As of 2020, around four million Malaysians or approximately 26% of the workforce are engaged in the gig economy, with the pandemic having boosted numbers.

Gig workers can range from the makcik who sells nasi lemak or the neighbour who offers home tuition, to graduates providing professional services such as freelance writing or graphic design. Buskers, entertainers, songwriters, and other performers also qualify.

As it is tax season, you might be wondering: do gig workers need to declare their income and file taxes like every other full-time employee? Here’s what you need to know.

1. All income must be declared

For those with full-time jobs, employers provide an EA form every year that contains information such as the total amount of income earned as well as EPF and Socso deductions.

If you have any other source of income, such as property rentals or gig income, it should be declared, too. This includes food delivery, emceeing events, driving an e-hailing vehicle, or owning a home business.

In short, you could have a full-time job and be a gig worker in your own time; or you could do gig work as your only source of income. Either way, you still need to declare it in your tax return. However…!

2. Not everyone has to actually pay taxes

Regardless of which scenario applies to you, depending on how much you earn, you may not need to pay any taxes at all.

Those who earn under RM3,400 per month on average will not have to pay any tax, despite being legally required to declare their income.

3. Get your TIN online

If you don’t already have one, the process of applying for a Tax Identification Number (TIN) is simple and can be done online within a few minutes – even on your phone.

There is no need to visit the Inland Revenue Board (LHDN) office with a physical application form, although you may certainly choose to do so.

If you’re a gig worker filing your taxes for the first time, here are some tips:

• Know how much of your income is actually taxable. A spreadsheet or other software can be useful here.
• Keep clear records of business expenses (as opposed to private or domestic expenses). Track of all your spending as part of your gig work.
• Understand capital allowances on qualifying assets related to your income production. For example, a new oven for a home bakery or a motorcycle for deliveries may be applicable for capital-allowance claims.
• Know what tax reliefs you qualify for, ranging from medical costs and education to lifestyle expenses. Compiling the relevant receipts will help reduce your tax load as well.

If you fail to declare your taxes, you could be penalised and/or required to pay backdated taxes should you be audited. Furthermore, poor tax records may lead to difficulty when it comes to future financial matters such as bank loans.

So declare your taxes, regardless of how much (or little) you earn!

The deadline for manual filing is April 30 and May 15 for e-filing. If your gig income qualifies as a business, you have until June 30 (manual filing) or July 15 (e-filing).

This article was written by Thenesh Kannaa, ACCA Expertlink panel member for taxation.