Tax Planning for Individual.

It's the time of the year again where most employed workers will be eligible for the year end bonus payment.

To those who received the payout will know that their bonus payment is subjected to income tax deduction by the Inland Revenue Board (IRB) of Malaysia. Many will grumble of this deduction but we all have no alternative of NOT to pay the taxes. However, there is one solution (legal) to avoid paying taxes on the bonuses.

The Malaysian Tax Act allows certain income to be deducted from gross salary and they are travelling allowances, meal allowances and maternity allowances.

If you want to avoid paying taxes on your bonuses, you could instruct your employer to convert the bonus money that you would receive into one of the 3 allowances eligible for deduction mentioned above.This amount of bonuses would then be divided by 12 months period and you would receive the divided proportion on monthly basis until the total of allowance become same as the bonus payment.

Happy Investing!!