9.3 Residual Individual Cases with business income (Form – B/e-B)

Tax Return Form B /e-B

For individuals who are resident in Malaysia during the assessment period, there are only 2 types of tax return filing form applied. Is either 

1. Form Be/ e-Be (resident individual without business income) or ;
2. Form B/ e-B (resident individual with business income).

 Besides the tax return filling deadline for the Form B is different from Form Be (Form B been due in 30 June instead of 30 April every year), business income become the main fact to differentiate which type of tax return filling form applied to you.

Business income 

As per discussed, income tax been imposed under Section (Sec) 4 of Income Tax Act 1967 (ITA 1967). Whereby, business income been stated under Sec 4(a) as per follow:-

4. Subject to this Act, the income upon which tax is chargeable under this Act is income in respect of-

(a) gains or profits from a business, for whatever period of time carried on;

Further on the statement above, definition of the word “business” been defined under Sec 2 as per:-

"business" includes profession, vocation and trade and every manufacture, adventure or concern in the nature of trade, but excludes employment;

The word”profession” may perhaps confuse your judgment whether your current situation is considered an inclusive part of “business income” under Sec 4(a) or belonging to “employment income” under Sec4 (b).  Which there might therefore some fact to be considered, which they are:-

 

1.       Whether a master-servant relationship (between employer and employee) appeared?

2.       Whether an element of control (such as they required specific working hours)?

3.       Whether the required element to performing task is prepared by the master of delegation?

4.       Whether element of risk (might probably incurred loss) from the task performed?

If the fact above excluded, your business are considered “employment income” under Sec4 (b). Else, a more general tangible judgment might be <whether you have a FORM EA for the remuneration you received>.

Business and Trade

Although the word “business” have a wider scope from “trade”, but we take the word “trade” been seen as synonymously with the word “business” to avoid your confusion for the business scope definition herewith whereby the word ”trade” is not defined in ITA 1967. Lets we look further for how “business or trade” being defined by UK HM Revenue & Custom in topic 7. Badges of Trade

For the preparation of tax return for individual with business income basically is not much different to prepare tax return for individual without business income. Basically the individual (Idv) tax return (With business income – Sec 4(a) – Filling of Form B) timeline could be:-

Converted into time line for tax return:-

Step 1. Reminder of request info

Duration  : About 2~3 months before – Tax Return Filling

Subject     : To get the information you may need to prepare your Income Tax Computation (ITC)

For Idv ITC, you would have no sketch of information you would get, but you could refer the previous year ITC to expect how the Idv practice to control over his/her/their financial habit. Individual will seldom change the financial habit as companies do, just like how you like to having a cup of coffee while reading.

Basically the document you may get could categorize into:-

1. Income related documents
2. Rebate related documents
3. Relief related documents
4. Tax remitted related documents

[Please click on title for topic link]

E. Sample list of Information neededfor Individual Tax Computation

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Step 2. Checking of Documentation

Duration  : Once getting related documents from client

Subject     : Kindly reminded your client for any missing information that you may need to prepare your Income Tax Computation (ITC)

You may go through the previous ITC for such Idv to expect what the person may normally claim each tax returns, do call up your client if you found any unusual practice or missing documents from your client.

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Step 3. Draft Tax Computation

Duration  : ~6 weeks/ 45 days before tax return due date.

Subject     : Preparing tax return computation which could be accept/ agreed by your client.

Steps in preparing draft tax computation:

1. Income computation– For business income, kindly refer to my previous discussion for corporate business income [Type3 - Business income generate unit - (common case)]

2. Relieve computation
3. Tax payable summary

All others details may exactly same as individual without business income

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tep 4. Final approval of tax return

Duration  : About 2 week before – Tax Return Filling

Subject     : Finalize submission

Check immediate whether your letter and draft Form e-B have been signed correctly, then

open the PDF Form e-B directly from IRB web page to ensure on the information as Form been agreed

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Step 5. Submission of tax return filling

Duration  : About 1 week before – Tax Return Filling ~the last filling date

Subject     : Submission of Tax Return Filling

Do submission, or pass it to authorize person for submission.

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Step 6. Bound Copy(or submitted record for client)

Duration  : Any time after submission, no deadline limitation

Subject    : Send the finalized Tax Return Form to your client for record keeping purpose

On simple, only 4 items you may need to prepare :-
1. Cover letter
2. Confirmation submission of Form e-B

3. Final submitted copy of Form e-B
4. The signed page(from your client) of Draft Form e-B

For Comprehensive, you may need :-
1. Bill
2. Duplicate of acknowledgment
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3. [hard cover for booklet/ binding cover]
4. Cover letter
5. Signed approval letter

6. Confirmation submission of Form e-B

7. Final submitted copy of Form e-B
8. Signed Draft Form e-B
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[Item between double line (3-8) is binding to be a booklet]