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End of Year Tax Guide 2024 | Payroll Guide

Updated

This article will guide you through the process of wrapping up the 2024 tax year and getting ready for the 2025 financial year. We will cover the following:

1. End of tax year preparation

These steps should be taken prior to publishing the E, EA Form and PCB2 forms.

1.1 Review configuration data

  1. Ensure employee details are up to date. In particular, the employee's email and postal address. Earnings certificate notifications will be sent to the email address provided in the 'Email' field, so it is important the information is correct. However, the earnings certificate can be printed and dispersed manually if required. Additionally, check that the employee's address is complete and correct as this will prevent earnings certificate from being able to be published. A quick way to audit this information is to generate an 'Employee Details Report' and select the relevant display columns to retrieve the information.
  2. Any new tax relief items to be claimed by employees have been set up for the final month of December payroll within Pay run inclusions > Tax reliefs, alternatively you can add this within the December pay run.
  3. Any benefits in kind to be claimed by employees have been set up for the final month of December payroll. This can be set up within the Pay run inclusions > Benefits in kind, or same as tax reliefs, can be added in within the December pay run.
  4. Ensure the Business statutory settings is up to date as the details within will populate the end-of-year forms, e.g. E, EA and PCB2 forms.

1.2 Process and finalise pay run

  1. Ensure that all pay runs are finalised, including any amendment pay runs you had to create.
  2. Ensure all tax reliefs, benefits in kind, allowances have been paid/claimed within the pay run.

Please Note: The pay run end date determines which financial year that pay run applies to. Annual forms that are generated for the 2024 tax year will only include earnings etc from pay runs ended within that tax year. For example:

  • Pay run period ending 31/12/2024, PAID 31/12/2024 will be included in the 2024 financial year.
  • Pay run period ending 31/12/2024, PAID 03/01/2025 will be included in the 2024 financial year.

1.3 Statutory reporting and payments

When a pay run is finalised, the following statutory exports are available to be uploaded/submitted to the relevant Government bodies, ie. LHDN for the CP39, Perkeso for EIS and SOCSO contribution files, and EPF for the EPF contribution file. Refer to the following support articles for more information.

1.4 Generate and publish employee annual forms

EA form

An EA form is a Yearly Remuneration Statement that includes your salary for the relevant basis year and is used for the filing of personal taxes to LHDN. EA forms should be given to employees by the last day of February 2025. How to generate and publish the EA forms can be found in this support article.

PCB2 form

PCB2 (Statement of Payment by Employer) is a detailed statement itemising all monthly PCB/MTD and CP38 amounts deducted during the year, which the employer provides to the employee for submission to LHDN. The PCB2 form should be given to employees by the last day of February 2025. This support article will guide you through how to generate and publish the PCB2 form.

1.5 Generate the E form

Borang CP8D E form (Return form of employer) is an annual employer return submitted by an employer to LHDN every year via e-Filing on the LHDN MyTax portal, no later than 31 March 2025.

Refer to this support article on how to generate the E form for submission to LHDN.

2. New tax year 2025

Once the above 2024 end of tax year processing is finalised, then there are several considerations for the new financial year:

  1. Review and update each employee's statutory details, such as number of children, marital status, residential status, residential type, worker status, EPF contribution, EIS contributions, SOCSO schemes.
  2. Review and update each employee's tax reliefs to be claimed for 2025. Your employee should complete a TP1 form and provide to you to claim the new tax reliefs for 2025.

Please note, tax reliefs are NOT carried over from 2024 to 2025. You can update employee's mandatory tax reliefs (i.e. marriage status, number of dependents) in bulk via Employee Import or individually via Employee Tax relief. Then you can add optional tax reliefs via Pay run inclusions > Tax relief.

What were the new tax year 2025 changes?

With regards to the Budget 2025 announcement, below are statutory changes information related to the year of assessment 2025.

  1.  
    1. Tax relief threshold for disabled individual is increased as below
    • Self - RM 7,000
    • Spouse - RM 6,000
    • Child - RM 8,000. Additional RM 8,000 if receiving full-time instruction at an establishment of higher education (approved by the government).
    1. Private retirement scheme contributions and deferred annuity scheme premiums is extended to year of assessment 2030
    2. Insurance premiums for education or medical benefit limit is increased to RM 4,000
    3. Scope of medical expenses for parent is expanded to include grandparents and scope of complete medical examination is expanded to include vaccination
    4. Scope of full medical examination, COVID-19 detection test (including purchase of self-test kit) and mental health examinations or consultations for self, spouse or child (limited to RM1,000) is expanded to cover the following:
      i. purchase of influenza test kit;
      ii. purchase of self-testing medical devices such as glucometer, pulse oximeter, blood pressure monitor and thermometer; and
      iii. fees for disease detection examination conducted at clinic or hospital, such as blood test, ultrasound, mammogram and pap smear.
    5. Threshold for intervention expenditure for ADHD, GDD & other learning disabilities is increased to RM 6,000
    6. Fees paid to childcare centre and kindergarten is extended to year of assessment 2027
    7. Deposit for child into the Skim Simpanan Pendidikan Nasional account is extended to year of assessment 2027
    8. The scope of sports equipment and activities relief for own use, spouse or child is extended to include parents
    9. The scope of costs related to electric vehicle charging facilities, including installation, rental, hire-purchase of equipment, or subscription fees is expanded to include purchase of food waste composting machine for household use, till year of assessment 2027
    10. Reinstated tax relief for interest payment for first residential home loan for 3 consecutive YAs, starting from the first year the housing loan interest is paid:
      (i) House price RM500,000 and below: RM 7,000
      (ii) House price between RM500,000 - RM750,000: RM 5,000
      (Effective for sale and purchase agreements executed between 1 January 2025 to 31 December 2027)

As per currently, once the employee's tax reliefs are specified, they are then automatically deducted in the PCB/MTD calculation. For further information on how to apply the employee's tax relief items, refer to the tax relief support article.

If you have any questions or feedback, please let us know via support@employmenthero.com.

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