Malaysia tax brief

Malaysia tax brief for Australian expats

If you have been looking for a job in Malaysia or have already found one and are still confused on the country’s tax structure, then worry no more. Here are the things you should know about Malaysian tax for Australian expats.

Who is a resident in Malaysia?

Any person who fulfils the following criteria is considered a Malaysian resident:

  • Has lived in Malaysia for at least 182 days in one calendar year
  • Has resided in Malaysia for 182 days or less in one calendar year but plans to stay for another 182 days or more in the next year

Tax residency status

Filing your residency status for tax purposes is vital since it determines your liability to pay Australian personal tax on your income.

If you remain an Australian tax resident while in Malaysia you:

  • Must declare that income even if it has already been taxed in Malaysia
  • Must declare all foreign employment income, including any except income and lodge an Australian tax return

Tax relief and deductions

They include:

  • A spouse tax relief as long as the spouse doesn’t earn any income in or out of Malaysia
  • Tax relief for each child below 18 years old
  • If you have to pay parental care, then you are relieved from paying tax
  • Tax relief for children studying at tertiary level

Income earned outside Malaysia

Income earned in Malaysia will be taxed. However, an expat in Malaysia needs an MM2H visa. This visa allows you not to pay income tax as long as the income is being remitted from outside Malaysia.

Malaysian tax year

The Malaysian tax year is the same as the calendar year. It begins on January 1st and ends on December 31st. Tax returns must be filed before April 3rd of the following year.

Australia-Malaysia tax treaty

Australia and Malaysia signed a double tax treaty to avoid double taxation and fiscal evasion.

Malaysian taxation rate for non-residents and expatriates

  • Workers aboard a Malaysian ship are exempted from paying income tax
  • Residents are taxed from 0-25% depending on income with incentives
  • Non-residents are taxed 28% with no incentives

Pension fund in Malaysia

Only permanent residents in Malaysia and citizens are required to contribute to a pension fund. However, an expatriate can choose whether to contribute.

Contact us at Expat Tax Services if you need more information and advice about Malaysian tax for Australian expats.

Shane Macfarlane CA
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