On Friday 15th October 2010, Prime Minister, Datuk Seri Najib Tun Razak tabled a RM212-billion budget for 2011 centred on four key strategies designed to transform Malaysia into a developed and high-income nation by 2020 with sustainable development, spearheaded by the private sector as well as focus on the well-being of the people.
If you are like the average taxpayer, chances are you are often confused by the terms “deduction”, “allowance”, “relief”, or “exemption”.
These words are not given separate meanings in the tax legislation but they all operate to reduce your tax bill. It is helpful to distinguish them and to know the meanings usually attributed to them.
A deduction is an expense or “outgoing” of the taxpayer which he is entitled to take into account in arriving at any particular figure of income.
For income tax purposes, any expenses incurred in the course of a business will only be eligible for tax deduction if the expenses are solely incurred in producing the business income.
It is important to establish the deductibility of an expense as in the event of a field audit which results in the Inland Revenue Board (IRB) discovering an understatement of tax due to claims on expenses which are not tax deductible, a taxpayer will not only suffer additional tax but also a 45% penalty.
With effect from year of assessment 2004, entertainment expense will only be eligible for 50% tax deduction except for specific circumstances where it will qualify for full deduction.
Credit Card Tax for 2010 is to stay no doubt about it. Credit card industry as a whole has come to a consensus that this tax will be borne by the cardholders and not the banks. Association of banks also confirmed on the tax payment date.
Now, banks in Malaysia are strategising to help customers pay the credit card tax by hoping that they can retain their customers.
Most banks are willing to allow customers to utilise their reward points collected to pay the tax charge. However, some banks said that consumers could easily offset the tax with the many cash rebates offered with their credit cards.
For banks that agree to use points, how much are needed?
The table below shows how much points that you need for different banks
The credit cards tax is to stay & no changes will be done. It is will be according to the budget accouncement last October as it was approved in the parliment recently. Principal credit or charge cards holder have to pay RM50 per card while supplement card holder have to pay RM25 per card.
Starting 2010, new credit card applicants will have to pay the RM50 service tax upfront when they issued with new credit or charge cards.
For existing card holders, the charge will be imposed on the anniversary date of cards. The service tax will be pay through their issuing banks. For example, if the card’s anniversary date is in April, then you pay the tax in starting April 2010 & every subsequent anniversary date.