Did you know that you may be entitled to claim a refund on your income tax? Don’t make the mistake of overlooking this, as a refund could improve your financial situation by increasing your cash flow, reducing your tax burden, and even allowing you to make investments.

To be clear, tax relief and tax refunds are not the same. Tax relief is a deduction from your taxable income, which reduces the overall amount that is subject to tax. A refund, on the other hand, is a reimbursement of excess tax paid to the Inland Revenue Board (LHDN) by a taxpayer.

To help you get the most out of this tax season, here are five questions to help you identify whether you are eligible for a refund, and how you go about doing it.

1. What is a tax refund, exactly?

A refund is a repayment of taxes that have been paid in excess by a taxpayer. In Malaysia, you may be eligible for a refund if you have paid more taxes than is required by law. The refund is typically processed after the tax assessment is completed, which is usually done after the end of the tax year.

One common scenario where taxpayers may be eligible for a refund is when they are subjected to monthly tax deductions that do not include additional tax reliefs or unplanned expenses; for instance, if a taxpayer purchases items like books or a personal computer, or has medical expenses for a serious illness.

As a result, they may have overpaid their taxes and be eligible for a refund.

2. When can you claim a refund?

You need to complete the tax form and attach supporting documents to claim the refund. According to LHDN, refunds will be processed:

• within 30 working days after e-filing submission of Borang Nyata (income tax return form); or
• within 90 working days after manual submission of Borang Nyata sent via post or by hand.

The refund process is dependent on the information provided in the return form and the submission of any necessary supporting documents for review if required.

3. How do you do it?

• Determine your eligibility: You can claim a refund if you have paid more taxes than required, or if you have too many deductions or tax credits.
• File your return: You need to file your tax return by April 30, either online through the e-filing system or by submitting a physical copy of the Borang Nyata.
• Attach supporting documents: If you are claiming tax reliefs such as medical expenses or the purchase of approved items, you need to attach supporting documents with your return.
• Wait for assessment: After you have submitted your return, LHDN will assess it to determine if you are indeed eligible for a refund.
• Receive your refund: The refund should be processed within 30 to 90 days after assessment. It will be paid through a bank transfer or cheque, or you can choose to have it deposited directly into your bank account or receive a cheque by mail.

4. How to check on the status of your claim

• Go to the LHDN website and click on “e-Filing Login” at the top-right corner of the homepage. Enter your login credentials, including your user ID and password, to access your e-filing account.
• You can then check the status of your refund by clicking on “Refund Status” under the “Services” tab. You will need to enter your tax reference number and your IC number.
• After entering your details, you will be able to view the status of your tax refund. If it has been processed, you can also view the payment details, including the date and amount of the refund.
• If you prefer to check your tax refund status by phone, you can call the LHDN customer service hotline at 1-800-88-5436. Make sure to have your tax reference number and IC number ready.

5. What else should you be aware of?

During e-filing, you will be able to know how much income tax refund you will receive. However, there is a possibility of a late refund. To avoid such delays:

• ensure all information is updated during e-filing. Important information to speed up the process includes your bank account number, mailing address, phone number, email address, and company registration number (for corporate taxpayers);
• do not provide incorrect or false information regarding tax exemptions as this may lead to an audit by LHDN;
• declare all types of income received, such as rental income or investment returns. Usually, LHDN has access to this information, and failure to report may result in penalties.

If you have not received your tax refund after 30 days of approval, fill in the customer feedback form or contact the Hasil Care Line at 03-8911 1000.

Stay alert!

During this season, many taxpayers are vulnerable to scam syndicates, where fraudsters pose as LHDN officers and attempt to intimidate their victims by threatening legal action or arresting them for alleged unpaid taxes.

Note that LHDN does not make unsolicited phone calls or send emails requesting personal information. If you receive a call or email from someone claiming to be from the revenue board, follow these steps:

• Verify the identity of the caller: Ask the person to provide their full name, designation, and contact information. You can also ask for their LHDN identification number or employee number. If you have any doubts, ask for a callback number and contact LHDN directly to verify the caller’s identity.
• Do not disclose personal info: LHDN will never ask you for any personal information – such as your IC number or bank account details – over the phone or email.
• Be cautious of intimidation: Scammers may use threats or intimidation to pressure you into providing personal info or making a payment. LHDN will never threaten you with arrest or legal action over the phone or email.
• Report the incident: If you suspect you have received a fraudulent call or email, inform LHDN immediately. Alternatively, contact the Malaysian Communications and Multimedia Commission to report the incident.

This article was written by Hariz Hafiz for Qoala Malaysia.