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Receipts mandatory for tax relief

new tax releaf

Individual taxpayers claiming tax relief or deduction must back their claims with receipts dating back seven years if they are hauled up for an audit, according to the Inland Revenue Board (LHDN) and tax experts.

Their reminder came in the wake of a warning by LHDN that it would go after tax evaders when the Special Voluntary Disclosure Programme ends Sept 30.An audit could be conducted if a risk assessment by LHDN raised suspicion on a taxpayer’s declaration.

The assessment could come from newspaper articles that reported a lavish lifestyle beyond one’s means or making generous donations that do not tally with the declared income.

Once an audit is called, the onus would be on the taxpayer to support their relief claims with receipts or documentary proof was a requirement under the Income Tax Act.In such cases, alternative documents such as statements issued by the merchants or businesses should suffice,

LHDN would usually carry out an audit after a risk analysis of an individual’s tax declaration when a taxpayer is claiming the full amount on numerous tax reliefs, reporting lower income as compared to information provided by the employer in Form E or unable to justify a luxury lifestyle.

LHDN would accept all forms of receipt and documentation either physical or digital during an audit as long as the documents can prove that payments or expenses have been made as reported

Those who failed to keep proper records of receipts or documentation with regard to claims on tax relief or deductions could face a fine of between RM300 and RM10,000 or jailed not exceeding one year or both.

Source: https://www.thestar.com.my/news/nation/2019/09/19/receipts-mandatory-for-tax-relief