Improve your vehicle's fuel consumption - by as much as 40% - by changing the way you currently drive. There is a catch, though. You'll no longer qualify as a Malaysian driver...
1. Pump More Here & Pump Less There
Don't wait until your car senget one side before inflating your tyres. Low tyre pressure forces your engine to work and drink harder. Driving on underinflated tyres also reduces the life of the tyres. A lose-lose situation.
2. Dig Your Nose
Digging your nose is more economical than gunning your engine while waiting at traffic lights. Jack rabbit starts cost you even more. Never floor the pedal unless there's an express bus looming in your rearview mirror. Learn how to accelerate (and brake) smoothly for better fuel efficiency.
3. Pay It Again Sam
You may be using an alternative toll-free road as a sign of protest or as a means of saving money. If the the old route is perpetually congested and longer, you may end up burning more fuel than the toll saved. Sad but often true.
4. Go Look Stop
Are you one of those who frequently get stuck behind a stalled vehicle, crash into road humps or potholes? If you look further than 3 meters while driving, you can better anticipate obstacles and avoid fuel guzzling start-stop situations. Good reason not to tailgate too.
5. Make Up Your Mind
I don't know if it's kiasuness or indecisiveness that makes people drive with the other foot riding the brake pedal. A slight touch might not be noticeable to you but it strains the engine, wears out your brakes prematurely and confuses the poor driver behind. Make sure your handbrake is down all the way too.
6. Get Rid Of Freeloaders
The less passengers the less weight. The less load the better the fuel economy. If you want to car pool, pool the cost. Clear your boot by removing unutilised items like golf sets, prams, barbecue sets, scuba gear, etc.
7. Bear With Crow Shit
Park your car under the shade wherever possible. The hotter your car interior becomes, the harder the air-conditioning needs to work later, the more fuel the engine consumes as a result. The hot sun also increases fuel loss through evaporation.
8. Stay Safe & Save
Fuel consumption jumps dramatically after a certain speed. Keeping to the speed limit saves you more than traffic fines. Driving at 120 kph, rather than 100 kph, may increase fuel consumption by another 25 percent. The dangers of speeding far outweigh the travel time saved.
9. Get A Life
Stop pissing off your neighbours in the mornings and do yourself a favour. Most modern cars have no chokes or carburetors, so there's no need for long, noisy engine warm- ups. Hard revving a cold engine kills it faster than driving it.
10. Let The Bugger Go
There's no need to catch up with an offending driver just to show a finger or fist. You end up either paying more for fuel or a hefty hospital bill.
11. Learn From Your Mistakes
If your wife or girlfriend says she needs to pop into a warehouse sale for a quick look-see, find a parking spot and turn off the engine. Long idling wastes fuel and pollutes the environment.
12. Don't Be A Drag Queen
Remove that empty showoff roof rack or that ugly ill-designed Ah Beng spoiler as it causes unnecessary drag. Smoking with your windows down at cruising speed also increases drag. Newer cars (except the Juara) are aerodynamically designed for fuel efficiency. Stop adding unnecessary external accessories such as jutting elbows.
13. Meter The Meter
Keep track of your car's fuel consumption by monitoring the odometer or tripmeter. A sudden drop may mean mechanical problems. Timely oil change and other maintenance can save you significant amount of fuel.
14. Try A Different Nasi Lemak
All petrol are the same except for the additives and advertising. Contrary to what most Malaysians believe, you can mix your fuel. There's really no need to waste fuel by driving out of the way just to fill up your favourite brand and redemption card.
15. Get A New Boss
Use online banking or find a better employer. Stop driving to an ATM every hour just to check whether your salary is in.
Showing posts with label money saving tips. Show all posts
Showing posts with label money saving tips. Show all posts
Tuesday, June 10, 2008
Wednesday, June 4, 2008
Ways to save money
1. Change your attitude to your mortgage
The most expensive item you are ever likely to buy is your home. If you're not in the privileged position to pay cash, make sure the loan you use to finance it is the best available. For example, if you are paying your lender's full standard variable rate (SVR) you are probably paying hundreds of pounds a year more than you need to. There are thousands of deals to choose from and while it is vital to check the small print for hidden catches, this is a relatively easy way to save a lot of money. Remember: loyalty to your bank benefits your bank, not you. Even better, if you can afford to make overpayments on your mortgage, you'll clear your debt several years early and make massive savings. For example, if you borrow £100,000 at 6% over 25 years, you'll 17.pay it back at £643 a month. The total charge for credit will be £93,000. But if you can overpay by £100 a month you'll clear the loan in less than 19 years, giving you 6 years of mortgage-free living and saving a staggering £25,000 in interest.
2. Clear your credit card debt
One of the golden rules of financial planning is to clear your most expensive debts first, in other words your credit cards. OK, credit cards offer a convenient way to pay for goods and services but if you can't clear the balance every month, consider a low-cost loan as an alternative. Do the sums: a credit card debt (APR 15%) of £2,200 over three years will cost £545 in interest. A loan at 6% will cost £209. A saving of £336.
3. Cut your home phone bills
BT may seem to behave like a monopoly but it most definitely is not one. If you must use your phone there are scores of cheaper alternatives from cable companies that package your telephone, television and even broadband internet access to low-cost dial-up services that give you access to cheaper calls using your existing BT line.
4.Consider a pay-as-you go mobile
Ask yourself this: is your mobile phone absolutely necessary? If the answer is yes, then ask yourself whether you really need all those minutes and texts that come as part of your package. If you hand over £50 a month to your mobile phone company, that's £600 a year – or around £1,000 of your gross salary. But you can buy a pay-as-you-go phone for as little as £30 and only pay for the odd call as and when you need to.
5. Make a shopping list
Food shopping forms a significant part of our monthly outgoings and the supermarket is where the bulk of the money is spent. Tesco takes £1 in every £8 spent by UK shoppers. But be warned, stores spend a small fortune studying ways of making us part with more of our money than we would otherwise intend to. Have you ever wondered why your favourite song is playing in the background as you navigate the aisles? Have you even noticed the background music? Possibly not, but you will have noticed at the checkout that the bill is often more than expected. To circumvent this, simply make a shopping list. Dig out the cookery books, plan a few meals and only buy what you need.
6. Don't buy designer labels
Celebrities are given expensive clothes to wear. You're not. At the end of the day, and let's face it you may only wear the outfit once, can you justify paying hundreds of pounds over the odds because a top designer has had his or her name sewn on the label? And can you honestly say you can tell the difference at a distance between a £600 designer bag and a £9.99 one from the market? Think about it.
7. Sell your clutter on eBay
Take this quick test: You're at home. Open a cupboard. Look inside. If it's full of clothes you haven't worn, or 'good ideas a the time' you haven't used, for, let's say, three years - you don't need them. So why not sell them to someone else who does? Ebay, the online auction house, has opened individual sellers to a world of buyers. And you can flog anything for the cost of a small commission. Tip: you may want to buy a few items first to build up your rating as a respectable eBayer before you start selling.
8. Learn to say 'no'
It's easy to capitulate to the demands of a screaming child in a packed Woolworths on a Saturday afternoon. But don't do it. Similarly, how often does a 'swift half' after work turn into a £40 drinking session? Saying 'no' a few times a year will do wonders for your bank account.
9. Ask yourself: do I really need this?
Imagine the scenario. It's lunchtime and you've got an hour to kill. You find yourself in a department store and there's a sale on. You pick up a beautifully packaged selection of barbecue tools and associated garden paraphernalia. And it's half price. Now, stop! Ask yourself: Do I really need this? Exactly. Now, put it down and walk away.
10. Walk/cycle to the station/work
It maybe a bit of hippie notion to many people but it's free.
11. Cut down your drinking
A few beers after work a few nights a week is a financially debilitating state of affairs. Set limits and stick to them.
12. Pack up smoking
Never mind the health implications, the guilt and the smell, your 20-a-day habit is costing you nearly £2,000 a year. Pack it in.
13. Cancel your gym membership
If you pay your £40 a month by direct debit and you use the gym three times a week, great. If not, cancel your membership immediately. You'll soon save enough to buy your own bike and, if you're so inclined, a rowing machine. Consider running home from work three times a week. It's free.
14. Use your library
The local library is a mecca for the money saver. You'll never need to buy another cookbook, guidebook or lifestyle manual again and if you can bear to wait a few weeks in the queue for the latest blockbuster, you never need to buy books again. CDs and videos are great value too.
15. The three-for-two trick
Now, there's a lot to be said for buy-one-get-one-free deals, especially if they pass the 'Do I really need this?' test. Then there's three-for-twos; a particularly cynical way of stores to entice shoppers to buy an extra item they would not otherwise buy. The 'offer' is always priced into the deal so do your sums and shop around.
16. Buy clothes and presents in the sales
So you need a new suit and the one you like comes in at a cool £300. Wait! The chances are that you can pick it up in the sale – and there's always a sale just around the corner – for £150. The same applies for birthday and Christmas presents. Buy in bulk in the sales and you not only save money, but you enjoy stress-free pre-Christmases and no last-minute birthday worries.
17. The Christmas lottery
Instead of trying to buy a present for every relative in your family, consider getting together beforehand and picking one name from the hat. You then buy one thoughtful gift for that one person rather than attempting to please everyone at considerable cost. Everyone gets a present, everyone saves money.
18. How saving £50 a month now can save you £120 next year
Do you pay your insurance premiums by monthly instalments? If you do, then consider this: you are probably being charged a premium of between 15% and 20% for the privilege. In other words, if your home and car insurance bill for the year is £600, you're paying up to £120 a year in interest by paying monthly. If you are in a position this year to save up for next year's premiums in advance, you can save money by paying the whole lot in one go.
The most expensive item you are ever likely to buy is your home. If you're not in the privileged position to pay cash, make sure the loan you use to finance it is the best available. For example, if you are paying your lender's full standard variable rate (SVR) you are probably paying hundreds of pounds a year more than you need to. There are thousands of deals to choose from and while it is vital to check the small print for hidden catches, this is a relatively easy way to save a lot of money. Remember: loyalty to your bank benefits your bank, not you. Even better, if you can afford to make overpayments on your mortgage, you'll clear your debt several years early and make massive savings. For example, if you borrow £100,000 at 6% over 25 years, you'll 17.pay it back at £643 a month. The total charge for credit will be £93,000. But if you can overpay by £100 a month you'll clear the loan in less than 19 years, giving you 6 years of mortgage-free living and saving a staggering £25,000 in interest.
2. Clear your credit card debt
One of the golden rules of financial planning is to clear your most expensive debts first, in other words your credit cards. OK, credit cards offer a convenient way to pay for goods and services but if you can't clear the balance every month, consider a low-cost loan as an alternative. Do the sums: a credit card debt (APR 15%) of £2,200 over three years will cost £545 in interest. A loan at 6% will cost £209. A saving of £336.
3. Cut your home phone bills
BT may seem to behave like a monopoly but it most definitely is not one. If you must use your phone there are scores of cheaper alternatives from cable companies that package your telephone, television and even broadband internet access to low-cost dial-up services that give you access to cheaper calls using your existing BT line.
4.Consider a pay-as-you go mobile
Ask yourself this: is your mobile phone absolutely necessary? If the answer is yes, then ask yourself whether you really need all those minutes and texts that come as part of your package. If you hand over £50 a month to your mobile phone company, that's £600 a year – or around £1,000 of your gross salary. But you can buy a pay-as-you-go phone for as little as £30 and only pay for the odd call as and when you need to.
5. Make a shopping list
Food shopping forms a significant part of our monthly outgoings and the supermarket is where the bulk of the money is spent. Tesco takes £1 in every £8 spent by UK shoppers. But be warned, stores spend a small fortune studying ways of making us part with more of our money than we would otherwise intend to. Have you ever wondered why your favourite song is playing in the background as you navigate the aisles? Have you even noticed the background music? Possibly not, but you will have noticed at the checkout that the bill is often more than expected. To circumvent this, simply make a shopping list. Dig out the cookery books, plan a few meals and only buy what you need.
6. Don't buy designer labels
Celebrities are given expensive clothes to wear. You're not. At the end of the day, and let's face it you may only wear the outfit once, can you justify paying hundreds of pounds over the odds because a top designer has had his or her name sewn on the label? And can you honestly say you can tell the difference at a distance between a £600 designer bag and a £9.99 one from the market? Think about it.
7. Sell your clutter on eBay
Take this quick test: You're at home. Open a cupboard. Look inside. If it's full of clothes you haven't worn, or 'good ideas a the time' you haven't used, for, let's say, three years - you don't need them. So why not sell them to someone else who does? Ebay, the online auction house, has opened individual sellers to a world of buyers. And you can flog anything for the cost of a small commission. Tip: you may want to buy a few items first to build up your rating as a respectable eBayer before you start selling.
8. Learn to say 'no'
It's easy to capitulate to the demands of a screaming child in a packed Woolworths on a Saturday afternoon. But don't do it. Similarly, how often does a 'swift half' after work turn into a £40 drinking session? Saying 'no' a few times a year will do wonders for your bank account.
9. Ask yourself: do I really need this?
Imagine the scenario. It's lunchtime and you've got an hour to kill. You find yourself in a department store and there's a sale on. You pick up a beautifully packaged selection of barbecue tools and associated garden paraphernalia. And it's half price. Now, stop! Ask yourself: Do I really need this? Exactly. Now, put it down and walk away.
10. Walk/cycle to the station/work
It maybe a bit of hippie notion to many people but it's free.
11. Cut down your drinking
A few beers after work a few nights a week is a financially debilitating state of affairs. Set limits and stick to them.
12. Pack up smoking
Never mind the health implications, the guilt and the smell, your 20-a-day habit is costing you nearly £2,000 a year. Pack it in.
13. Cancel your gym membership
If you pay your £40 a month by direct debit and you use the gym three times a week, great. If not, cancel your membership immediately. You'll soon save enough to buy your own bike and, if you're so inclined, a rowing machine. Consider running home from work three times a week. It's free.
14. Use your library
The local library is a mecca for the money saver. You'll never need to buy another cookbook, guidebook or lifestyle manual again and if you can bear to wait a few weeks in the queue for the latest blockbuster, you never need to buy books again. CDs and videos are great value too.
15. The three-for-two trick
Now, there's a lot to be said for buy-one-get-one-free deals, especially if they pass the 'Do I really need this?' test. Then there's three-for-twos; a particularly cynical way of stores to entice shoppers to buy an extra item they would not otherwise buy. The 'offer' is always priced into the deal so do your sums and shop around.
16. Buy clothes and presents in the sales
So you need a new suit and the one you like comes in at a cool £300. Wait! The chances are that you can pick it up in the sale – and there's always a sale just around the corner – for £150. The same applies for birthday and Christmas presents. Buy in bulk in the sales and you not only save money, but you enjoy stress-free pre-Christmases and no last-minute birthday worries.
17. The Christmas lottery
Instead of trying to buy a present for every relative in your family, consider getting together beforehand and picking one name from the hat. You then buy one thoughtful gift for that one person rather than attempting to please everyone at considerable cost. Everyone gets a present, everyone saves money.
18. How saving £50 a month now can save you £120 next year
Do you pay your insurance premiums by monthly instalments? If you do, then consider this: you are probably being charged a premium of between 15% and 20% for the privilege. In other words, if your home and car insurance bill for the year is £600, you're paying up to £120 a year in interest by paying monthly. If you are in a position this year to save up for next year's premiums in advance, you can save money by paying the whole lot in one go.
26 Tax-Saving Moves
They are legal and permitted by Inland Revenue Board ( IRB )
1) Save for your Child’s Education
Since 2007 , any amount that is deposited into a savings account for your child under national Education Savinds Scheme ( Skim Simpanan Pendidikan Nasional ) allows you to claim tax deductions.
Thers is a limit of RM 3000 for this deduction but spouse who file separate tax returns can each claim this amount .
Tax Deduction : RM 3000 per individual
For Mr A : As he falls in the 24% tax bracket , this deduction translates to a tax saving of RM 720 ( RM 3000@24%)
2 ) File Separate tax returns
A separate assessment allow each spouse to claim personal tax relief of RM 8000 while a joint tax return allows one spouse to claim a wife or husband relief of RM 3000
Tax Deduction :
Each spouse earning Taxable income can claim personal tax relief of RM 8000 by filling separate tax returns.
3) Ask your employer to increase your EPF contributions
Contributions to the employees Provident Fund (EPF) by employers are tax-exempt for the employees.
To reduce your taxable income , ask your employer to reduce your EPF monthly salary but increase your EPF contributions by the same amount.
Tax Deduction :
The deductible amount from your taxable income is dependent on the arrangement between you and your employer.
For Mr A : Mr A agrees to takle monthly pay cut of RM 1000 for an equivalent increase in his EPF contributions by his employer.At the end of the year , he receives an additional RM 12000 in his pension fund but his taxable income is reduced by the same amount.
The tax saving that he makes is RM 2880 ( RM12000@24%)
4) Change your cash remuneration to cash reimbursement
Fixed allowances given by your employer each month for entertainment and housing or parking fees are taxable at your tax bracket.
Change this to a “ reimbursement “ based on receipt and you are not taxed on the amount received.
Tax Deduction :
The deductible amount from your taxable income is dependent on the arrangement between you and your employer
For Mr A : By Changing a yearly fixed allowance of RM 6000 to a reimbursement of the same amount and supported by receipts , Mr A makes a tax saving of RM1440 ( RM 6000@24%)
5) Ask for a company car
A car given by your employer is regarded as a benefit-in kind ( BIK ) and taxable.
However , a company car is advantageous for taxpayers because the preset tax scale for cars is much lower than the actual cost of buying and maintaining a car.
According to the Public ruling for BIKs , the tax payer must pay RM 3600 in taxes every year, for a car worth RM 75000
If the employer pays for fuel , the tax payer is taxed an additional RM 1200 for this BIK
Tax deduction :
Whether you benefit from a company car depends on the value of the car and your current tax bracket. Do the calculations to ascertain your tax deduction.
6) Make charitable contributions
A gift of money to an approved charitable organisation entitles you to a tax deduction for the amount given.
From 2008 onward , this amount cannot exceed 7% of your aggregate income.
However Charitable donations that were made in 2007 are not subject to this limit.
Tax deduction :
Up to 7% of your aggregate taxable income can be reduced with this deduction.
For Mr A : With his taxable income of RM 90000 , Mr A can make a donation of RM 6300 .This deduction results in a saving of RM 1512 ( RM 6300@24%)
7) Take Up postgraduate studies
A relief of RM 5000 per year for any course of study at the Master’s or doctorate level , the government announced in 2007 Budget the widening of the scope to all postgraduate studies.
The course does not have to be done full time , but “ must be in an institution or professional body in Malaysia recognised by the government or approved by Minister of Finance
Tax Deduction :
RM 5000 per individual
For Mr A : As he completes his master’s degree . Mr A can enjoy tax saving RM 1200 from his taxable income ( RM 5000@24%)
8) Read , Read , Read
Starting from YA 2007 , taxpayers can claim a personal tax deduction to RM 1000 for purchase of books, journals , magazines and other publications.
To maximise this generous deduction , consider giving books as gifts.
Tax Deduction : RM 1000 per individual
For Mr A : With book purchases of RM 1000 Mr A saves RM 240 ( RM 1000@24%)
9) Get Sporty
You will get a deduction of RM 300 for each year of assessment for the purchase of sports and exercise equipment for any sports activities defined under the Sport Development Act 1997 “
Tax Deduction : RM 300 per individual
For Mr A : By buying RM 300 worth of sports equipment , Mr A makes a saving of RM 71 ( RM 300@24%)
10) Buy Life Insurance
The maximum tax relief is RM 6000 a year for premiums paid to an insurance company for life Insurance or deferred annuity plans.
This Limit is shared with your contributions to the EPF, other employer schemes and contributions under any written law relating to widows or orphan pensions
Tax deduction : RM 6000 per individual ( shared with your EPF contributions )
11) Take out a Medical or Education policy
You can claim deductions of up to RM 3000 a year for education and medical insurance ( combined limit for both )
This includes medical coverage that is part of life insurance policy( the limit for life insurance is in move 10 )
A policy of this kind can be written for you , your spouse or your child.
Tax deduction :
RM 3000 per individual
For Mr A :After acquiring an education policy for his children , Mr A makes a saving of RM 720 ( RM 3000@ 24%)
12) Pay your parents’ medical bills
You are able to claim up to RM 5000 for payments towards your parents’ medical bills.
Tax deduction :
RM 5000 per individual
For Mr A : By paying his parents’ medical bills , Mr A makes a saving of RM 1200 ( RM5000@ 24%)
13) Medical
Claim a deduction of up to RM 500 per tax year for a full medical examination and RM 5000 for medical expenses for yourself, spouse or child for serious disease.
If you have also spent money on full medical in the same year, your claim will be reduce the RM5000 available for serious disease.
A separate tax reduction of up to RM5000 a year is given for necessary basic supporting equipment for disabilities suffered by yourself ,spouse, children or parent
Tax Deduction :
RM 500 per individual for full medical check-up.
RM5000 for serious diseases or basic supporting equipment
For Mr A : He claimed for a full medical check-up .The deduction give him of RM 120 ( RM 500@24%)
14) Pay Zakat
If you are a muslim ,paying any amount in zakat , fitrah or other obligation Islamic dues will entitle you to a tax rebate.
Tax deduction :
The Amount of zakat that you pay
15) Buy a Computer
A deduction of up to RM 3000 can be claimed once every three years for the purchase of computers , printers and bundled software .
The similar i9ncentive given previously in the form of a tax rebate was withdrawn with effect from 2007
Tax deduction : RM 3000 once every three years.
For Mr A : Getting a computer for RM3000 gives him a saving of RM 720 ( RM 3000@24%)
16) Hire a Tax Consultant
Consider hiring a tax consultant to explore ways your remuneration package can be structured to maximise your tax savings.
Those who are earning at least RM5000 every month should be able to justify the cost of hiring a tax adviser with their tax savings
Tax saving : this is dependent on your personal circumstances and the deal that you negotiate with your employer.
Tax – Savvy Investments
You may be looking at some investment this year.
There are savings to be made from certain investments , from a tax point of view.
However , some moves may be advantageous if you fall into a higher tax bracket .
Besides looking for tax-exempt investment , here are four investment moves to explore
17) Buy property valued below or at RM250000
Stamp duty must be paid on all property transactions that involve a change of legal ownership.
Last year’s budget ( 2008 ) announced a 50% stamp duty exemption for the purchase of houses that do not exceed RM250000
The maximum tax savings that can be found here is RM2000 ( for a house worth RM250000 )
This exemption is only given for one house per individual and applies to sale and purchase agreement signed between September 2007 and December 2010
18) Buy Similar property
Similar property can be grouped together for income tax purposes.
The IRB has indentified categories such as residential , commercial and vacant land.
If you own two property in the same category , you can reduce the taxable profit made from one property with the loss, if any incurred from the other.
Property investors are also exempt from real property gains tax for all disposals on on or after 1st April 2007.
However , taxpayers who are trading property – buying and selling in order to generate income – are liable to income tax.
“ This exemption is meant for taxpayers who invest in property for a passive income”
Tax deduction :
Taxable income received from renting out a property in a particular grouping such as residential can be reduced if a loss was incurred by another property in the same group.
19) Buy shares
Invest in dividend-yielding shares if your tax bracket is above 26%.
A new single-tier system was established under the national Budget for dividends received by shareholders.
Companies pay tax of 26% (YA2008) and shareholders receive a net dividend that is exempt from tax and does not need to be filed with the IRB “Shareholders who fall into higher tax brackets [higher than 26%] are essentially [getting a] saving on the difference.
“The single-tier dividends is intended to simplify the tax filing process for individuals,” says Chua Tia Guan, executive director and head of tax and financial planning at Great Vision Wealth Management Sdn Bhd.
“In the past, refunds had been slow. From now on, there is no need to declare or apply for a refund. And as corporate taxes are falling, companies will be able to pass on more profits to their shareholders [in the form of dividends],” he says.
However, not all companies will go under the single-tier system immediately as some of them might have imputation tax credits left, which they can use till 2013.
Shareholders who receive dividends from companies using the imputation system will have to report the amount received and claim a tax refund if his personal tax rate is lower than the company’s tax rate (27% in YA2007, 26% in YA2006).
Shareholders can identify the system used by the company as it is stated in the dividend vouchers.
Tax Deduction
Your tax saving is the difference between your tax bracket and 26% (the corporate tax rate). This is only applicable to dividends given out by companies using the single-tier system.
20) Invest in REITs
You can go into real estate investment trusts ( REITS )if your tax bracket above 15%.
There are 11 REITs listed on the Main Board.
The tax on dividends given out by these property-related investments are taxed at 15% as compared to tax on dividend at 26% ( under the new single –tier dividend system )
Only tax brackets exceeding 15% would enjoy some tax savings by investing in REITs
Since the distributions received by individual taxpayers have been subject to that 15% , the taxpayers are not required to declare the amount in their tax return.
Tax deduction:
Your tax saving is the difference between your personal tax bracket and 15%
Moves for Business Owners
The first rule that small-business owners should implement with regards to their taxes is to take it seriously.
Spend some time strategising for your business activities to save hundreds or thousands ringgit.
Here are six
21) Maintain books and records from Day 1
Keep separate bank accounts for personal and business transactions and establish a basic accounting system.
The inland Revenue Board recognises business income on an accrual basis .
This means that as long as a transaction is completed, either a sale of goods or a provision of service , its value is immediately treated as business income and is taxable.
However , unpaid transaction can be reduced your taxable income.
Any expenses made fro the business can be deducted from the business income.
The General rule is that expenses can be deducted if it is wholly and exclusively incurred in earning your business income.
So Keep the receipts for all supplies that you buy for your business
However there is no deduction for capital expenditure although some assets will qualify for tax relief by way of capital allowances
22) Time the purchase and use of your fixed assets
Capital allowances are permitted for certain business assets such as equipment , machinery , vehicles computers and software.
The amount of allowances permitted each year depends on the category that asset falls into .( refer to Public Ruling No 2/2001 for the deductible rate of your assets.
The first capital allowance is given for the accounting year in which the asset was purchased and used by the business.
If you are contemplating a purchase , try to do it before the end of the accounting year, instead of just after , to claim the capital allowance against your business income.
If you are buying the asset with a hire-purchase loan, allowance can only be claimed as and when repayments are made to the lender.
23. Buys a company car
If you are a sole trader or a partner in a business, any car or vehicle that is used for business purposes can bring about tax deductions.
“The business income is reduced by the car’s financing cost if you buy the car on hire-purchase.
You are also deduct a certain amount for capital allowances every year,
Before implementing this tax-saving technique, business owners must identify a percentage of the car’s use that is for private activities.
As there is no definite ruling on how to determine this proportion for private use, business owners must apply a fair and reasonable figure that can withstand scrutiny.
“Estimating private mileage is an exercise that must be undertaken in accordance to the facts on your actual usage.
And remember to record all running expenses to make these deductions,” says Thornton.
24. Hire your spouse or family member
An effective tax-saving strategy is to hire a spouse or family member.
“For example, a husband who is a business owner can hire his wife. The wife’s salary is tax deductible but you must be able to show that she is doing something to earn it,
In this situation, you would have to contribute to your wife’s Employees Provident Fund (EPF) savings and that amount entitles her to tax relief.
Another option is to make your spouse or family member a partner in your business.
This allows you to divide the income made by the business between the both of you.
As a partnership has no tax liability, both partners are liable for tax for the respective portion of business income that each earns.
“By opting for separate tax assessments, a husband and wife who are partners in a business can each claim individual tax relief.
25. Implement a process to ‘chase after’ unpaid debts
Unfortunately, small business owners can complete a sale or service but might not receive payment, in full or in part.
At the end of an accounting year, a debt, which is estimated to be wholly or partly irrecoverable, can be deducted from your business income and this lowers your tax bill.
“Tax authorities tend to look closely at bad-debt write-offs and provisions (for debts that are expected to be partly recoverable).
So put in some effort to recover the debt before deeming it irrecoverable and you must evaluate each debt separately.
The process that you put in place to recover your unpaid debts should be documented and any conclusion that you make should be supported with documentation as well.
For example, you must show why it it not cost effective to take legal action against a customer.
However, if you eventually recover bad debts that have been written off or partially written off, you must include this amount in your taxable income for the year that you received payment.
26. Dedicate a space in your home office
Working in your own house can result in tax deductions for the costs related to your “home office”.
This includes electricity, telephone bills, quit rent and service charges of apartments.
The best way to claim for these deductions is to dedicate a room or place as the working environment.
“A dedicated area helps to identify expenses that are specifically for business purposes and can be claimed in full.
Items that are used by the business as well as personal use, such as electricity, must be apportioned.
One way to do so is on the basis of floor area.
If the business owner pays rent for the working area, this expense can be deducted from the business income.
This applies to rent that is paid to a spouse who owns the home but is not involved in the business.
However, this is strategy is only effective if the spouse who is not involved in the business is taxed at a low tax rate as rental received must be declared as taxable income.
If this is an appropriate strategy for the business owner, A tenancy agreement that specifies rental for a specific part of the house at the prevailing market rate.
1) Save for your Child’s Education
Since 2007 , any amount that is deposited into a savings account for your child under national Education Savinds Scheme ( Skim Simpanan Pendidikan Nasional ) allows you to claim tax deductions.
Thers is a limit of RM 3000 for this deduction but spouse who file separate tax returns can each claim this amount .
Tax Deduction : RM 3000 per individual
For Mr A : As he falls in the 24% tax bracket , this deduction translates to a tax saving of RM 720 ( RM 3000@24%)
2 ) File Separate tax returns
A separate assessment allow each spouse to claim personal tax relief of RM 8000 while a joint tax return allows one spouse to claim a wife or husband relief of RM 3000
Tax Deduction :
Each spouse earning Taxable income can claim personal tax relief of RM 8000 by filling separate tax returns.
3) Ask your employer to increase your EPF contributions
Contributions to the employees Provident Fund (EPF) by employers are tax-exempt for the employees.
To reduce your taxable income , ask your employer to reduce your EPF monthly salary but increase your EPF contributions by the same amount.
Tax Deduction :
The deductible amount from your taxable income is dependent on the arrangement between you and your employer.
For Mr A : Mr A agrees to takle monthly pay cut of RM 1000 for an equivalent increase in his EPF contributions by his employer.At the end of the year , he receives an additional RM 12000 in his pension fund but his taxable income is reduced by the same amount.
The tax saving that he makes is RM 2880 ( RM12000@24%)
4) Change your cash remuneration to cash reimbursement
Fixed allowances given by your employer each month for entertainment and housing or parking fees are taxable at your tax bracket.
Change this to a “ reimbursement “ based on receipt and you are not taxed on the amount received.
Tax Deduction :
The deductible amount from your taxable income is dependent on the arrangement between you and your employer
For Mr A : By Changing a yearly fixed allowance of RM 6000 to a reimbursement of the same amount and supported by receipts , Mr A makes a tax saving of RM1440 ( RM 6000@24%)
5) Ask for a company car
A car given by your employer is regarded as a benefit-in kind ( BIK ) and taxable.
However , a company car is advantageous for taxpayers because the preset tax scale for cars is much lower than the actual cost of buying and maintaining a car.
According to the Public ruling for BIKs , the tax payer must pay RM 3600 in taxes every year, for a car worth RM 75000
If the employer pays for fuel , the tax payer is taxed an additional RM 1200 for this BIK
Tax deduction :
Whether you benefit from a company car depends on the value of the car and your current tax bracket. Do the calculations to ascertain your tax deduction.
6) Make charitable contributions
A gift of money to an approved charitable organisation entitles you to a tax deduction for the amount given.
From 2008 onward , this amount cannot exceed 7% of your aggregate income.
However Charitable donations that were made in 2007 are not subject to this limit.
Tax deduction :
Up to 7% of your aggregate taxable income can be reduced with this deduction.
For Mr A : With his taxable income of RM 90000 , Mr A can make a donation of RM 6300 .This deduction results in a saving of RM 1512 ( RM 6300@24%)
7) Take Up postgraduate studies
A relief of RM 5000 per year for any course of study at the Master’s or doctorate level , the government announced in 2007 Budget the widening of the scope to all postgraduate studies.
The course does not have to be done full time , but “ must be in an institution or professional body in Malaysia recognised by the government or approved by Minister of Finance
Tax Deduction :
RM 5000 per individual
For Mr A : As he completes his master’s degree . Mr A can enjoy tax saving RM 1200 from his taxable income ( RM 5000@24%)
8) Read , Read , Read
Starting from YA 2007 , taxpayers can claim a personal tax deduction to RM 1000 for purchase of books, journals , magazines and other publications.
To maximise this generous deduction , consider giving books as gifts.
Tax Deduction : RM 1000 per individual
For Mr A : With book purchases of RM 1000 Mr A saves RM 240 ( RM 1000@24%)
9) Get Sporty
You will get a deduction of RM 300 for each year of assessment for the purchase of sports and exercise equipment for any sports activities defined under the Sport Development Act 1997 “
Tax Deduction : RM 300 per individual
For Mr A : By buying RM 300 worth of sports equipment , Mr A makes a saving of RM 71 ( RM 300@24%)
10) Buy Life Insurance
The maximum tax relief is RM 6000 a year for premiums paid to an insurance company for life Insurance or deferred annuity plans.
This Limit is shared with your contributions to the EPF, other employer schemes and contributions under any written law relating to widows or orphan pensions
Tax deduction : RM 6000 per individual ( shared with your EPF contributions )
11) Take out a Medical or Education policy
You can claim deductions of up to RM 3000 a year for education and medical insurance ( combined limit for both )
This includes medical coverage that is part of life insurance policy( the limit for life insurance is in move 10 )
A policy of this kind can be written for you , your spouse or your child.
Tax deduction :
RM 3000 per individual
For Mr A :After acquiring an education policy for his children , Mr A makes a saving of RM 720 ( RM 3000@ 24%)
12) Pay your parents’ medical bills
You are able to claim up to RM 5000 for payments towards your parents’ medical bills.
Tax deduction :
RM 5000 per individual
For Mr A : By paying his parents’ medical bills , Mr A makes a saving of RM 1200 ( RM5000@ 24%)
13) Medical
Claim a deduction of up to RM 500 per tax year for a full medical examination and RM 5000 for medical expenses for yourself, spouse or child for serious disease.
If you have also spent money on full medical in the same year, your claim will be reduce the RM5000 available for serious disease.
A separate tax reduction of up to RM5000 a year is given for necessary basic supporting equipment for disabilities suffered by yourself ,spouse, children or parent
Tax Deduction :
RM 500 per individual for full medical check-up.
RM5000 for serious diseases or basic supporting equipment
For Mr A : He claimed for a full medical check-up .The deduction give him of RM 120 ( RM 500@24%)
14) Pay Zakat
If you are a muslim ,paying any amount in zakat , fitrah or other obligation Islamic dues will entitle you to a tax rebate.
Tax deduction :
The Amount of zakat that you pay
15) Buy a Computer
A deduction of up to RM 3000 can be claimed once every three years for the purchase of computers , printers and bundled software .
The similar i9ncentive given previously in the form of a tax rebate was withdrawn with effect from 2007
Tax deduction : RM 3000 once every three years.
For Mr A : Getting a computer for RM3000 gives him a saving of RM 720 ( RM 3000@24%)
16) Hire a Tax Consultant
Consider hiring a tax consultant to explore ways your remuneration package can be structured to maximise your tax savings.
Those who are earning at least RM5000 every month should be able to justify the cost of hiring a tax adviser with their tax savings
Tax saving : this is dependent on your personal circumstances and the deal that you negotiate with your employer.
Tax – Savvy Investments
You may be looking at some investment this year.
There are savings to be made from certain investments , from a tax point of view.
However , some moves may be advantageous if you fall into a higher tax bracket .
Besides looking for tax-exempt investment , here are four investment moves to explore
17) Buy property valued below or at RM250000
Stamp duty must be paid on all property transactions that involve a change of legal ownership.
Last year’s budget ( 2008 ) announced a 50% stamp duty exemption for the purchase of houses that do not exceed RM250000
The maximum tax savings that can be found here is RM2000 ( for a house worth RM250000 )
This exemption is only given for one house per individual and applies to sale and purchase agreement signed between September 2007 and December 2010
18) Buy Similar property
Similar property can be grouped together for income tax purposes.
The IRB has indentified categories such as residential , commercial and vacant land.
If you own two property in the same category , you can reduce the taxable profit made from one property with the loss, if any incurred from the other.
Property investors are also exempt from real property gains tax for all disposals on on or after 1st April 2007.
However , taxpayers who are trading property – buying and selling in order to generate income – are liable to income tax.
“ This exemption is meant for taxpayers who invest in property for a passive income”
Tax deduction :
Taxable income received from renting out a property in a particular grouping such as residential can be reduced if a loss was incurred by another property in the same group.
19) Buy shares
Invest in dividend-yielding shares if your tax bracket is above 26%.
A new single-tier system was established under the national Budget for dividends received by shareholders.
Companies pay tax of 26% (YA2008) and shareholders receive a net dividend that is exempt from tax and does not need to be filed with the IRB “Shareholders who fall into higher tax brackets [higher than 26%] are essentially [getting a] saving on the difference.
“The single-tier dividends is intended to simplify the tax filing process for individuals,” says Chua Tia Guan, executive director and head of tax and financial planning at Great Vision Wealth Management Sdn Bhd.
“In the past, refunds had been slow. From now on, there is no need to declare or apply for a refund. And as corporate taxes are falling, companies will be able to pass on more profits to their shareholders [in the form of dividends],” he says.
However, not all companies will go under the single-tier system immediately as some of them might have imputation tax credits left, which they can use till 2013.
Shareholders who receive dividends from companies using the imputation system will have to report the amount received and claim a tax refund if his personal tax rate is lower than the company’s tax rate (27% in YA2007, 26% in YA2006).
Shareholders can identify the system used by the company as it is stated in the dividend vouchers.
Tax Deduction
Your tax saving is the difference between your tax bracket and 26% (the corporate tax rate). This is only applicable to dividends given out by companies using the single-tier system.
20) Invest in REITs
You can go into real estate investment trusts ( REITS )if your tax bracket above 15%.
There are 11 REITs listed on the Main Board.
The tax on dividends given out by these property-related investments are taxed at 15% as compared to tax on dividend at 26% ( under the new single –tier dividend system )
Only tax brackets exceeding 15% would enjoy some tax savings by investing in REITs
Since the distributions received by individual taxpayers have been subject to that 15% , the taxpayers are not required to declare the amount in their tax return.
Tax deduction:
Your tax saving is the difference between your personal tax bracket and 15%
Moves for Business Owners
The first rule that small-business owners should implement with regards to their taxes is to take it seriously.
Spend some time strategising for your business activities to save hundreds or thousands ringgit.
Here are six
21) Maintain books and records from Day 1
Keep separate bank accounts for personal and business transactions and establish a basic accounting system.
The inland Revenue Board recognises business income on an accrual basis .
This means that as long as a transaction is completed, either a sale of goods or a provision of service , its value is immediately treated as business income and is taxable.
However , unpaid transaction can be reduced your taxable income.
Any expenses made fro the business can be deducted from the business income.
The General rule is that expenses can be deducted if it is wholly and exclusively incurred in earning your business income.
So Keep the receipts for all supplies that you buy for your business
However there is no deduction for capital expenditure although some assets will qualify for tax relief by way of capital allowances
22) Time the purchase and use of your fixed assets
Capital allowances are permitted for certain business assets such as equipment , machinery , vehicles computers and software.
The amount of allowances permitted each year depends on the category that asset falls into .( refer to Public Ruling No 2/2001 for the deductible rate of your assets.
The first capital allowance is given for the accounting year in which the asset was purchased and used by the business.
If you are contemplating a purchase , try to do it before the end of the accounting year, instead of just after , to claim the capital allowance against your business income.
If you are buying the asset with a hire-purchase loan, allowance can only be claimed as and when repayments are made to the lender.
23. Buys a company car
If you are a sole trader or a partner in a business, any car or vehicle that is used for business purposes can bring about tax deductions.
“The business income is reduced by the car’s financing cost if you buy the car on hire-purchase.
You are also deduct a certain amount for capital allowances every year,
Before implementing this tax-saving technique, business owners must identify a percentage of the car’s use that is for private activities.
As there is no definite ruling on how to determine this proportion for private use, business owners must apply a fair and reasonable figure that can withstand scrutiny.
“Estimating private mileage is an exercise that must be undertaken in accordance to the facts on your actual usage.
And remember to record all running expenses to make these deductions,” says Thornton.
24. Hire your spouse or family member
An effective tax-saving strategy is to hire a spouse or family member.
“For example, a husband who is a business owner can hire his wife. The wife’s salary is tax deductible but you must be able to show that she is doing something to earn it,
In this situation, you would have to contribute to your wife’s Employees Provident Fund (EPF) savings and that amount entitles her to tax relief.
Another option is to make your spouse or family member a partner in your business.
This allows you to divide the income made by the business between the both of you.
As a partnership has no tax liability, both partners are liable for tax for the respective portion of business income that each earns.
“By opting for separate tax assessments, a husband and wife who are partners in a business can each claim individual tax relief.
25. Implement a process to ‘chase after’ unpaid debts
Unfortunately, small business owners can complete a sale or service but might not receive payment, in full or in part.
At the end of an accounting year, a debt, which is estimated to be wholly or partly irrecoverable, can be deducted from your business income and this lowers your tax bill.
“Tax authorities tend to look closely at bad-debt write-offs and provisions (for debts that are expected to be partly recoverable).
So put in some effort to recover the debt before deeming it irrecoverable and you must evaluate each debt separately.
The process that you put in place to recover your unpaid debts should be documented and any conclusion that you make should be supported with documentation as well.
For example, you must show why it it not cost effective to take legal action against a customer.
However, if you eventually recover bad debts that have been written off or partially written off, you must include this amount in your taxable income for the year that you received payment.
26. Dedicate a space in your home office
Working in your own house can result in tax deductions for the costs related to your “home office”.
This includes electricity, telephone bills, quit rent and service charges of apartments.
The best way to claim for these deductions is to dedicate a room or place as the working environment.
“A dedicated area helps to identify expenses that are specifically for business purposes and can be claimed in full.
Items that are used by the business as well as personal use, such as electricity, must be apportioned.
One way to do so is on the basis of floor area.
If the business owner pays rent for the working area, this expense can be deducted from the business income.
This applies to rent that is paid to a spouse who owns the home but is not involved in the business.
However, this is strategy is only effective if the spouse who is not involved in the business is taxed at a low tax rate as rental received must be declared as taxable income.
If this is an appropriate strategy for the business owner, A tenancy agreement that specifies rental for a specific part of the house at the prevailing market rate.
TIPS ON FILLING YOUR CAR(S)
Only buy or fill up your car or bakkie in the early morning when the ground temperature is still cold. Remember that all service stations have their storage tanks buried below ground. The colder the ground the more dense the fuel, when it gets warmer petrol expands,so buying in the afternoon or in the evening....your litre is not exactly a litre. In the petroleum business, the specific gravity and the temperature of the petrol, diesel and jet fuel, ethanol and other petroleum products plays an important role. A 1-degree rise in temperature is a big deal for this business. But the service stations do not have temperature compensation at the pumps.
When you're filling up do not squeeze the trigger of the nozzle to a fast mode. If you look you will see that the trigger has three (3) stages: low, middle, and high. In slow mode you should be pumping on low speed, thereby minimizing the vapours that are created while you are pumping. All hoses at the pump have a vapour return. If you are pumping on the fast rate, some of the liquid that goes to your tank becomes vapour. Those vapours are being sucked up and back into the underground storage tank so you're getting less worth for your money.
One of the most important tips is to fill up when your tank is HALF FULL. The reason for this is, the more fuel you have in your tank the less air occupying its empty space. petrol evaporates faster than you can imagine. Petroleum storage tanks have an internal floating roof. This roof serves as zero clearance between the petrol and the atmosphere, so it minimizes the evaporation. Unlike service stations, here where I work, every truck that we load is temperature compensated so that every litre is actually the exact amount.
Another reminder, if there is a fuel truck pumping into the storage tanks when you stop to buy, DO NOT fill up--most likely the petrol/diesel is being stirred up as the fuel is being delivered, and you might pick up some of the dirt that normally settles on the bottom.
Hope this will help you get the most value for your money.
When you're filling up do not squeeze the trigger of the nozzle to a fast mode. If you look you will see that the trigger has three (3) stages: low, middle, and high. In slow mode you should be pumping on low speed, thereby minimizing the vapours that are created while you are pumping. All hoses at the pump have a vapour return. If you are pumping on the fast rate, some of the liquid that goes to your tank becomes vapour. Those vapours are being sucked up and back into the underground storage tank so you're getting less worth for your money.
One of the most important tips is to fill up when your tank is HALF FULL. The reason for this is, the more fuel you have in your tank the less air occupying its empty space. petrol evaporates faster than you can imagine. Petroleum storage tanks have an internal floating roof. This roof serves as zero clearance between the petrol and the atmosphere, so it minimizes the evaporation. Unlike service stations, here where I work, every truck that we load is temperature compensated so that every litre is actually the exact amount.
Another reminder, if there is a fuel truck pumping into the storage tanks when you stop to buy, DO NOT fill up--most likely the petrol/diesel is being stirred up as the fuel is being delivered, and you might pick up some of the dirt that normally settles on the bottom.
Hope this will help you get the most value for your money.
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