KUCHING: The Budget 2015, tabled by Prime Minister Datuk Seri Najib Tun Razak on Friday, promises an array of benefits, with focus on easing the financial burden of Malaysians while boosting Malaysia’s economic growth.
Deloitte Malaysia’s tax services team; executive director, real estate tax leader Tham Lih Jiun, associate director Joshua Voon, and tax manager Kane Bong, answer a few Budget 2015 tax-related questions.
Q: I heard that there is reduction in the corporate income tax. What is the reduced rate?
A: The reducedrate is 24 per cent but it will be effective from year of assessment 2016.
Q: Are there any additional tax reliefs given to individual in 2015?
A: Reliefs given on medical expenses for serious diseases, disabled child and purchase of supporting equipment for disabled child will be increased by RM1,000 to RM6,000.
Q: I live with my parents and help to pay for the housing loan instalments. I will be getting married and intend to purchase my own apartment. Am I qualified for the stamp duty exemption?
A: It will depend on the value of the property. As a first time buyer, you are qualified for the 50 per cent stamp duty exemption on instrument of transfer and loan agreement if the price of the apartment does not exceed RM400,000. The Budget 2015 announced that the threshold for value of property qualifying for the exemption be increased to RM500,000 for purchases made between January 1, 2015 to December 31, 2016.
Q: I have yet to file my Form BE for 2013. What are the potential penalties that I would be exposed to?
A: Failure to submit your Form BE before the statutory filing deadline would expose you to a fine ranging from RM200 to RM2,000 or imprisonment for a term not exceeding six months, or both. In addition, the Inland Revenue Board (IRB) will be allowed to impose a penalty of up to three times the amount of the tax payable if no prosecution action is taken. The Budget 2015 announced that the maximum fine will be increased from RM2,000 to RM20,000.
Q: My company may develop several pieces of land in Sarawak into industrial estates. Are there incentives introduced in the 2015 budget?
A: The Budget 2015 has introduced tax incentives for Industrial Area Management. The tax incentives are in the form of 70 or 100 per cent income tax exemption for a period of five years for private sectors to manage, maintain and upgrade industrial estates depending on the location of the industrial estates. The 100 per cent income tax exemption is only applicable to industrial estates located in less developed areas. Further clarification on “less developed areas” is needed.
Q: I am happy to hear that there is no goods and services tax (GST) on RON95 petrol, diesel and liquid petroleum gas (LPG). Does this mean that now everyone will enjoy this benefit?
A: To be specific, the retail sale of RON95 petrol, diesel and LPG which was supposed to be subject to GST will be given relief from GST. The retailers who supply the above mentioned products need not charge GST. However, the question of whether everyone will enjoy this relief remains unclear as the Budget 2015 announcement specified that such GST relief is only given to “consumers and targeted groups”. Hence, further clarification would be required on whether such GST relief is a blanket relief or only available to targeted groups.
Q: I understand that GST is not a cost of doing business for me as I can claim GST incurred on my purchases (input tax) on one hand, and charge GST on my sale (output tax) on the other hand. How would this impact my cashflow?
A: You are required to charge output tax on your sale in the taxable period when the transaction occur, and pay the tax no later than the last day of the following month, even if your customers have not made any payment. On the other hand you are able to claim the input tax when you get hold of a valid tax invoice, even if you have not made any payment for it. The input tax claim would offset the output tax you charge your customers in the same taxable period and only the net amount is payable to the Royal Malaysian Customs Department. As such careful cash flow planning is required by leveraging on credit terms from suppliers and at the same time imposing more stringent credit terms on your customers, so that you are not caught in tight cash flow position.
Q: My current turnover may or may not exceed RM500,000. Do I still need to register for GST purposes?
A: If your total taxable supplies (standard rated, zero rated and deemed supplies) for the past 12 months or future 12 months (based on reasonable estimation) exceeds RM500,000, it is mandatory for you to register for GST by December 31, 2014. Failure to register by the stipulated deadline would attract penalty for late registration not exceeding RM 20,000. However if your total taxable supply is below RM500,000, you may opt to register voluntarily but approval for voluntary registration is at the discretion of the Royal Malaysian Customs Department.
Q: If my turnover is below the RM500,000 threshold, are there any benefits if I register?
A: The benefit of being a GST registrant is that you would be able to charge GST on your sales (output tax) hence allowing you to claim the GST incurred on your purchases (input tax). On the other hand if you are not a GST-registered person, you would have to absorb the GST you incur on your purchases which will increase your cost of doing business.
Q: I am in the business of manufacturing and trading of machineries. Since all my products are standard rated supplies, I just need to charge six per cent GST on the sales and claim six per cent GST on the purchases. Why do people tell me that GST is complicated?
A: Besides your ordinary sale of goods (sale of machineries) and purchases, other business related transactions may also be subject to GST, such as:
i) Sale of business assets, scraps
ii) Providing gifts (non-monetary) to your clients/supplier (if the value of gift is more than RM500 per recipient per year)
iii) Letting of business assets for private use.
iv) Sale of goods or services to connected person at value lower than the Open Market Value
v) Reimbursements of costs from other party
Not all GST incurred on purchases qualifies for GST input tax credit. GST incurred in relation to passenger cars, club subscription fees, medical fees, family benefits etc are not eligible for GST input tax credit. It is advisable you conduct a thorough review of all your business transactions to ascertain the GST treatment.
Q: Must I issue a tax invoice using my accounting system? Is there a prescribed format which I must follow?
A: There is no specification on how a tax invoice is to be issued. However, the legislation has prescribed particulars which are required to be stated in the tax invoice.
Q: My customer advises me to raise invoice in Jan 2015 but to deliver the goods only in May 2015. As I have raised the invoice before GST is effective, I do not need to charge GST. Is this correct?
A: The transitional rules provide that any supply of goods and services from April 1, 2015 would be subject to GST notwithstanding that you have issued invoice before the appointed date. The amount stated in the invoice would be deemed inclusive of GST. This would put you in a worse position as your net income is less after taking into consideration the GST payable to Royal Malaysian Customs Department.
Q: Do I need an accounting software when preparing my GST return? What kind of software is recommended?
A: Having an accounting software to prepare your GST return should make your job easier as it improves the efficiency and accuracy in generating the necessary reports for preparation of GST returns.
Every software has its own unique features and advantages and there is no ‘one-size-fits-all’ kind of software. In selecting a software, areas to be considered include transaction volume, business complexity, staff’s knowledge and price budget.
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