You know it’s tax season when everyone is stressing out more than usual and scrambling to gather their receipts and other relevant documents for filing purposes. Whether you’re a full-time employee or self-employed, stressing over filing for your income tax is normal.
The process can be tedious and overwhelming particularly for first-time taxpayers who don’t know what to expect. From adhering to the dateline given, filing in the right form, to making sure every single document required is in your hand, one mistake made can be too many.
Why? Because even if you’ve made an honest mistake (which is understandable for first-timers), you may be punishable with a fine or worse, face imprisonment.
These are four common mistakes that normally happen when filing for income tax, and the consequences if you made them:
- You made your tax payment after the dateline
If your source of income is mainly from employment (in other words, non-business income), the final date to pay your taxes is on the 30th of April. If you earn an income from your business, the dateline is on the 30th of June.
For tax payments made after these dates, you’ll be faced with a 10% increment from the tax payable and an additional 5% increment on the balance of the tax payable if payment is not made after 60 days from the final date.
- You didn’t keep the relevant documents
Documents like receipts, invoices, vouchers or any other documents that help to verify your earnings and expenditures should be kept for at least seven years.
Under Section 119A, failing (without reasonable excuse) to comply with an order to keep proper records and documentation will result in you being slapped with a fine of RM300 to RM10,000 or imprisonment for a term not exceeding one year or both.
Without the complete documents, you may have a hard time proving your income and expenditure, which could affect the amount of tax needed to be paid and when claiming for tax rebate, reliefs or exemptions.
Also, if you plan to submit your income tax via e-filing, make sure you have all the details ready, including personal details (e.g. IC number, tax number, marriage info), EPF statement, income details, and receipts or invoices.
- You filed the wrong form
There are several different forms to be submitted depending on your residential status and source of income. Here are the types of income tax return form (ITRF) for individual:
Status: Resident
- Residents who are business owners – Form B (e-B)
- Residents with expertise or specialised skill – Form BT (e-BT)
- Residents who are employed and not running a business – Form BE (e-BE)
Status: Non-Resident
- Non-Residents who are employed or run their own business – Form M (e-M)
- Non-Residents with expertise or specialised skill – Form MT (e-MT)
- You’re not transparent in your earnings
If you lie or underdeclared on how much you earn, you may be faced with a fine of RM1,000 to RM10,000 and 200% of tax undercharged under Section 113(1)(a) (Making an incorrect tax return by omitting or understating any income) or Section 113(1)(b) (Give any incorrect information in matters affecting the tax liability of a taxpayer or any other person).
It’s best to start filing for your taxes as soon as possible. At least when you made a mistake, you’ll have the extra time to rectify the situation, thus saving you from the hefty fines. To make it easier, opt for e-filing instead of a manual filing. Not only is it more convenient as everything is automatically calculated, it will also be a lot faster. For more info on offences, fines and penalties related to income tax, check out the complete list on LHDN.