the highest taxable income.

Example: Li and Choo have three children below 18 years. Li’s total income is RM90,000 and Choo’s RM60,000 for YA 2008. The child relief entitlement is RM1,000 x 3 = RM3,000. (see charts above)

Penalties

The Income Tax Act 1967 imposes various penalties for non-compliance. These include:

(a) Non-submission of return

Return Form BE for YA 2008 needs to be submitted by or before Apr 30, failing which taxpayers incur a:

(i) Penalty that is 3 times of tax

(ii) Fine between RM300 to RM2,000

In practice, the tax authorities impose 2%-20% on the tax payable as the penalty instead of the statutory formula of 300%.

(b) Non-payment of final tax

The employer deducts the employee’s monthly tax which is paid to IRB on the 10th of every month. The difference between the actual tax and the total tax deducted by the employer must be paid to IRB on / before Apr 30. Failure to pay the final tax on Apr 30 will result in a late payment penalty of 10% being imposed.

An additional 5% will be imposed if the final tax or penalty is still not paid by June 30 (60 days after Apr 30)

(c) Not keeping sufficient records

Under the self assessment system, an employee is required to keep sufficient records on his tax affairs for seven years. Only the tax return Form BE is submitted to IRB by or before Apr 30.

These records comprise a copy of Form BE, salary slips, Form EA (Statement of Employment Income), and credit card statements in relation to petrol claims, travelling, parking, and toll charges incurred in relation to official duties.

Failure to maintain sufficient records is an offence and the penalty will be:

(i) A fine between RM300 to RM10,000 or

(ii) Imprisonment ≤ 1 year.

Dr Choong Kwai Fatt is a tax consultant and associate professor, Faculty of Business and Accountancy, Universiti Malaya. For further enquiries or feedback please email to
info@my.accaglobal.com

Source: The Star

See Part 1

Please post your comments.

If You Pay Minimum EPF How Does It Affect You Taxes

Part 2

INDIVIDUAL taxpayers need to be alert to amendments to the income tax regulations relating to bonuses and directors’ fees.

Taxpayers also need to consider the tax consequences if they elect to pay the mandatory minimum contribution of 8% to the Employees’ Provident Fund (EPF).

By opting to contribute 8% to EPF instead of the previous 11%, they lose out on dividends, decrease the potential size of their retirement nest egg, and could suffer additional income tax.

Bonus/directors’ fees

Employees receiving director fees or bonuses in 2009 in relation to work performed in 2008 or prior to 2008 will only be taxed in year of assessment (YA) 2009 under a new amendment to the Income Tax Act 1967 to ease filing under the self assessment system via the Finance Act 2009 (gazetted on Jan 8, 2009).

These director fees or bonuses would be included in the EA Form 2009 to be submitted on April 30, 2010. They must not be treated as income in 2008 and should never be included in EA Form 2008.

Example 1:

Karmen Sdn Bhd pays a special bonus of RM8,000 to Fionna on April 1, 2009 for her excellent performance in 2008. The bonus of RM8,000 will be treated as income for 2009.

Example 2:

Yie Lin receives director fees of RM300,000 in relation to 2004, 2005, 2006, 2007, 2008 (or five years’ total) on March 1, 2009. The total director fees of RM300,000 will be treated as income in 2009.

The employer is required to deduct the monthly tax deduction in the year 2009 (year of payment) and pay the net amount to the employee or director.

There is a new monthly tax deduction table issued to take effect on Jan 1, namely Income Tax (Deduction From Remuneration) (Amendment) Rules 2008 [PU(A) 468/2008].

Paying bonuses and directors’ fees related to 2008 in year 2009 has the advantage of tax savings of 1% if and only if the annual income of such employees is RM250,000 and above.

EPF contributions: 11% or 8%?

With effect from Jan 1, the EPF Act 1991 has been amended to allow employees to contribute 8% of their salary to EPF.

Previously, the mandatory contribution was 11% of salary.

The employer will continue to contribute an amount equal to 12% of the employee’s salary to EPF.

Under the existing Income Tax Act 1967, income to be assessed remains at 100% of salary although the employee only receives 92% of salary.

Salary 100%

Less: 8% of salary to EPF (8%)

Net salary 92%

The employers’ contribution of 12% is not taxable on employees. The amount of EPF contributed by employees (8%) is available as tax relief.

EPF plus life insurance premiums paid on the life of the taxpayers or their spouses will be granted a maximum tax relief of RM6,000 in a particular YA (EPF + life insurance = RM6,000).

Although the Government meant well by lowering the EPF contribution from 11% to 8% to ease the taxpayer’s financial burden, taxpayers may ultimately end up paying additional tax due to reduced EPF contributions.

Assuming that an individual does not have life insurance premiums, full utilisation of the RM6,000 relief will require an individual to earn an annual salary of RM54,545 (computed as follows: RM6,000/11% = RM54,545).

An individual earning an annual salary below RM54,545 will end up paying additional tax if he reduces his EPF contribution from 11% to 8%.

Example:

Melissa earns an annual salary of RM50,000. She pays 11% of salary, or RM5,500, to the EPF and pays RM500 in premiums on her life insurance. Effective Jan 1, she is required to pay only 8% of RM50,000 to EPF.

The differences in tax payable as a result of contributing either 11% or 8% to EPF are shown in the table

Taxpayers need to think twice before opting to contribute just 8% to EPF.

Although employees whose income exceeds RM54,545 don’t pay additional tax if they contribute 8% to EPF, they risk losing out on a substantial retirement sum since their contributions will be lower by 3% (11%-8%) and interest will compound annually on a smaller lump sum.

EPF paid a dividend of 4.5% in 2008 and 2007. Although the EPF Act 1991 sets the mandatory contribution by employees at 8%, employees have the right to request their employers to continue deducting 11% of their salary for EPF to meet tax savings and retirement planning goals.

Dr Choong Kwai Fatt is a tax consultant and associate professor, Faculty of Business and Accountancy, Universiti Malaya. For further enquiries or feedback, please email to
info@my.accaglobal.com

Source: The Star

See Part 1 and Part 3

Please post your comments

Tips For Filling Your Income Tax Returns

Part 1

This first of a three-part ACCA’s Easy Guide to Tax Filing for Employees looks at additional goodies for taxpayers

IT’S tax season again! Employees are required to submit their tax return Form BE for year of assessment (YA) 2008 on or before April 30, where the income assessed is in relation to the basis period of Jan 1 to Dec 31, 2008.

This time around, taxpayers get to enjoy additional tax goodies as part of the Government’s effort to cushion the impact of the economic downturn and higher cost of living on Malaysians.

Specifically, the Government announced via the Budget 2009 proposal and the second stimulus package on March 10, 2009, the following tax benefits for employees, which will take effect in YA2008. These benefits will help reduce taxable income and, consequently, the amount of tax payable.

Compensation for loss of employment

The tax burden is eased for retrenched employees as well as those who opt for voluntary separation schemes.

Employees who are retrenched on or after July 1, 2008 will be granted an income tax exemption of RM10,000 for each completed year of service with the employer or companies in the same group. This also applies to payments for employees who opted for voluntary separation schemes.

Example:

A is a salesperson working in Star New Enterprise from April 1, 2006. Due to the economic downturn in 2009, A was retrenched on Nov 1, 2008 and was paid compensation of RM25,000 for loss of employment. The amount to be taxed in YA2008 will be:

Compensation RM25,000

(Less) Exemption

1.4.2006 – 31.3.2007

1.4.2007 – 31.3.2008

(2 completed years of service)

X RM10,000 RM20,000

RM5,000

If the retrenchment was before July 1, 2008, then the amount exempted for each year of service will be RM6,000.

Tax-exempt employee benefits — allowances

The following tax benefits provided to employees from Jan 1, 2008 to Dec 31, 2008 will be tax deductible against business income for employers AND exempted from tax on employees. These benefits are also available for YA2009.

(a) Petrol card/petrol allowance/travel allowance

An employer providing petrol cards, petrol allowance or travelling allowance to employees to travel from home to workplace or office will be allowed up to RM2,400 a year.

(b) Meal allowance for working overtime, travelling outstation.

(c) Parking allowance.

(For (b) and (c), the allowance must be reasonable and justifiable depending on the nature of work and position of employee.)

(d) Medical treatment for employees, spouses and children to include traditional medicine such as ayurvedic treatment and acupuncture.

(e) Interest subsidies on housing, car and education. The total loan amount is restricted to RM300,000.

(f) Childcare allowance up to RM2,400 a year.

(g) Employers’ products or services which can be provided free or at a discount which must not exceed RM1,000 a year.

Employers involved in the manufacture of food and car accessories may consider providing the products to employees to reduce their cost of living in the current economic slowdown.

These allowances need to be disclosed in the Form EA as tax-exempt benefits although they are not taxable on employees.

Official duties – travelling allowance

When employers provide petrol cards, petrol allowance or travelling allowance to salaried personnel, such as reporters and other employees, to carry out official duties, this form of allowance is taxable on the employee and must be reflected in their respective EA Forms.

Employees must keep a record of the actual expenses incurred in relation to official duties and set off the amount incurred against the allowance received. This is an added burden and responsibility on the employee. The records have to be kept for a period of seven years.

Employees may end up paying additional tax under the self-assessment system if they report the employment income as per the EA Form without deducting the actual travelling expenses incurred while on official duty to carry out the employers’ business.

In the Budget 2009 announcement, the Government said petrol cards, petrol allowance, travelling allowance and toll cards for official duties up to RM6,000 a year will be tax-exempt.

This means that the employer will exclude RM6,000 a year from the taxable income of employees as reported in the EA Form. However, the employer needs to disclose this RM6,000 as a tax-exempt benefit in the EA Form.

Employees receiving travelling allowances not exceeding RM6,000 a year will no longer be required to keep the required receipts to substantiate their claims.

This incentive applies from YA2008.

However, if the employer provides, for official duties, petrol card, petrol allowance, travelling allowance and toll card exceeding RM6,000 a year, the employer is required to report in Form EA in two sections:

(a) Tax exempt benefits: RM6,000

(b) Part of taxable employment income – salary, bonus, entertainment allowance – and the petrol/travelling/toll amount in excess of RM6,000

In this case, the employee is now required to keep all receipts to substantiate her claims.

Example:

Ming Hui has marketed agricultural products for Duck Rich Sdn Bhd since 2007. She receives a travelling allowance of RM14,000 per year.

For the year ended Dec 31, 2008, the company will provide Ming Hui with Form EA disclosing taxable income of RM8,000 as part of employment income and a tax-exempt benefit of RM6,000.

Ming Hui incurred RM9,000 for travelling expenses to carry out official duties for YA2008. She is required to set off these travelling expenses against the amount received from her employer of RM14,000 (and not RM8,000). The amount taxable on her is RM5,000 (RM14,000 – RM9,000).

Ming Hui is required to maintain the receipts of RM9,000 for a period of seven years.

Dr Choong Kwai Fatt is a tax consultant and associate professor, Faculty of Business and Accountancy, Universiti Malaya. For further enquiries or feedback please email to info@my.accaglobal.com

Source: The Star

See Part 2

Please post your comments.

Money & Life

Money&life
What Is Money

For some, these videos and articles may change how you view life, the way you assess yourself and evaluate others.

Money is not real. It only exist in a system artificially created by human beings and has been manipulated by the elites to exploit others.

Watch this animated video explaining the origins of money.



This is an interesting 47 minute video by Paul Grignon which explains how money is artificially created.




The Credit Crisis And World Recession

This is is also an interesting 2 part video explaining how the credit crisis started and how it affects us.

Part 1




Part 2




As seen in the video, this is a primer of the financial crisis by the New York Times.

If you're interested to learn more, you can read the following articles:

Credit Crisis Timeline - From Foreclosures To Bank Failures

Credit Crisis — The Essentials


It looks like the best solution now is to begin looking for alternative ways of living less dependent on the money system. ie. grow your food and spend less on non essential stuff. :) We are lucky, in Malaysia, we have the option of living off the land if necessary. Singaporeans, for instance, do not have this privilege.

Please post your comments.