Expat Tax Query

Yes when you file your annual tax return for 2019 in April 2020 any overpaid tax is refunded.

The overpaid tax is difference between the 28% flat rate and the amount of tax due at resident rates with allowances

Thank you Gravitas. Does the rebate also include the first 182 days tax? My hiring manager tells me there won't be any refund for the first 6 months tax deducted. Please clarify as this is very confusing..

Overpayment is always refunded so as long as you work for 182 days in 2019 then retrospectively your tax is recalculated at the resident rates for the whole tax year.

Tax is a bit complex but you will get a portion of the rm9k tax free allowance as per number of months worked

That makes sense. Thank you Gravitas. You are a boon to this community!

Gravitas wrote:

Tax is a bit complex but you will get a portion of the rm9k tax free allowance as per number of months worked

Now, I don't understand this part. Are you saying the free allowance will be prorated? Does that mean the first six months will not be considered to derive my monthly tax commitment? This is super confusing for a newbie

Also, will my salary from the 7th month onward be credited as per the Tax Resident slab rates. I mean the amount credited to my bank account from my Employer payroll.

Tq
If you work June to December (7 months)
7  x 13.000 = 91,000
5250 personal tax free allowance (7/12ths of 9,000)
Taxable income 85,750

Will update tax payable shortly

Edit
On first 70,000 = 4600
+ 24% payable on balance 15,750 ( =3780)
Total = 8380
Divide by 7 to find monthly deduction
Tax is under1200 per month

This is a rough calculation based on nett salary but don't know about other deductions from monthly pay such as socso, epf, medical etc

It's clearer now. I will be completing my 182 days by Nov 30 2019. Does this mean I will be deducted a flat rate of 28% (3700 MYR) on gross pay of 13K MYR p.m till November and then it will be 1200 MYR tax from December onward (only for that month I guess) which means my net salary will be 13K - 1.2K = 10.8K MYR in hand?

And I can claim the excess tax (3700-1200)*6 which is around 15K MYR by April 2020 when I file my tax returns for FY19. Again the whole process starts from Jan 2020. Is my understanding correct?

Totally correct.

You continue to pay tax resident rates from January 2020

The only tricky bit is the  182 days requirement for each tax year if leaving job/malaysia January to July in the future.

Thanks for your patient explanation. Appreciate it..

Another question for 2020. Will they again deduct 28% from Jan till July 2020? Please don't say yes !!

Edit: Thanks, you answered it in the previous post.

Gravitas wrote:

Totally correct.

You continue to pay tax resident rates from January 2020

The only tricky bit is the  182 days requirement for each tax year if leaving job/malaysia January to July in the future.

Planning how to leave in a tax beneficial way is important

Yeah, my EP expires in 2 years from June 2019. I guess, I will still be a TR in case I leave. Not sure on the details.

Edit: I am thinking my full year of service in 2020 will link into my tenure in 2021 even though it falls short of 182 days in 2021. I am not sure though.

You will need to plan carefully if you don't work until 3 July 2021* because 2021 you would not have 182 days**

It's possible to link tax year 2020 to 2021 by careful planning of any holidays. It's called the 14 day rule

* see if employer will give you 25 month contract
**each tax year is separate

Thanks, Gravitas. How do I plan my holidays? Please elaborate if you have the time.  Greatly appreciate your inputs.

Sorry I updated above message. Please check it

Basically to link tax years accumulated maximum of 14 days personal travel

So if I understand this correctly, if my holiday count is less than 14 days from Jan 2021 to June 2021 ( my EP expires on June 1), FY 2021 will be linked to 2020 tax year and I won't be charged Non Resident Tax. Is this accurate or is it wishful thinking on my part?

This is interesting

http://lampiran1.hasil.gov.my/pdf/pdfam/PR6_2011.pdf

The main point to note is taking 14 days across the year end 31st December /January and the consequences

However there are no examples of the 14 day rule Jan-July but it is mentioned in the general rules

I looked at Example 5 in Page 7. I guess that applies to me. By that interpretation I will be considered a TR in 2021 I reckon. Please confirm.

Rule is linking shorter period (2021) to 182 day longer period (2020) with max 14 days.

This is tricky and I think needs explaining by someone else as I am not 100% sure how it works.

Example 5 - Only issue is "182 consecutive days in 2009" in the narrative under the diagram

I think the max days I should have taken for social visits should be equal to or lesser than 14 from Nov 29 2020 - June 1 2021 (183 days) for this rule to kick in. Anyway I guess I need to confirm this with an auditor when I am in KL. Thanks Gravitas!!

Gravitas wrote:

Example 5 - Only issue is "182 consecutive days in 2009" in the narrative under the diagram

Yeah now that you mentioned it, this looks very specific. I need to have at least one break free 182 days in 2020 to achieve this. By the way, is there an update to this document. It is kinda old.

I did a search on "Resident Status Public Ruling" and there is a document from 2017 but can't send a link.

INLAND REVENUE BOARD OF MALAYSIA
PDFwww.hasil.gov.my › pdfam › PR_11_2017