At this time of the year, many migrant workers have received the EA form issued by the company and can begin to file personal income tax. However, do you understand this income statement indicating the salary and benefits of the past year?
This employment salary statement, which is widely known as “EA Form”, is called CP8A by the Inland Revenue Service (Form CP8A), which is a salary list that employers must prepare for employees each year, listing the employees’ taxable income in the past year And tax-free income or benefits, monthly withholding tax (PCB), employee provident fund and other amounts, for the purpose of tax declaration by the salaried family.
The EA form prepared by the employer must be in the format prescribed by the authorities. In other words, no matter which company you work for, the format of the EA form remains the same, only the salary items, amounts, etc. are different.
The EA form is divided into 7 categories from A to G.
It should be noted that the income entered in Parts B and C are taxable income, and the total amount of the two is the amount that employees have to fill in the “B1” (statutory employment income) column of the BE form.
Employees should confirm that the amount of taxable income in the two columns in the EA form is accurate, and that there is no more or less increase, so that the tax will not be incorrectly reported.
7 categories of EA form
■Part A: Employee Information
The employer will fill in the employee information in this section, including name, position, employee number, identity card number, employee provident fund number, etc. If the employee has served for no more than one year, such as joining or leaving in the middle of last year, the date of appointment and leaving will be displayed.
■Part B: Employment income, welfare and accommodation
(Excluding tax-free allowances/extra cash rewards (Perquisites)/gifts/benefits)
This income part is divided into 5 items. If the salary package is relatively simple and the employer does not provide material benefits such as cars or accommodation, usually only the 4 types of income in the past year are indicated in item 1. Read more about methods to renew Malaysia Identification Card (MyKad) Online.
If the salary package includes material benefits, the employer must calculate its value according to the equation of the tax bureau. If employees do not understand the amount, they should check with their employer.
According to Article 13(1b) of the Income Tax Act, the material benefits or facilities provided by the company cannot be converted into money. These are benefits provided or paid by the employer for employees, spouses, family members, etc.
1. Salary, wages or paid leave (including overtime allowance)
-Fees (including director fees), commissions or bonuses
-Total tips, additional cash rewards, bonuses or gratuities, or other allowances
-Income tax absorbed by employers on behalf of employees
2. Value of benefits-in kind:
(A) Car (must indicate the details of the car model, the date provided by the company, the value of the car and gasoline, and the driver)
(B) Utility bills, telephone bills and other benefits
(C) Home welfare (relevant furniture, air conditioners, curtains, carpets, kitchen utensils, etc. must be specified)
(D) Domestic helpers and gardeners
(E) Travel and vacation benefits
(F) Others (such as food and clothing)
3. The value of accommodation benefits (address required)
4. Unapproved pensions, plans or club refunds
5. Unemployment compensation
■Part C: Pension and others
In addition to indicating employee pensions, this column will also indicate annuities or other regular payments.
■Part D: Total deduction
1. Monthly withholding tax paid to the Tax Bureau this year
2. CP 38 deduction (that is, the tax bureau issued a “salary deduction order” to the taxpayer employer who owes taxes, requesting that the unpaid income tax be directly deducted from the employee’s salary; the total amount of deductions will be displayed here.)
3. Islamic aid (Zakat, also known as Zakat)
■Part E: Total contributions of approved pensions or provident funds, funds or associations
This column will indicate the name of the relevant provident fund, which is usually the employee provident fund; and the total amount paid by the employee. The employer part does not need to be indicated here. Click here to read Methods to Connect Smartphone with Printer without using PC.
■Part F: Payment in arrears and other payment details in previous years
According to the tax bureau, if an employee fails to receive employment income in the current year and only receives payment in the tax year of this tax return, the relevant payment must be indicated in this column. For example, if the salary that should have been received in 2014 was only received in 2015, the money should be indicated in the EA form for the 2015 tax year.
■Part G: Tax-free allowances/extra cash rewards/gifts/total benefits
The total amount of 8 tax-free allowances, additional cash rewards, gifts and benefits provided to employees by employers in the past year must be indicated in this column. This tax-free allowance is separate from the employment income in Part B and cannot be repeated. It is stated that it is tax-exempt, so employees do not need to fill this amount in the BE form when filing taxes.
That’s all 7 things you should know about EA forms! Stay safe, stay home.