AtOneGoFinancial Blog

21 November 2023

IRS Penalty for Underpaying Personal Taxes to Remain at 8%

IRS building — Rob Crandall / Shutterstock.com

The penalty for underpaying your taxes will not increase in January — though it remains steep. The IRS announced Nov. 17 that the interest rates it charges for underpayments will remain the same for the first quarter of 2024 — Jan. 1 to March 31 — as they are for the last quarter of 2023. The rates the federal agency pays for overpayments also will remain the same. (Yes, if you pay more in federal...

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20 November 2023

Tax Matters – Understanding the penalty regime

EVERY taxpayer has an obligation to comply with the tax laws and any infringement will be an offence, which will lead to penalties, fines and, possibly, imprisonment. There are two types of penalties: mandatory penalties and discretionary penalties.

Mandatory penalties

Mandatory penalties will be automatically imposed through the Inland Revenue Board’s (IRB) internal system. Common examples are late payment penalties for tax due, late payment of withholding taxes, underestimation of advance taxes, revision of tax computation within six months of submission, etc.

These penalties will be automatically triggered upon the expiry of the deadline and this is usually 30 days or one month from the due date. Clearly, when dealing with this category of penalties, there is no room for doubt that the taxpayer has defaulted in meeting the required deadline.

In practice, if the taxpayer can show extenuating circumstances which led to missing the deadline, the IRB has been magnanimous in either waiving or reducing the penalties in exercising its discretion.

An example would be where the taxpayer has submitted the payment before the due date, but the funds remitted are rejected by the bank due to certain banking anomalies. Subsequently, these amounts are made good by the taxpayer within a short period of the default, and the IRB is kind enough to waive the penalties. This is possible if the taxpayer takes immediate action to rectify the situation, which indicates his genuine intention to pay the tax on time.

Discretionary penalties

This is the type of situation where the taxpayer in the eyes of the IRB has defaulted by providing incorrect information, incorrect returns or failed to submit tax returns on time. It is not clear cut in such circumstances the taxpayer has failed to meet the obligations and the penalties are not fixed and can include a range of rates.

For example, failure to furnish tax returns can trigger a penalty between RM2,000 and RM20,000, or imprisonment not exceeding six months, or both. Where there is no prosecution, the penalty could increase to 300% of the tax payable. Submitting an incorrect return or providing incorrect information or omitting or understating income can trigger a penalty between RM1,000 and RM10,000 and a special penalty of 200% of the tax undercharged.

When are discretionary penalties imposed?

The most common instances where discretionary penalties arise would be from tax audits and investigations. Although the penalties imposed here should be discretionary, in practice, penalties appear to be automatically imposed on any adjustments.

In such circumstances, the taxpayers should examine their position and be prepared to engage with the IRB on the imposition of the penalties.

When it comes to penalties imposed due to submission of incorrect returns, incorrect information or understating income, the law provides protection to the taxpayer in the event the matter is taken to court to prove that the position taken by the taxpayer was done on good faith. Effectively, it means that if the taxpayer has filed tax returns with complete disclosure of information and on time and cooperated with the tax audit or investigation officials, the defense of good faith is a good one.

Added to this, the taxpayer should be able to show that his interpretation of the law is justifiable based on facts and existing legislation and case laws. The test applied here should be one of a reasonable person. If the taxpayer has sought the views of a qualified professional, then he has added grounds to support his argument of good faith.

Now the IRB has accepted in its latest audit framework that where a difference of opinion is purely due to an interpretational matter, then penalties will not kick in.

Taxpayers should engage with the IRB in cases where in the course of settlement they are willing to accept the IRB’s position on a grey area relating to the interpretation of the law to request for the penalty to be waived. In such circumstances, the IRB should accommodate genuine taxpayers and refrain from imposing penalties.

This article is contributed by Thannees Tax Consulting Services Sdn Bhd managing director SM Thanneermalai (www.thannees.com).

Source: The Sun Daily

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Malaysia has qualities to become regional FDI haven: Holistic Wealth Group CEO

PETALING JAYA: Malaysia has many attractive merits to make it a regional investment haven for foreigners, according to integrated tax and financial services company Holistic Wealth Group’s CEO, Datuk Chua Meng Min (pic).

He said Malaysia should be a haven for foreign direct investment (FDI) as it possesses many qualities which are enticing to foreign companies – such as good infrastructure and reasonably inexpensive operational costs in terms of office rental, setting up plants as well as regional offices – compared with other countries in Southeast Asia, particularly Singapore.

“Office rental, building a factory in Malaysia is (quite) inexpensive ... Singapore is one of the countries with the highest cost of living in the world. Why should a foreign company set up a regional office there?,” Chua told SunBiz.

He said most business operations such as manufacturing are conducted in developing countries in Asean, namely Malaysia, Indonesia and Thailand. Hence, he questioned the reasoning behind a foreign company’s decision to set up a regional office in Singapore if most operations are done elsewhere.

Since the cost of conducting business activities in Malaysia is vastly lower compared with Singapore, Chua said, Malaysia is clearly the more ideal place to set up a regional office.

Moreover, he pointed out that the English language is widely used domestically and that most Malaysians are well educated, which make them viable candidates for hire to foreign companies.

In addition, he said Malaysia is a safe country and has diverse entertainment outlets that would be acceptable to expatriates and foreign companies.

Hence, he opined that there is no reason for Malaysia not to be able to attract more FDI into the country, given all the merits that it boasts of.

He said FDI is very important to the country as when foreign companies come in, certain industries, sectors or markets – such as the property market – will improve due to their spending, which will ultimately boost the overall economy.

Chua commended the government for its efforts and initiatives in promoting Malaysia. However, he said, more needs to be done to put Malaysia on the map as an investment haven in the region.

“Asean is a great place to start with. Some foreign investors in, say, the US or Europe may not be familiar with Malaysia, compared with Thailand, for example. We can capture investors by highlighting the lower cost (of setting up their business) in Malaysia compared with Singapore,” Chua said, adding that Singapore is Malaysia’s biggest competitor in terms of capturing FDI in the region.

“Vietnam and Indonesia have (limited) advantages, besides labour or huge manpower. Other than that, they do not have the infrastructure and English-speaking advantage. Malaysia has good infrastructure from our international airports, roads all the way to our ports (which are conducive for business operators), Chua said, adding that Malaysia also possesses a significant number of educational institutes of international standard.

He said future growth sectors will be in electrical and electronics, environmental, social and governance, as well as renewable energy.

“Malaysia is still growing, the future is in the electrical vehicle (EV) industry as well as in artificial intelligence and green energy. The country needs to catch up to capture these huge markets,” he added.

Chua believes the EV industry will see tremendous growth, driven by gradual increase in EV consumption in the coming years, due to the global push to move away from fossil fuel-powered vehicles.

Malaysia, he said, can capture the EV market through producing locally made batteries, instead of depending “solely on batteries that are made in China”.

“The US-China conflict has made a lot of people realise that we should not depend on only one country (for investment or trade) and that we have to diversify to spread risks, in order to manage unforeseeable circumstances such as import bans and tariffs,” Chua said.

Embrace and master new technology, accountants told

PETALING JAYA: The accounting profession must embrace new technology in their systems with the impending implementation of e-invoicing next year, as well as enhancements in environmental, social and governance (ESG) reporting.

Intuit QuickBooks Proadviser for Asia and chartered accountant Cheah Chun How said failure to adapt may render accounting professionals obsolete.

“A lot of accountants, auditors, and tax agents are still focusing on all the legacy systems where there’s no automation, there’s no online. But in today’s world, we need to master this as fast as possible. Now today is just about cloud accounting. In the future, AI will be embedded into everything, and there will be more new technology coming into not only Malaysia but the entire world.

“So, as accountants, if you don’t master all this new technology, then we are no longer relevant to the business owners out there. Then they may not need us,” he told SunBiz.

He said the accounting profession has evolved beyond traditional bookkeeping and payroll tasks. As a result, there is now a growing demand for accountants to harness advanced skills and be trusted advisers to their clients.

He highlighted two key developments that are shaping the accounting profession.

First, the imminent introduction of e-invoicing which has raised questions among his clients regarding compliance.

“I recently had a chat with some of my clients, and they asked, ‘E-invoice is coming, what advice do you have?’

“I informed them about the requirement set by LHDN, which is Lembaga Hasil Dalam Negeri (Inland Revenue Board). They specified that if sales exceed RM100 million, you need to start complying.

“Another question is ‘Given that my sales are only RM1 million, do I need to comply?’

“Not at the moment, but starting January 2027, all companies are mandated to comply. So, you still have time.“

Cheah said his company, High Pines Training and Consultancy Sdn Bhd, is collaborating with QuickBooks and various other providers to develop a solution to assist businesses in complying with e-invoicing that is slated to be implemented next year.

The second focal point in the accounting landscape is the increasing emphasis on ESG reporting.

“The Malaysian Institute of Accountants ... nearly every day sends me emails about ESG requirements that we need to report inside the audit report. So, all these new requirements are in place, and we need to adopt them as well. We can’t just say, ‘Oh, it doesn’t concern me.’ No, we have to learn. As an accountant, there are a lot of new things that we need to learn in order to stay relevant with the customer,” he said.

Back in 2018, the Malaysian Institute of Accountants released the Digital Technology Blueprint. Building on this, in 2021, they issued a report, “Emerging Technology Adoption Within Accounting Programmes by Higher Learning Institutions in Malaysia”.

The report said future accountants need to equip themselves with future skill sets by understanding and incorporating emerging technologies into accounting programmes.

Earlier this year, Intuit, one of the biggest software companies in the world, launched QuickBooks Online Accountant (QBOA) in more than 170 countries, including Malaysia.

A QuickBooks research suggests accountants are now busier than ever. Four out of 10 (43%) report they have more than 40 clients, and 86% are looking to technology to help them be more efficient and better meet client needs.

QBOA addresses this by enabling accountants to manage their practice workflow, client interactions, and billing in one place. Developed by a group of accountants globally, QBOA is a suite of benefits to help professional accountants move to the cloud faster and drive greater efficiency and scalability of their firms.

Governor sees positive impact on Malaysia’s first digital bank – GX Bank Bhd

KUALA LUMPUR: Central bank governor Datuk Abdul Rasheed Ghaffour foresees a positive impact on Malaysia’s banking landscape with the launch of the country’s first digital bank, Grab-led digital bank GX Bank Bhd.

The governor said the new digital banks will drive efficiency and competitiveness across the banking sector.

“In September, GX Bank was the first digital bank to commence operations and we have four more to come. In terms of the impact, it will be positive to enhance the competition and this will be good for consumers. For the digital banks their focus would be for the unserved and the underserved segments ... the (digital) banks are coming to cater to this market. It will complement all the services and products provided by existing banks,” he said during recent Q3’23 GDP press conference.

He added, “And there are no restrictions for existing incumbent banks to move towards digital. In fact, most of our banks have been moving towards digitalisation and this will further enhance growth in terms of their efficiency, also in terms of their competitiveness.”

GX Bank commenced operation on Sept 1. It rolled out its beta app to selected 20,000 Malaysians users effective Nov 14. This comes after testing the beta app amongst employees of the bank and partners.

GXBank CEO Pei Si Lai said that this is just the beginning of a suite of financial services, products and benefits GXBank has lined up.

“As we continue to test the stability of our app and gather feedback from users, we hope to develop a digital banking experience and app that is uniquely tailored to the financial needs of Malaysians of all generations,” she added.

As a bank built predominantly by Malaysians, she said it is uniquely positioned to understand and develop financial solutions that address the needs and challenges of the everyday Malaysian.

“We are one step closer to our nation’s vision of a financially resilient country where Malaysians can have equitable access to financial products that cater to their individual needs, without the intimation and hassle of elaborate paperwork, processes and jargon,” said Pei Si.

According to the central bank, a licensed digital bank shall operate with an asset limit for a period of up to five years from its commencement of operations (foundational phase).

During the foundational phase, a licensed digital bank shall maintain at all times a minimum amount of capital funds of RM100 million unimpaired by losses and be subject to the business limitation.

19 November 2023

Success: The Insight Story – The higher you climb, the more humble you should be

How has your life experience made you the leader you are today?

My life experience has played a significant role in shaping the leader I am today. Growing up in Banting as a “small town boy” and leaving home at 18 to pursue my higher studies, I had to learn life skills quickly and adapt to new situations, environments and broaden my horizons independently.

Overcoming challenges and learning from mistakes taught me the importance of resilience, determination, and perseverance in leadership. These experiences have also given me a unique perspective and empathy for those facing similar challenges, and I strive to lead with compassion and understanding.

What traits do you look for in your talent or how do you decide who is right for a job?

When evaluating potential talent for a job, I prioritise several traits that I believe are critical for success in any role. Firstly, I look for individuals who demonstrate a positive attitude and strong work ethic. It’s important to me that employees approach their work with enthusiasm and a willingness to contribute to the team’s goals.

Secondly, I value individuals who are eager to learn and grow in their role, and beyond. A growth mindset is key to adapting to changes in the industry and continuously improving one’s skills. In my experience, the most successful employees are those who are always seeking out new challenges and opportunities to develop their abilities.

Lastly, I recognise the importance of diversity and inclusion in the workplace. The ability to work effectively in a multigenerational work culture is crucial, and I seek out candidates who are adaptable, respectful, and collaborative with colleagues of all ages and backgrounds.

How do you think the industry you are in will evolve in the future?

As CEO of an e-commerce group of companies, I have been in this industry for the past nine years here in Malaysia and also in the Middle East. I have witnessed its fast-tracked evolution, particularly during and after the pandemic. Looking ahead, I believe that the industry will continue to evolve rapidly as consumers’ buying patterns shift towards online and digital platforms.

One of the most notable trends in recent years has been the rise of social commerce, which involves selling products directly through various social media platforms. This has opened up new opportunities for businesses from small to large enterprises to reach customers and drive sales through multiple social media channels while providing customised yet similar customer experience for their customer’s shopping.

Additionally, advancements in artificial intelligence have led to the emergence of conversational commerce, which allows customers to interact with businesses through social messaging apps, chatbots, and virtual assistants.

Finally, the increasing popularity and adoption of search-based e-commerce, which allows customers to easily find products through search engines and online marketplaces will continue to drive growth in the industry.

What advice can you offer those looking to start their career/own business?

Firstly, it’s essential to have a deep and comprehensive understanding of your industry. Even if you hire an industry expert, you must continue learning to stay up-to-date with the latest trends and developments.

Secondly, you must have a genuine passion for your vocation. Starting a business is like raising a baby; you must be prepared to dedicate time, effort and energy to nurturing it, even during tough times.

Thirdly, it is okay to fail and don’t be afraid to take calculated risks. Celebrate failures because they provide valuable learning experiences that can help you grow and improve.

And finally, always be prepared to bounce back when things go wrong. Resilience is key to overcoming challenges and setbacks.

We all know about the industrial revolution, are we in for a technological revolution ? Your thoughts.

The rise of digital platforms, automation, and artificial intelligence has disrupted traditional business models, creating both opportunities and challenges for companies across all industries. I believe that we are indeed in the midst of a technological revolution that will continue to shape the future of business and society. The pace of technological change is accelerating rapidly, and companies that fail to adapt and embrace new technologies might face the risk of falling behind their competitors.

How has mentorship made a difference in your professional life?

Early in my career, I worked in a call center, which was a challenging job that required me to develop resilience and adaptability. However, it was my supervisor at Scicom Msc Bhd, Rahul Sumansalam, who truly made a difference and impacted me.

Perhaps the most important lesson Rahul taught me was about the importance of humility in leadership. He stressed that the higher you climb in the corporate world, the more humble you should be. This is not to say that life is lonely at the top, but rather that being humble is a critical component of effective leadership.

What do you want to accomplish in the next five years?

Over the next five years, my primary goal is to establish Commerce.Asia as the market leader for all e-commerce solutions across Southeast Asia. One area that we are currently placing great emphasis on is online-to-offline solutions, which have become increasingly relevant in the post-pandemic era.

By bridging the gap between online and offline retail, we believe that we can help our customers increase revenue and sales while delivering an exceptional customer experience.

We are also exploring emerging technologies such as Web 3.0 and blockchain to enhance our offerings and stay at the forefront of the industry. Ultimately, we want to empower businesses and SMEs to accelerate their digital growth and expand their operations regionally.

Malaysia to host India-Asean Startup Summit next month

PETALING JAYA: More than 600 local and international startups are expected to converge at the inaugural India-Asean Startup Summit (IASS 2023) to be held at the Sunway Pyramid Convention Centre here on Dec 12 and 13.

A pioneering initiative by Malaysia’s DEWI Wealth Accelerator, IASS 2023 will showcase groundbreaking ideas and solutions with a focus on innovation, collaboration and women empowerment, said a statement from the organisers.

The summit will also witness the participation of 50 local and international investors as well as 100 startup hubs, accelerators, government agencies and two leading Indian startups --Startup India and Invest India.

DEWI Wealth Accelerator founder Datin Malliga Subramaniam said the summit will highlight the exceptional opportunities for Malaysian startups to delve into the extensive potential of cross-border collaborations with their Indian counterparts.

“At IASS 2023, we are excited to create a platform where Malaysian startups can gain insights from India’s thriving digital technology ecosystem. India’s expansive market and favourable incentives for businesses in emerging sectors offer fertile ground for innovation.

“ This summit will open doors for Malaysian startups to benefit from the Indian market, fostering a reciprocal exchange of ideas and strategies,“ she said.

The statement said a special focus of the summit is to empower women-led startups, addressing unique challenges and opportunities in this sector.

The statement quoted Indian High Commissioner to Malaysia B.N. Reddy as saying that IASS 2023 will boost economic and innovative ties between the two countries which have seen growing bilateral trade and investment.

“ Indian startup companies such as Oyo, Perfios, Pine Labs and Razorpay are now well-established in Malaysia and are exploring opportunities in the Southeast Asian region that presents a big opportunity,“ he said.

Reddy added that India has the world’s third largest startup ecosystem in the world with consistent growth of 12-15%. At present there are over 115,000 startups in India recognized by the government with 110 startup unicorns valued at over US$1 billion (RM4.7 billion).

Indian startups are also actively collaborating with Malaysian startups.

He cited as an example Razorpay, India’s leading fintech player which had been working with Curlec of Malaysia and had even acquired a majority stake in it.

Curlec is now a leading player in the B2B digital payments space and has recently joined Paynet as a direct member with plans to expand significantly in Malaysia and the Asean region.

5 Countries Where Real Estate Is Still Incredibly Cheap

man outside retiree retirement — Phovoir / Shutterstock.com

Editor's Note: This story originally appeared on Live and Invest Overseas. Getting onto the property ladder has always been one of the safest and best ways of securing long-term wealth. Buying cheap real estate overseas gives you another level of security and diversification. By purchasing property abroad, you have added safety should the U.S. market fail. Especially when the strength of the U.S.

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18 November 2023

Here’s the New Magic Number for Living Comfortably in Retirement

Young man smiling and holding money — ViDI Studio / Shutterstock.com

How much money will you need to retire? Your answer is likely to differ depending on your age. Recently, Northwestern Mutual surveyed 2,740 adults for its latest annual Planning & Progress Study and asked them how much money they need to save to retire comfortably. As a group, they said $1.27 million. That is up from $1.25 million in 2022 — and it also is considerably higher than the $89,300...

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