25th April 2023 - 3 min read
The Association of Chartered Certified Accountants (ACCA) has urged gig workers to file their taxes as the tax submission deadline nears, saying that it is important to do so. This comes as a bigger percentage of Malaysia’s workforce are now involved in the gig economy.
“It is the civic responsibility of all income earners, including gig workers, regardless of age, to file and pay taxes to ensure the fiscal sustainability of the government. The government will then be able to provide infrastructure and services such as telecommunication and roads which are commonly used by gig workers,” said ACCA’s ExpertLink panel member for taxation, Thenesh Kannaa, who is also the co-founder of independent tax advisory firm TraTax.
Thenesh further explained that gig workers – and all Malaysians in general – will face severe financial and civil problems later if they fail to pay their taxes. “Penalties for failing to file or pay taxes can be as high as 100% of unpaid taxes, which will only get worse the longer gig workers ignore filing and paying taxes. Failure to file and pay taxes also heavily affects a person’s credit scores, making it harder for them to get loans at reasonable interest rates,” he said.
These consequences, in turn, will affect a gig worker’s potential to advance in life, said Thenesh. He or she may not be able to get a loan to buy a new home or start their own business in the future, thereby limiting themselves.
Additionally, Thenesh said that it is also near impossible to avoid filing taxes these days due to the increased digitalisation of modern gig work and payment methods. This ultimately provides the Inland Revenue Board (LHDN) with digital records that can be easily used to trace a taxpayer’s activities.
Thenesh also shared some steps and suggestions that can help ease the tax filing process for gig workers. “Gig workers can easily get their Tax Identification Number (TIN) online through the LHDN website or mobile app, which they can then use to file their taxes digitally, without ever needing to physically go to a LHDN office. If tax filing is too difficult, hiring a licensed tax agent to help file your taxes is also an option,” he said, adding that taxpayers can use the Finance Ministry’s MyCukai website to check if their tax agent is licensed.
Furthermore, Thenesh advised gig workers to use a spreadsheet to record and organise their income and expenses. This will not only make it easier for gig workers to identify their total income to declare, but also how much to apply for tax deductions and claims. They should also be aware of expenses that count as capital allowances that are used for their gig work – such as new ovens for a home-baking business – as these may be applicable for tax depreciation/capital allowances claims, he said.
Malaysian individual taxpayers are required to file their taxes by either 30 April 2023 (manual filing) or 15 May 2023 (e-Filing). Meanwhile, gig workers whose income qualifies as business income must file their taxes by 30 June (manual filing) or 15 July (e-Filing). A 2020 study by independent think tank Emir Research also indicated that about 26% of the workforce (equivalent to approximatelly four million Malaysians) were engaged in the gig economy.
(Source: The Star)
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