Let’s be real, staring at the e-Filing screen can make even the sharpest person feel a little cross-eyed. Whether it’s your first year or your fiftieth, the pressure to get everything perfect is high. Yet, mistakes are surprisingly easy to make.
In fact, it's common enough that the Inland Revenue Board of Malaysia (LHDN) recently issued a media statement pointing out that many taxpayers are accidentally selecting 'Yes' for the 'Tax borne by employer' section. It sounds like a small detail, but it’s one of those "oops" moments that can cost you time, money, or even attract penalties.
As you navigate your income tax filing this year, here are some things you should look out for.
1. The “Submit” Button
It sounds trivial, but many taxpayers fill out their entire e-Filing on the MyTax portal and then simply close the browser, thinking they are done.
- The Mistake: Failing to click through the final declaration and "Sign and Submit" buttons.
- The Consequence: Your tax return is technically "unfiled," leading to automatic late-filing penalties starting from15% of the tax payable. Late filing tax penalty rates as follow
Remember, once you’re done, always ensure you download and save your e-Filing Acknowledgement Receipt, not just the draft.
2. Choosing the Wrong Tax Form
The e-Filing process begins with selecting the correct form, a step that is often more confusing than it appears. Because each form is tailored to specific taxpayer profiles, an incorrect selection can lead to misclassified income and avoidable filing errors. Accuracy at this stage is vital for a seamless submission.
Here’s a guide to ensure that you choose the right form
- e-Be: Form BE is an income tax return form for individuals with income from non-business sources. This includes employees who receive salaries, retirees who receive pensions, and individuals earning investment income such as rental income
- e-B: Form B is an income tax return form for individual taxpayers who derive income from business activities, such as sole proprietors and partnerships
- e-BT: Form BT is a specialised form for "Knowledge Workers" or "Returning Experts" approved by the Minister.
- e-M: Form M is an income tax return form for non-Malaysian resident earning an income in Malaysia
- e-MT: Form MT is a specialized version of Form M for non-resident "Knowledge Workers" approved by the Minister
3. Claiming Incorrect or Ineligible Lifestyle Deductions
Malaysians love tax reliefs. Tax deductions help reduce your taxable income, which means you’ll be taxed on a lower amount. However, claiming items you’re not eligible for can trigger an audit.
In Malaysia, the lifestyle tax relief allows a deduction of up to RM2,500 per year for expenses on books, journals, magazines, newspapers, personal computers, smartphones, tablets, internet subscriptions, and self-improvement courses.
An additional RM1,000 relief is also provided for the purchase of sports equipment, payment of rental and entrance fee to any sport facilities, payment of registration fee for any sports competition where the organizer is approved and licensed by the Commissioner of Sports, and gym memberships.
Examples of what you can claim:
✅ Equipment: Rackets, shuttlecocks, dumbbells, yoga mats, and bicycles
✅ Facilities: Rental for badminton courts, swimming pool entry fees, or gym memberships
✅ Competition Fees: Registration for marathons or sports tournaments (only if organisers are approved by the Sports Commissioner. Refer to eligible list here)
Examples of what is not eligible for claims:
❌ Subscription Services: Netflix, Spotify, or Disney+ subscriptions
❌ Gaming Consoles: PS5, Nintendo Switch, or gaming peripherals like RGB keyboards (unless the keyboard is part of a PC purchase)
❌ Phone Accessories: Power banks, phone cases, or screen protectors
❌ Sports Attire: Jerseys, footwear or compression wear
❌ Clubhouse Fees: Social club memberships that aren't strictly for a gym or sports facility
❌ Freelance Coaching: Training fees paid to an uncertified or unregistered freelance coach
4. Ignoring Non-Employment Income
Many Malaysians forget to declare income that didn't come from their monthly paycheck. Understating income can lead to a fine of RM1,000 to RM10,000 plus 200% of the tax undercharged.
What to include:
- Rental income
- Commissions from part-time sales (like Cuckoo or Coway agents)
- Freelance projects
5. Miscalculating EPF and Insurance Limits
The limits for EPF and Life Insurance are often confusing because they share a combined cap or have specific sub-limits.
While the limit is RM7,000 in total, here’s the split that taxpayers need to take note of:
- Up to RM3,000 for Life Insurance/Takaful
- Up to RM4,000 for EPF (voluntary or mandatory)
💡 Bonus Tip: Always keep all receipts, invoices, and documentation for at least 7 years in case LHDN requests proof.
Filing your income tax in Malaysia doesn't have to be a source of annual anxiety. Most of the common mistakes mentioned above, from clicking the wrong button to losing a receipt, are entirely preventable with a little bit of organisation and a "do it early" mindset.
Being an informed taxpayer isn't just about avoiding penalties, it's about ensuring you don't overpay or miss out on the reliefs you’ve rightfully earned. A little attention to detail today can save you time and money tomorrow.
If you're a freelancer or business owner unsure about your tax position, get in touch with Thelyx today and let us handle the complexities for you!
