Mathematics: Project Based Learning

Title: Income Tax Assessment

Name Poah Zhi Xian / (30)

Class 5S1 2022
School Sekolah Menengah Jenis Kebangsaan Sam Tet
5, Jalan Gereja,
Address
30300, Ipoh, Perak, Malaysia

Subject
Ms. Chan Lai Yin
Teacher
Duration of
study 1/5/2022-14/5/2022
 Duration of the Project Based Learning
1 May 2022 – 14 May 2022 (2 weeks)

No. Date Schedule

Instructions given on Project Based Learning
1. 1 May 2022
2022 (Mathematics): Income Tax Assessment.
2. 2 May 2022 Collecting data and information for the project.
Analyzing the data and information.
3. 4 May 2022
Discussion with the subject teacher
4. 5 May 2022 Starting to do the write up for the project.
5. 8 May 2022 Editing the draft after checking by the teacher.
6. 14 May 2022 Hand up to teacher for final checking.
 TOPIC: INCOME TAX ASSESSMENT

Taxpayers need to interpret, report and make income tax payment on

annual basis. By using the latest tax exemption and tax relief items, you
are required to create a folio about income tax assessment for one of your
family members (a case study). Your folio should contain
(a) front cover -name, class, title of project, name of subject teacher, school
and school address, duration of study
(b) Content:
(i) Introduction of income tax
(ii) Latest tax exemption and tax relief items
(iii) Income tax assessment of a family member (a case study)
(c) Conclusion
(d)Related references
b) i) Introduction of income tax

Taxation is a process of revenue (money) collection from individuals

or companies, for use in the country’s development, by providing various
facilities (for example, education, healthcare, national security, welfare) for
the well-being of all citizens. All taxes collected are based on parliament-
approved acts.

~Mathematics KSSM Textbook Form 5

An income tax is a tax imposed on individuals or entities (taxpayers)

in respect of the income or profits earned by them (commonly called
taxable income). Income tax generally is computed as the product of a tax
rate times the taxable income. Taxation rates may vary by type or
characteristics of the taxpayer and the type of income.

Therefore, the purpose of paying income tax is very important to our

country. This is because they are used as a source of government revenue to
fund national development projects and public services. They are also used
to control the sale of goods or services. Examples include tobacco taxes,
alcohol taxes and gambling taxes. In some cases, income tax is used as a
financial tool to stabilize the economy. Also, income tax is used to pay the
salaries of politicians or civil servants. Moreover, taxes may act as
government policy implementation tool. For example, real property gains
tax is imposed when the government wants to reduce excessive property
investment activities

The Inland Revenue Board (IRB) and Royal Malaysian Customs are
responsible for collecting direct and indirect taxes in Malaysia. State
governments are responsible for collecting mining, land and forest revenue,
local government revenue, and revenue from issuing permits.
b) ii) Latest tax exemption and tax relief items
• Definition of Tax Exemption:
A tax exemption is the right to exclude all or some income from
taxationby federal or states governments. These expenses may be tax
exempted but are subjected to certain limits in amount. These tax
exemptions aim to promote developments in cultural and arts as well
as in cultivating a caring society.
Tax Exemption for Resident
Individual Year of Assessment 2021:

Perquisite / Benefit-in-kind Tax Exemption Limit (per year)

Up to RM6,000. If the amount exceeds

RM6,000, further deductions can be
Petrol, travel, toll allowances
made in respect of amount spent for
official duties.

Parking allowance, including parking

Actual amount expended
rate paid by employer directly

Meal allowance received on a

Actual amount expended
regular basis

Medical benefits (including

traditional medicine and maternity Actual amount expended
expenses)

Child care allowance for children up

Up to RM2,400.
to 12 years old

Benefit, whether in money or

otherwise, for past achievements,
Up to RM2,000.
service excellence, or long service
award, etc.
 Gift of fixed line telephone, mobile
phone, etc. registered in employee’s Limited to 1 unit for each asset
name

Monthly bills for phone or

Limited to 1 line for each category of
broadband line registered in
asset
employee’s name

Company goods provided free or at

a discount to employee, spouse, or Up to RM1,000
unmarried children

Company goods provided free or at

Amount of discount or amount of
a discount to employee, spouse, or
services provided free
unmarried children

Fully exempted if total loan amount

Subsidised interest for housing,
education, or car loan
does not exceed RM300,000. For
exceeding amounts, there is a
calculation formula that you can find
in the explanatory notes to the BE
form.

Exempted up to 3x in a year for leave

passage within Malaysia (fares, meals,
Leave passage (vacation time paid
accommodation) and 1x outside
for by employer)
Malaysia (up to RM3,000 for fares
only)

* Subject to change from time to time.

(Source: Official Portal Inland Revenue Board of Malaysia) 2022

 • Definition of Tax Relief:

A tax relief refers to any government program or policy designed to help

individuals and businesses reduce their tax burdens or resolve their tax-
related debts. For example, Employees’ Provident Fund (EPF), medical
treatment and education fees. Items of tax relief depend on the policy set
by the government and may change from year to year.

Tax Relief for Resident

Individual Year of Assessment 2021:

No Individual Relief Types Amount (RM)

1 Individual and dependent relatives 9,000

Medical treatment, special needs and carer expenses for parents 8,000
2
(Medical condition certified by medical practitioner) (Restricted)

Purchase of basic supporting equipment for disabled self, 6,000

3
spouse, child or parent (Restricted)

4 Disabled individual 6,000

Education fees (Self)

Other than a degree at masters or doctorate level - Course of

study in law, accounting, islamic financing, technical, vocational,
industrial, scientific or technology
7,000
5 Degree at masters or doctorate level - Any course of study (Restricted)
Any course of study undertaken for the purpose of up-skilling or
self-enhancement recognized by the Director General of Skills
Development under the National Skills Development Act 2006 –
effective from YA 2021 until YA 2022. (Restricted to 1,000)

6 Medical expenses for serious diseases for self, spouse or child

7 Medical expenses for fertility treatment for self or spouse

Vaccination expenses for self, spouse and child. Types of vaccine

which qualify for deduction are as follows:

Pneumococcal;

Human papillomavirus (HPV);

Influenza;

8 Rotavirus;

Varicella; 8,000
Meningococcal; (Restricted)

TDAP combination ( tetanus-diphtheria-acellular-pertussis); and

Coronavirus Disease 2019 (Covid-19)

(Restricted to 1,000)

(i) Complete medical examination for self, spouse, child as

defined by the Malaysian Medical Council (MMC).
9 (ii) COVID-19 detection test including purchase of self detection
test kit for self, spouse, child.
(Restricted to 1,000)

Lifestyle – Expenses for the use / benefit of self, spouse or child

in respect of:

purchase and subscription of books / journals / magazines /

newspapers (including electronic subscription) / other similar
publications (Not banned reading materials)

purchase of personal computer, smartphone or tablet (Not for 2,500

10
business use) (Restricted)

purchase of sports equipment for sports activity defined under

the Sports Development Act 1997 and payment of gym
membership

payment of monthly bill for internet subscription (Under own

name)
 Lifestyle – Purchase of personal computer, smartphone or tablet
for self, spouse or child and not for business use 2,500
11
This deduction is an addition to the deduction granted under (Restricted)
item 10.

Purchase of breastfeeding equipment for own use for a child

1,000
12 aged 2 years and below (Deduction allowed once in every 2
(Restricted)
years of assessment)

Payment for child care fees to a registered child care centre / 3,000
13
kindergarten for a child aged 6 years and below (Restricted)

Net deposit in Skim Simpanan Pendidikan Nasional (Net deposit 8,000

14
is the total deposit in 2021 MINUS total withdrawal in 2021) (Restricted)

4,000
15 Husband / wife / payment of alimony to former wife
(Restricted)

16 Disabled husband / wife 5,000

17 Each unmarried child and under the age of 18 years old 2,000

Each unmarried child of 18 years and above who is receiving

18 full-time education ("A-Level", certificate, matriculation or 2,000
preparatory courses).

Each unmarried child of 18 years and above that:

receiving further education in Malaysia in respect of an award of

diploma or higher (excluding matriculation/ preparatory
19 courses). 8,000

receiving further education outside Malaysia in respect of an

award of degree or its equivalent (including Master or
Doctorate).
 Disabled child 6,000

Additional exemption of RM8,000 disable child age 18 years old

and above, not married and pursuing diplomas or above
20
qualification in Malaysia @ bachelor degree or above outside
Malaysia in program and in 8,000

Higher Education Institute that is accredited by related

Government authorities

Life insurance and EPF INCLUDING not through salary deduction

Pensionable public servant category

Life insurance premium 7,000

21
OTHER than pensionable public servant category (Restricted)

Life insurance premium (Restricted to RM3,000)

Contribution to EPF / approved scheme (Restricted to RM4,000)

Deferred Annuity and Private Retirement Scheme (PRS) - with 3,000

22
effect from year assessment 2012 until year assessment 2025 (Restricted)

Education and medical insurance (INCLUDING not through salary 3,000

23
deduction) (Restricted)

250
24 Contribution to the Social Security Organization (SOCSO)
(Restricted)

Payment for accommodation at premises registered with the

Commissioner of Tourism and entrance fee to a tourist attraction

(Expenses incurred on or after 1st March 2020 until 31st 1,000

25
December 2021) (Restricted)

Registered accomodation premises can be check thru link

of : http://www.motac.gov.my/en/check/registered-hotel

* Subject to change from time to time.

(Source: Official Portal Inland Revenue Board of Malaysia) 2022

 b) iii) Income tax assessment of a family member- A case study
My sister, Yi Cheng earned an annual salary of RM75 000, including monthly allowance
of RM1000, monthly medical benefits of RM100 in 2021. In that year, she donated
RM500 to a government-approved charity organization. The table below shows tax
reliefs of my sister.

Tax Relief Amount (RM)

Individual (limited to RM9000) 9 000

Life insurance & EPF (limited to RM 7000) 4 500
Lifestyle (limited to RM2500) 2 000
Medical insurance (limited to RM3000) 1 500

Calculate the total income tax of my sister, Yi Cheng by using income tax
assessment.
Item Income Tax Assessment (RM)

Annual income 75 000

- Donation - 500
Tax exemption:
- Allowance - (1000×12)
=12 000
- Medical benefit - (100×12)
=1 200
Tax relief:
- Individual (limited to RM9000) - 9 000
- Lifestyle (limited to RM2500) - 2 000
- Medical insurance (limited to RM3000) - 1 500
- Life insurance & EPF (limited to - 4 500
RM7000)
Chargeable income 44 300
Base tax 600
Tax on the next balance Balance
=RM44 300-RM35 000
=RM9 300

RM9 300 x 8%
=RM744
Tax rebate - RM0
Income tax payable RM600+RM744
=RM1 344
c) Conclusion

To conclude, we can say that the instrument of taxation has good

effect on:

• Increasing the level of economic activity

• Reducing income inequalities
• Promoting economic growth
• Reducing the gap between rich and poor
• Raising the standard of living in a country

As citizens of Malaysia, we must report our property honestly in

order to fulfill our responsibilities as citizens. This is because the

taxes collected by the Malaysian government can become one

of the resources for the development of the nation’s economy.

d) Related References

1) Book

i. KSSM Form 5 Mathematics Textbook

ii. Sasbadi Modul Aktiviti Integrasi Digital KSSM Tingkatan 5 Mathematics

Dwibahasa

2) Internet

i. https://www.investopedia.com/terms/i/incometax.asp

ii. https://slideplayer.com/slide/4070090/

iii. https://www.bankrate.com/glossary/t/tax-exemption/

iv. https://ringgitplus.com/en/blog/income-tax/tax-exemptions-

what-part-of-your-income-is-taxable.html

v. http://www.hasil.gov.my/bt_goindex.php?bt_kump=5&bt_sk

um=1&bt_posi=3&bt_unit=1&bt_sequ=1&bt_lgv=2
8. Answer the following questions.

i. State 2 types of tax rebate allowed by the government.

ii. State the entities responsible for collecting
a. Income tax
b. Property assessment tax
c. Road tax
d. Sales and service tax
iii. Explain the meaning of tax relief for income tax.
iv. What are the consequences if a person failed to submit annual tax report if eligible
for tax payment?

Answer:

i. (a) Tax rebate of RM400 will be given to taxpayer if the chargeable

income does not exceed RM35 000, subject to change.

(b) The amount of zakat or fitrah paid by Muslim citizens.

ii. a. Inland Revenue Board (IRB), or in Malay Lembaga Hasil Dalam

Negeri (LHDN).

b. Local authority, such as municipal council or district council.

c. Road Transport Department, or in Malay Jabatan Pengangkutan

Jalan (JPJ).

d. Royal Malaysian Customs Department (RMCD), or in Malay

Jabatan Kastam Diraja Malaysia (JKDM).

iii. Tax reliefs refer to items or expenses, which are not taxed, for the

benefit of the individual or family members, for example

Employees’ Provident Fund (EPF), medical treatment and education fees.

iv. Fine of RM200 up to RM20 000 or imprisonment of not exceeding 6 months or

both.