If you have just started using Talenox Malaysia, you'd want to ensure that the Monthly Tax Deduction (or Potongan Cukai Bulanan) for your employees is accurate.
Here are the steps to ensure that:
1. Under Employee Profile > Statutory Details > Setup accumulated deductions, do enter the Accumulated MTD paid (assuming from Jan - April 2019) to ensure that MTD calculation is correct from May 2019 onwards (for example):
2. Aside from Accumulated MTD paid field, you will need to complete both Accumulated Remuneration/Benefit-In-Kind (BIK) / Value of Living Accommodation (VOLA) and Accumulated EPF fields too.
2. Once all 3 fields are saved, we will calculate the whole year tax and prorate accordingly based on the official formula, which you can verify from LHDN Official Calculator (MTD Calculation). 😁
How to further verify accurate MTD calculation?
1. After processing payroll, in Month Total page, select any employee and double click on the value amount under MTD column.
2. Thereafter, it will auto-verify with LHDN and a .pdf report will be generated from LHDN Official Calculator (MTD Calculation). This will take approximately 30 seconds - 1 minute to simulate the user filling forms. (Do note that this will depend on the loading speed of LHDN website too.)
3. Here is an example of the auto-generated PCB/MTD .pdf report. (For better experience, do ensure the browser pop-up blocker is disabled first.) 😎
Do note that Talenox calculates MTD/PCB based on a formula set by LHDN. As MTD/PCB calculation can be regarded as complex, it can be summarised as below:
[(P-M) x R] + B / 12
P = Chargeable income for the year
M = Amount of the 1st chargeable income for every range of chargeable income a year
R = Percentage of Tax Rates
B = Amount of tax on M (less) tax rebate for individual and spouse (if qualified)
- Taxable income: Previous salary + (recurring items in monthly salary + non recurring items in monthly salary) + (recurring items from this month’s salary x number of months remaining in the year)
- Chargeable Income: Taxable income - deductions
- Total Yearly Tax is calculated on the chargeable income