26 Ways to Slash TAXES - Part 4

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%