End of Year Tax Guide 2022 | Payroll Guide

End of Tax Year Preparation

You should take these steps before publishing the E, EA Form, and PCB2 forms.

Review configuration data

Make sure employee details are up to date. In particular the employee's email and postal address. We will send earnings certificate notifications to the email address provided in the Email field so it is important the information is correct. However, you can print the earnings certificates and send them out manually if required.

Additionally, check that the employee's address is complete and correct as this will prevent earnings certificates from publishing. A quick way to audit this information is to generate an Employee Details Report and select the relevant display columns to retrieve the information

Make sure any new tax relief items that need claiming by employees have been set up for the final month of December payroll on the Pay-run Inclusions Tax Reliefs, page; alternatively, you can add this within the December pay run.

Make sure any benefits in kind that need claiming by employees are setup up for the final month of December payroll. You can set these up on the Pay Run Inclusions Benefits in Kind page, or , just like tax reliefs, you can add these within your December pay run. Also make sure your Business statutory settings are up to date as the details within will populate the end of year forms e.g. E, EA and PCB2.

Process and finalise pay run

Make sure that all pay runs are finalised, including any amendment pay runs you have to create and you have paid/claimed all tax reliefs, benefits, in kind and allowances within the pay run. The pay run end date determines which financial year the platform will apply to the pay run. Annual forms generated for the 2022 tax year, will only include earnings etc, from pay runs ended within that tax year. For example:

  • Pay run period ending 31/12/2022, and paid on the  31/12/202  you would include in the 2022 financial year.
  • Pay run period ending 31/12/2022, and paid on the 03/01/2023 you would include in the 2023 financial year.

Statutory reporting and payments

After you process a finalised pay run you can run the following statutory export so you can upload and submit your data to the relevant Government bodies, i. e. LDHN for the CP39, Perkeso for EIS and SOCSO contribution files and EPF for the EPF contribution file.

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 you would use it for the filing of personal taxes to LDHN. You should give EA forms to employees by the 28th February 2023. You can read about how to generate and publish the EA forms in this support article.

PCB2 form

PCB2 is a letter confirming that the employer has made all of the tax withholdings for a given period. You will give the form to the employee who submits it to LDHN. You should give PCB2 form to employees by the 28th February 2023. The following support article will guide you through how to generate and publish the PCB2 form.

E form

Borang CP8D-E form (Return form of employer) is a declaration report and you will submit it as the employer to LDHN every year, by the 31st March 2023. Here are the tax form submission deadlines for 2022, as a reference, we will update once LHDN publishes a schedule for 2023.

New Tax Year 2023

Once the above 2022 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 that need claiming for 2023. Your employee should complete a TP1 form and provide it to you to claim the new tax reliefs for 2023. Please note that LHDN have not released the forms for 2023; these are TP1 and TP3 forms for 2022 for your reference. You can add recurring or one-off tax reliefs for your employees via the Pay Run Inclusions Tax Relief page.

Tax reliefs do not carry over from 2022 to 2023; to read more information refer to the following article on employee tax reliefs.

What were the new tax year 2023 changes?

For your information below are proposed changes for tax year 2023 from the Malaysian Budget tabled in Oct 2022. As such, they are not yet enacted and we will keep this section up to date based on government announcements.

Income tax rate

Changes to Income Tax Rate for Resident Individuals:

  • 13% to 11% for the chargeable income band of RM50,001 to RM70,000.
  • 21% to 19% for chargeable income band of RM70,001 to RM100,000.
  • 24.5% to 25% for the chargeable income band of RM250,001 to RM400,000.

Tax relief items

There is one new tax item for 2023:

  • Complete medical examination is expanded to include dental examination and treatment by dental practitioners registered with the Malaysian Dental Council up to RM1,000

In addition to the above, they have made some updates to existing tax relief items for 2023:

  • Life insurance premiums are expanded to also include voluntary EPF contributions up to RM3,000.

There were other changes made to some tax reliefs by extending the year of assessment further:

  • Child care fees extended until the year of assessment 2024;
  • Net Deposit in Skim Simpanan Pendidikan Nasional until the year of assessment 2024.
  • Deferred annuities until the year of assessment 2025.

Lastly, below tax reliefs are no longer available for year of assessment 2023:

  • Additional lifestyle tax relief for purchases of personal computers, smartphones, and tablets introduced in 2022.
  • Domestic tourism expenditure.

As per current law, once you specify the employee's tax reliefs, they are then automatically deducted in the PCB/MTD calculation. To read further information on how to apply the employee's tax relief items, refer to the tax relief support article

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