If you are given the benefit to claim reimbursement from your employer the expenses for you to employ gardeners or domestic servants or to claim reimbursement for your mobile phone charges, it is advisable not to make use of them.

Instead, you can request your employer to employ these gardeners or domestic servants to work for you and register the mobile number under your employer’s name. Both the ways gives the same benefits but the tax implications are different for each of the methods.

If you employ the gardeners and domestic servants yourself or register your mobile phone number under your name and claim reimbursement for these expenses from your employer, your employment income will include the full amount your employer reimburse you. This type of reimbursement will fall under the category of perquisite under section 13(1)(a) of Income Tax Act(ITA).

On the other hand, instead of you employing these gardeners or domestic servants by yourself or registering your mobile phone number under your name, getting your employer to do them will render these benefits to fall under the category of ‘benefits in kind’ under section 13(1)(b) of the ITA. Under these section, the amount that will be included in your employment income is as follows(given in annual value):

a) Mobile telephone (rental & charges) : RM 600

b) Gardeners : RM 3600

c) Domestic servants : RM 4800

If you look carefully, the annual value that will be included in your employment income is much lesser than the actual expenses that you will incur in having these benefits by yourself. Nowadays, employing a maid is not less than RM 600/month, if you were to employ a maid by yourself and claim reimbursement from your employer, your employment income will be added with the full amount of RM 600/month. But if you were given a maid by your employer, your employment income will only be added with RM400/month, so you will save RM 200/month from being included in your taxable income. This is absolutely a great method to reduce the amount of tax we will be required to pay, however, the question is, how many employers will come forward to do so? Well, it depends, but if you have such option don’t waste it.

For more info on employment income visit hasil.org.my

If you enjoyed this post, make sure you subscribe to my RSS feed!

What determines the individual tax residency status in Malaysia?

That is question which we will try to answer in this post but before that it is advisable to read the distinction between the status of a tax resident and a non-tax resident.

Now, if we refer to section 7(1) of our Income Tax Act 1967 we will get the answer to our question. It is explained there that the individual tax residency status can be obtained by four ways which are detailed in subsection (1)(a)-(1)(d). But, before we move further to look into the four circumstances, lets make clear the concept of

a)basis year; and

b)year of assessment.

Basis year is the period for which we are referring in assessing our income tax whereas year of assessment is a point in time where we are charged for income tax for the basis year. If you don’t understand, refer to the following example for further explanation of these concepts.

‘Lets say, it is the year 1998 and you are reporting to the Inland Revenue Board(LHDN) for the income you received in the year 1997. The basis year for this example would be the year 1997 because this is the period for which you are assessing your income. The year of assessment would be 1998 because this is the time you are being charged for income tax for the basis year of 1997.’ Is it clear now?

Prior to the year 2000, Malaysia charged income tax on a preceding year basis which is some sort like the example above. However, from the year 2000 onwards, Malaysia has shifted from the preceding year basis to current year basis for individual assessments which means both the basis period and the year of assessment are the same. Now we are assessed for income tax in a certain year for the income we receive in that year.

Why we need to understand these concepts is because when we are determining the tax residency status, we will be referring to the basis period instead of the year of assessment, so clear distinction between these concepts is essential.

Now lets get back to our topic.

The four circumstances which render a person to be a Malaysian tax resident are as follows:

1) If a person stays in Malaysia for a period of 182 days or more (need not to be consecutive) for the basis year, that person is considered to be a Malaysian tax resident. Simply said, if you are physically available in Malaysia for a period of 182 days or more, you are a Malaysian tax resident.

2) If a person stays in Malaysia for less than 182 days, but that basis year is linked by or linked to another basis year of at least 182 consecutive days, that person is considered a Malaysian tax resident. However, temporary absence can be taken as forming part of the consecutive 182 days.

3) The third circumstance is, if a person stays for 90 days or more in Malaysia(need not to be consecutive) and he was either:

a) a tax resident in Malaysia, or

b) in Malaysia for 90 days or more;

in any three out of four immediate preceding years, he is deemed to be a tax resident for that basis year.

4) The last way is, if he is not even physically present in Malaysia for that basis year but he is a tax resident of Malaysia in three immediate preceding years and the year following that basis year, he automatically becomes a tax resident for that basis year.

Most of Malaysian citizens usually will be a tax resident from the virtue of section 7(1)(a) by staying in Malaysia for more than 182 days. The other subsections are more relied by those who travel abroad to work or by foreigners who work in Malaysia.

For more information on this topic refer to hasil.org

Hopefully, this post was informative to you. If you have any comments, please don’t hesitate to drop one.

If you enjoyed this post, make sure you subscribe to my RSS feed!

How do you maximize your site?

Simply by earning some few dollars per click from displaying Adsense ads on it! Many are now realizing that good money is made from this source of revenue. Try the simple mathematical computation of multiplying those clicks for every page on your website and you get a summation of earnings equivalent to a monthly residual income with that little effort you have made.

Google Adsense is a fast and easy way for website publishers of all sizes to display relevant and text-based Google ads on their website’s content pages and earn money in the process. The ads displayed are related to what your users are looking for on your site. This is the main reason why you both can monetize and enhance your content pages using Adsense.

How much you will be earning will depend on how much the advertisers are willing to pay. It will depend also on the keywords required. If the keywords the advertiser have chosen are in high demand, you could receive more dollars per click. On the other hand, low demand keywords will earn you just a few cents per click.

How can you start making profits out of your website using Adsense?

1. Sign up for an Adsense account. It will only take a few minutes of your time.

2. When the site is accepted, you will be receiving a clip code to include in your web pages. You can insert this code on as many pages or web sites that you want. The AdWords will start appearing immediately after.

3. You will be earning a few cents or some dollars per click when someone starts clicking on the AdWords displayed on any of your web pages. Trying to earn false revenues by repetitively clicking on your own ads is a no-no. This will result in a penalty or the possibility of your site being eliminated. The money you have already earned may be lost because of this.

4. View your statistics. Adsense earnings can be checked anytime by logging into your web site account.

Once you got your account working, you may still want to pattern them to the many sites that are earning more money than you are. It is important to note that there are factors affecting how your website will perform and the amount of money it will give you.
It is a common practice that when a site earning money, the tendency is for the owner to want to make more out of what they are getting already. It usually takes some time combined with trial and error to attain what you want for your Adsense contents.

How do you increase your Adsense earnings? This is a question asked by most of the publishers. Well, below are a few tips to do so.

1. Choose one topic per page. It is best to write a content for your page with just a few targeted phrases. The search engine will then serve ads that are more relevant which will then result in higher clickthroughs.

2. Using white space around your ad. This can make your ad stand out from the rest of your page so visitors can spot them easily. There are also other choices of colors you can use,which harmonizes the color of your ad with the web page color.

3. Test your ad placement. It is recommended to use the vertical format that runs down the side of the web page to get more positive results. You can also try both horizontal and vertical formats for a certain period of time to see which one will give you better results.

4. More content-based pages. Widen the theme of your website by creating pages that focus more on your keyword phrases. This will optimize the pages for the search engines. It does not only attract traffic but also make them more relevant for the ads to be displayed.

5. Site Build It. This is the perfect tool to be used for creating lots of Adsense revenues. Site Build It has all the tools necessary to quickly achieve a keyword-rich site that can rank high in the search engines. This will also produce a flow of traffic to your site of highly targeted visitors.

More adsense resources:

Inside adsense - Google adsense blog

Adsense secrets - Free DVD on adsense tips

Adsense videos - Best-selling Step-by-step AdSense Videos

If you enjoyed this post, make sure you subscribe to my RSS feed!