End of Year Tax Guide 2023 | Payroll Guide

This article will guide you through the process of wrapping up the 2023 tax year and getting ready for the 2024 financial year.

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 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 2023 tax year will only include earnings etc from pay runs ended within that tax year. For example:

  • Pay run period ending 31/12/2023, PAID 31/12/2023 will be included in the 2023 financial year.
  • Pay run period ending 31/12/2023, PAID 03/01/2024 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/submited to the relevant Government bodies, ie. LDHN 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 LDHN.  EA forms should be given to employees by 28 February 2024. How to generate and publish the EA forms can be found 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. This form is given to the employee who submits it to LDHN. PCB2 form should be given to employees by 28 February 2024. 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 a declaration report and it is submitted by an employer to LDHN every year, no later than 31 March 2024.

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

2. New tax year 2024

Once the above 2023 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 2024. Your employee should complete a TP1 form and provide to you to claim the new tax reliefs for 2024

Please note, tax reliefs are NOT carried over from 2023 to 2024. 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 2024 changes?

With regards to the Budget 2024 announcement, below are statutory changes information related to the year of assessment 2024.

  1. The scope of medical treatment, special needs and carer expenses for parents is expanded to include:
    • All types of dental examination and treatment by dental practitioners registered with the Malaysian Dental Council.
    • Full medical examination up to RM1,000.
  2. Fee for skill improvement/personal development course in any field recognised by the Director General under the National Skills Development Act 2006 (limited to RM2,000) is extended to 2026.
  3. The scope of medical expenses for self, spouse, and children is expanded to include dental examination and treatment by dental practitioners registered with the Malaysian Dental Council up to RM1,000.
  4. Revision to the scope of lifestyle expenses for self / spouse / children:
    • Claims for the purchase of sports equipment and membership fees for gyms are excluded.
    • The scope is expanded to include self-enrichment course fees. These courses do not need to be registered or recognised by any Government body and taxpayers are encouraged to study skills that are not related to the job, such as courses related to hobbies, religion, or language.
  5. Expense for sports equipment and activities limit is increased from RM500 to RM1,000, and the scope is revised to include:
    • Purchase of sports equipment for any sports activity under the Sports Development Act 1997 [Act 576] (not including motorised two-wheeled bicycles);
    • Rental fees or entry fees to sports facilities;
    • Payment of the registration fee to participate in the competition; and
    • Gym membership fees or sports training.
  6. Expense for purchase, installation, rental, and subscription for EV charging facilities (up to RM2,500) is extended to 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.

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