Father Sez

From and to parents - parental advice to our children on personal financial management and life.
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A part of whatever you earneth, the taxman taketh

Wednesday April 15th, 2009 by fathersez

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This lesson has just been reinforced upon my second girl, Azah. 

She is an accounting graduate, so she is well aware of the need to pay taxes etc. Still there is no better teacher that the act of having to pay taxes herself.  

She started work with an accounting firm in July last year. As is required under our Malaysian tax laws, her employer prepared a certificate of her earnings and sent one copy to the Lembaga Hasil Dalam Negeri, (as we call our Inland Revenue Service) and gave another copy to my daughter. 

In the old days, the next step would be to fill up and file a stack of forms that the IRS sends to every taxpayer early each year.  Now it’s all online. The deadline for filing is 30 April.  

As she was a first time tax filer, she needed a PIN for her account. I took her particulars to the local LHDN office and got her PIN. I suppose, strictly speaking, they should have insisted that the number be given only to the tax payer. But then, I am the father and I had the documents to prove it.  

Her earnings for the year are below the taxable threshold, so she should not be paying any taxes. In any event, Malaysian employees are all put into a PAYE system where the estimated taxes for the year are calculated upfront and deducted from the wages monthly.  

Last Sunday we did her first filing together. I did the logging in etc., whilst she sat beside me. We went through the process of filling up her personal info, her earnings, the deductions allowed for her and the net results. The process took only about 15 – 20 minutes.

The lessons learnt were deep. Azah realized the need to keep proper documents and receipts, and that there were allowances for her insurances, books and computer purchased. 

This year, she managed to file her taxes well before the deadline. I wonder how her next year’s tax filing experience would be. 

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