| (1) What
is meant by Self Assessment?
Self Assessment is the manner in which a taxpayer works out
and pays his own income tax. It is not
a new tax but a system whereby the taxpayer
is given the responsibility to compute
his own tax liability.
Self Assessment is a total process change from the previous
formal assessment system. Under the formal
assessment system, taxpayers are required
to declare their incomes in the Return
Form, submit the Return Form to the Inland
Revenue Board (IRB) and the IRB will then
raise the assessment. The Notice of Assessment
is sent to the taxpayer and based on the
tax raised in the Notice of Assessment,
payment must be made accordingly.
Under the Self Assessment System, taxpayers are still required
to complete and submit Return Form by
the required dates. However, no notice
of assessment will be sent to the taxpayers.
Instead taxpayers will have to compute
their own tax and make payment of the
full amount at the time also required
to estimate the tax to be paid for the
current year and make monthly payments
during the year based on the estimate.
Taxpayers are allowed to make monthly
payments to IRB directly or pay through
Bumiputra-Commerce Bank/ Public Bank Bhd./
Public Finance Bhd.
In the case of an employee, the Scheduler
Tax Deduction Scheme will continue to
apply - i.e. tax will be deducted from
the monthly salary and remitted to the
IRB by the employer.
Why Self Assess?
For the taxpayer, self assessment will
allow the taxpayer to better manage his
own tax affairs. To do this he has to
keep proper records, fill his returns
correctly, compute his tax and finally
submit his Returns Form with the final
payment of tax (if any).
For the IRB, the change to the Self Assessment
System is aimed at:
i. Modernising and streamlining the tax
administration;
ii. Producing a more efficient system
and faster collection of taxes; and
iii. Increasing the level of income tax
compliance
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