This is Not a Spyware, Badware or Malware Website

Damn seriously I don't understand why Blogspot will put my blog as one of the Spy,Bad or Malware sites.

Please be assure that this is a secure site and I'm still building another new sites. Off for temporary because do not have time to even sleep, nor to blog.

But my next project ain't about blogging, is more like story-telling, and etc.

hehe..Enjoy!

Thank you note!

Taking the opportunity from my blog, I would like to thank my lecturer, Dr. Sonny Zulhuda for his guidance and assistance in our assignment of making this blog a great one, apart from having given lots of inspirational lectures and information tutorials sessions. I hope that in future, we will be working on something big together or, simply, just to sit down and see him do great things and be proud that I'm one of his student.

As for that, my hats are down and my hands are off the keyboard (impossible, as I'm still typing) to express my wholehearted thankfulness and gratefulness for the time of us sharing the understanding and knowledge of Business Law.

Truly enjoy the class and hope to excel in the finals! (Dr. Sonny, keep note of my ID, I need the good grades from you)

Thank you very much again and again and hope to see you soon!

Regards,
Let's Speculate More!

Internet Marketing and the Source of Income

As many of you all know the current trend of doing online business, or earning money through online. But as simple as both statements sounds, it differs a lot, especially on the second one. The reason behind of me stating this is because online business simply means doing business online and with the such of having a bidding online, online auction, selling stuffs through online.


But earning money through online has the other form of generating the income streams. Why can I tell you this, is because I have tried it before and I know what is it all around. Earning money through online is in fact, like Marketing Communication companies do, but instead of approaching people or doing events elsewhere, their main focus is on online platform. But on the online platform, how to earn money? Some may post up ads, and for people to write post, such as PayPerPost or even KennySia.com, Malaysia's Famous Blogger that write post for companies who want to advertise. Still this is not that complicated.

The complications starts when a different method and many of them were used. With the likes of advertisement through Google Adsense, a subsidiary of Google that placed ads on people's website but without the discretion of the owner of the site. Yes of course, the owner will have to signed and agreed on the T&C, but what I mean is that, the owner will not know what type of ads will be generated as it is randomly generated but with an mechanism to focus on your post. Let's say you post on Golf, and the ads will have golf ads on your website. Thus, the earning streams comes from clicks known as PayPerClick, or PayPerImpressions and many more.

And with that, many of us will put that, and Google will only pay you if you reaches USD$100. And that will be darn freaking long, I can tell you, so some took advantage and started having lots of blogs with no details but with high intention to earn money, before Adsense have this blockage to stop this people for making it worse for the companies (as Google have to be responsible to the companies that placed the ads). And with that, the Earning Money Through Online Saga continues, as people even write up E-book for sale to people and teaching people how to earn money through online. Some established companies and method like Stuart Tan from Singapore had proven some of the theory and it did worked. But as usual, the pie of a pot of gold will be exhausted as well, thus many started trying this stuffs again and again.

Alright, let me tell you something, from what I believe is that, if earning money through online is that important, earned it with conscience. Do not take advantage of the money but in the prospects of learning. This is essential and heaven-of-important. And let me share this story of a 17 Malaysian Boy (2008, where I was hyped about the issue) who earned about RM 10 000 in a month. The boy name is Labanon, now I think is 19-years old, and he did the same thing browsing such stuffs and trying what I was trying to do that time. But anyhow, the stories goes like this, my main concern is not how he earned the money, but what is the tax implications of this scenario.

As magnificent as it sounds, we are Malaysian we are to drawn down to it to see some implications even though you are capable of earning it. With the previous few post on Income Tax, he is not in the working force yet, and is still studying. Will he be charged for Income Tax?

The answer will, in my opinion (correct me if I'm wrong) will vary in a different way. First of all, the question is not his age, but the income stream. Is it periodical income stream (that means constant) or it is an one time payment? And even if it is an one time payment, is the profit from a business?

With that we will get a clear answer is that yes, this is an income by definition of Section 4 of ITA 1967. And from that, I will evaluate the point from here. Even without his parents knowledge, he has to pay income tax, with the reason is that, although Google Adsense is in US, all the operations are done in Malaysia, and this is definitely true, because all bloggers who earned money through online paid taxes (subject if the income is more than RM 27000 annually). In addition to that, something that I learnt last time is that Google will have an agreement with you to state whether you are a citizen of USA or not. If you are not, you are not asked on the tax code, but..there is a BUT! In the terms and conditions, you have to bear your own cost for tax, as you are not paying tax and google do not have to pay for you. So in both countries with taxation system, and with both must have one side being paid tax, is simply, the blogger have to pay for the tax.

That's why, Tax is always a big issue..first because it involved money.and second it got too much things to consider...hehe..

The Process of your Income Before Being Taxed! aiyoyo..

Alright, always the issue of how much money will I be taxed, how can I run away from being taxed and etc.

Alright, below are the procedures that is taken from my lecture notes on how Chargeable Income (the income where the taxes are charged) are computed.

The steps is as follow (the following steps is very essential especially for taxpayer, at least you have a good understanding on the process of it);

1. Gross Income: all the income that includes any sums, before deduction of any allowable expenses
2. Adjusted Income: calculated by deducting all outgoings and expenses incurred in the production of gross income
3. Statutory Income: determined by adding balancing charge with the adjusted income any by deducting capital allowances
4. Aggregate Income: Combination of statutory incomes less the business losses from the previous year
5. Total Income: aggregate income - current year adjusted business loss, less others
6. Chargeable Income: Total Income - Personal Relief

I would like to take this opportunity in this post, to talk a little on Personal Relief. Apparently with so much taxes being taken away, from our income, our Government had the so-call incentives (thankful for feeding them with money), that is called the relief, as if you have wife, children, books, and etc.
The below are the list of reliefs (adapted from http://www.mida.gov.my/en_v2/index.php?page=personal-income-tax)

4.1.1 Personal Relief

The chargeable income of resident individuals is computed by deducting the personal reliefs from the total income. The types of relief available are:

Relief	RM
Self	RM8,000
Further self relief - disabled	RM6,000
Wife/ husband	RM3,000
Further wife/ husband relief - disabled	RM3,500
Medical expenses for parents;	RM5,000
Medical expenses for taxpayer, spouse or children on serious diseases (include RM500 for medical examination);	RM5,000
Expenses on supporting equipment for disabled taxpayer, spouse, children or parent;	RM5,000
Expenses on supporting unmarried children:
i. Below 18 years of age;	RM1,000
ii. Disabled child	RM5,000
iii. Over 18 years old (pursuing tertiary education at university or college)	RM4,000
Life insurance premiums or approved fund contributions	RM6,000
Insurance premiums for education or medical benefit	RM3,000
Annuity premium on annuity purchased through EPF Annuity Scheme	RM1,000
Fee of acquiring law, accounting, Islamic finance, technical, vocational, industrial, scientific or technological skills or qualification. In cases of post graduate studies, no restrictions on the field of study.	RM5,000
Purchase of books, journals and magazines and other similar publication (excluding newspapers).	RM1,000
Purchase of computer for once every three years with effect from the year of assessment 2007	RM3,000

Foreign Source Income on ITA 1967. The Vague Story to be Told!

From the observation of a few companies both medium and large companies respond on foreign source income issue. And from the recent research that I got from online, and forums, what I can generalised the answer is in a way that, the most logic and to seek for the truth.

As for the answer, the residential or the period of time whereby an individual resides and where he resides is eventually the most important point.

From the previous story of Mr. J, he is residing in Malaysia, and even with foreign source of income, he is subjected to Malaysian tax. In a way to tell, if he is a Malaysian and in tax-scope of resident status is in Malaysia as well, and also eligible to US Tax Status, he will not be subjected to Malaysian tax, but is to US Tax. And as US and Malaysia do not have the Double Taxation System, so Mr. J will either be taxed in Malaysia or either in US. That's the simple story.

A very good example as well will be blogging, if you are working for Google. And Adsense (sub company of Google) is paying for ads you earned from your website. Google paid you and apparently your income annually reaches more than RM 27 000, you are subjected to Malaysian Tax simply because you work in Malaysia (don't talk about the IP address stuff, later MCMC have to get involved ady).


Anyway to know more, there is an interesting link as below, that shares many funny and true stories;
http://forum.lowyat.net/topic/1003595
http://answers.yahoo.com/question/index?qid=20091222065411AAPJzhN
http://taxipay.blogspot.com/2008/03/us-citizen-or-resident-with-foreign.html

Income Tax Law: Foreign Source Income

Continuation from the previous post, and from the definition of Income Tax, that states that money that received in Malaysia but came from outside Malaysia are subjected to tax. The outside Malaysia term will fit in 'Foreign Source Income'. With effect from year 2004, individuals (again resident or non-resident) are assessable only on income accrued in and derived from Malaysia. This was an amendment made that any income that is made outside Malaysia is tax-free. But wait a minute? Is that possible. From the definition, and from Paragrah 28,Schedule 6 of ITA 1967, foreign source income is exempted from income tax.

However, with the term clearly defined, it still remain ambiguous at some point. The reason why as I put a scenario for you guys to think.

Mr J is a businessman from Malaysia and have been a Far-East representative for a company in US namely H. As a Far-East representative, his responsibility to do inspection and make report to the company H, via his expertise and experience in the industry. He is the only one in Malaysia that is working for H, and it had been going on since 2001 until now. All his money are paid from US and sent to Malaysia. With 2004 amendments on Foreign Source Income and by definition, he should be waived off from the tax.

But this remain untrue, as based on the true story and advise from accountants that audit his Income Tax stuffs, he is still entitled for the tax. And this may be the UGLY TRUTH, but I'm going to state to you guys. The reason is that, although the source is from Foreign, and it is subjected Mr J had to stay in US, just like if you are a Malaysian, have to stay for a certain period of time, only the income are not subject to tax.

This may seem funny, but I truly hope it can be debatable, but most auditors for Mr J had told the same thing. And this is a true story! Bite it and go!

Income Tax Law: Continued...

As our scope of taxes are narrowed to Income Tax, we will focus on Income Tax Law. And a very important point to note is that, our Income Tax Law are all accordance to Income Tax Act 1967. Even though every single year, different budget and percentage changes in the tax imposed, the basic of the law is still on ITA 1967.

A very important point to note will be how income tax is classfied. According to Section 3 of ITA 1967,
"A Tax known as income tax shall be charged for each year of assessment upon the income of any person accruing in or derived from Malaysia or received in Malaysia from outside Malaysia".

This will thus, bring different definition to our context, with the number of days of resident play an important role. It is not whether you are citizen or permanent resident or sort, but to see how long you reside in Malaysia to check your Income Tax residence status. A reminder again, this is totally distinct from your origins or citizenship status in Malaysia.

Before we go on further, we shall discuss what are 'income'. Income must be repetitive from a source of income and received in the ordinary course of business. While you may think, let's say, I'm an event organizer, and I got money from different sponsors, and my money differs a lot, is that income?

As for that, the Income Tax Act or the authority (they are not that dumb to let you go), and all the gains or profit shall be referred to Section 4 of ITA1967 as follow;

1. Profits or gains of a trade, business, profession or vocation
2. Profits or gains from personal services - employment
3. Dividends, interests and discounts
4. Rents, royalties and premiums
5. Pension, charges or annuity or other periodical payments
6. Gains or profits not falling under any of the foregoing paragraphs.

With all gains, profits or income seem quite clear, the misleading number 6 can actually mean all the money that you earn. But still, there are points to consider. This is because if money that are not declared and yet is transacted, the authority may charged you of any case even money laundering.

And during each and every year, the basis period is the period of time upon which tax is assessed. Usually income tax is assessed upon one year period and as mentioned previously, April is the month of the Income Tax month. While on the other hand, the Year of Assessment means calendar year in which tax is assessed, and it begins from January and ends in December. As for individuals, it wouldn't affect much, but for corporate or business companies, it usually do not follow this calendar year. But anyhow, for Income Tax, before 2003, individuals are assessed on different horizon, before the amendments were changed and everyone is following the same time. Thus, accountants got more job.

Let's put this scenario and speculate on the situation that might happen.

AH is a student and an entrepreneur. He works as a part-time event organizer and had been actively doing his part professionally and learning every steps. He met with a lot of people, and especially with big shots like Dato', Datuk, Tan Sri, Yg Bhg and even Tun. With that influence, recently, he was given a project to do. The project is an event and the people are willing to fund him even up to RM 30 mill. As he do not need that much of money, the people behind this project are ready to allocate, as this pool of fund is not from a sole person, but multiple person. As he draft out the proposal and RM 30 mill were sent to him. Let's do not consider the people that gave him the money and how they do it. But narrow our scope to AH's Income Tax issue. He never paid tax, and do not even own a KWSP account. And for this, case with RM 30 sent to his bank account, CIMB were even terrified.

And let's say, yes, RM 30 mill is in his account now. What will you think will happen to Income Tax Authority. Even if he declare and do his event until the next year income tax audit, he will only be charged with the max of 26.8% and he wouldn't mind paying it. But let's bring this thing to logic, do you think Income Tax people will come or Malaysian Anti Corruption Commission (MACC) will come?

Think about it, because the scenario of him paying the tax is not a problem. But why is it that way that even we pay tax, we can be charged?? Please put some feedback on this. Thanks