Planit:Tax Calculations and EPF Treatment
From Planipedia
Tax Calculations and EPF Treatment for Malaysia
The following illustrated the Detailed Cash Flow screen were we capture Employment, Pension, Investment and Miscellaneous Income. Note that under Miscellaneous Income we capture the employer’s contribution to the client’s EPF Account 2. This is to recognize that this additional cash flow is available to fund expenses such as housing, health and education. In this case we entered 18,000 for the client and 3,600 for the spouse. These were calculated as follows:
- Client: 500,000 x 12% x 30% = 18,000
- Spouse: 100,000 x 12% x 30% = 3,600
In the Savings section of the Detailed Cash Flow, we capture the Employee’s contribution to the EPF Account 1, which is savings to fund retirement. In this case we entered 38,500 for the client and 16,500 for the spouse. These were calculated as follows:
- Client: 500,000 x 11% x 70% = 38,500
- Spouse: 100,000 x 11% x 70% = 7,700
In the Tax section of the Detailed Cash Flow, we capture any deductions/relief’s the client is eligible for. Here’s an example below of many of the fields in use. Note that the tax identified for the client is 118,227 and for the spouse, it’s 8,091. See the tax report on the following page, which corresponds with tax numbers seen below on the Cash Flow Screen.
Sample Tax Report Using the Data Illustrated Above Below you’ll find the tax report that’s available from the Reports menu. You’ll be able to match the various incomes and deductions with what you see in the data entry screens above. You’ll also be able to see the tax brackets and the tax rates associated with each tax bracket.
EPF Employer Contribution to Account 1 (Retirement) One final thing to recognize is that the employer is also contributing to the employee’s EPF Account 1 and these savings will accrue for the client’s benefit at time of retirement. To recognize these employer contributions, we enter these additional savings into the Savings Screen.
You’ll see below the Employee contributions of 38,500 and 7,700 for the client and spouse and the Matching contributions from the employer of 42,000 and 8,400. These were calculated as follows:
- Client: 500,000 x 12% x 70% = 42,000
- Spouse: 100,000 x 12% x 70% = 8,400
