24

march 2015

Income Tax

Guidelines

AMWAY™ (Malaysia) Sdn. Bhd. (AMSB) would like to share with AMWAY Distributors the various guidelines pertaining to the Income Tax Act 1967 (ITA) to assist you in running your business in an orderly fashion and in the manner befitting a responsible Malaysian citizen. Please be reminded that it is YOUR RESPONSIBILITY, as an AMWAY Distributor, to declare your income derived from AMWAY business annually to the Inland Revenue Board (IRB). IRB requests AMSB to furnish them with information on all income earned by Distributors and annually AMSB reports such information to the IRB. We share with you best practices for Upkeep of Accounting Records and some important guidelines, which you should be aware of. Kindly consult a professionally qualified accountant to assist you in further tax planning and understanding of your responsibility as a taxpayer.

> PROFITS FROM YOUR AMWAY BUSINESS IS TAXABLE Taxable incomes are incomes derived from business, employment, interest/dividend/ discount and rental/royalty/premium. Income arising from your AMWAY business come under the definition of “gains or profits from a business” as stipulated in the ITA and are therefore taxable. You are obligated under the Act to declare your business income in the annual tax return normally sent to you by IRB. AMWAY declares all bonuses and incentives paid to each Distributor annually to the IRB in compliance with the ITA. In regard to foreign sourced income, for example your Singapore derived income, please be reminded that your income derived from a foreign country may be taxable by the tax authority of that country. It is therefore imperative that proper advice from a professionally qualified accountant is sought to assist you in fulfilling your responsibility as a taxpayer, in both domestic and foreign territories.

> SELF ASSESSMENT SYSTEM The Self Assessment System for salaried individuals, businesses and partnerships was implemented with effect from 2004. Self Assessment is the manner in which a taxpayer works out and pays his own income tax. It is a system whereby the taxpayer is given the responsibility to compute his own tax liability. Under the Self Assessment System, which is based on the concept of “File and Pay”, taxpayers are required to:

• File their completed income tax return forms to the IRB together with the payment of the balance of tax payable (if any). • Pay their income tax liability through monthly salary deductions for individuals having employment income or through bimonthly instalments for individuals having business income. No “Notice of Assessment” (Form J) will be issued by the IRB. For the taxpayer, Self Assessment will allow the taxpayer to better manage his own tax affairs. To do this he has to keep proper records, fill in his returns correctly, compute his tax and finally submit his Returns Form with the final payment of tax (if any). You may contact the nearest IRB branch for more information on the Self Assessment System. Alternatively, for enquiries on the Self Assessment System, please visit the IRB website at www.hasil.gov.my or contact them at 1-80088-5436.

> HOW DO YOU DECLARE YOUR PROFITS FROM THE AMWAY BUSINESS? At the beginning of each calendar year, you will receive from the IRB an Annual Tax Return Form, i.e. Form B for individuals owning a business (like AMWAY Distributors) or Form BE if the individual is salaried. Declare your income from the AMWAY business by filling out the form. If you do not receive the form by March of each year, you should request for it from the IRB. Tax returns must be furnished to the IRB by 30 June of the following year for individuals owning a business and by 30 April the following year for salaried individuals. You may opt to e-file your tax return form. For enquiries on e-filing, please contact IRB at 1-800-88-5436. Failure to submit a Tax Return will constitute an Offence under the ITA and upon conviction is liable to a fine ranging from RM200 to RM2000 and/or to imprisonment for six months. The IRB is allowed to impose a penalty of up to three times the amount of tax payable if no prosecution action is taken against the taxpayer.

> SUBMIT THE ANNUAL TAX RETURNS EARLY It is the responsibility of AMWAY Distributors to ensure that they file the Tax Returns early and that the IRB receives them. Proof of mail does not guarantee receipt by the IRB.

> INSTALMENT PAYMENT SCHEME AND MONTHLY SALARY DEDUCTION For individuals with business, the IRB will issue a prescribed form (Form CP 500) setting out the estimate of tax payable under an instalment scheme which is determined by the IRB based on the tax assessed in the preceding year.

The taxpayer is required to pay the estimated tax payable in six bimonthly instalments as directed by the IRB.

> BEST PRACTICES FOR GOOD BUSINESS RECORDS UPKEEP TO FACILITATE AUDIT BY IRB It is imperative in any business to keep proper supporting documents. You are required to maintain your business records and documents for up to seven years in accordance with the Income Tax Act 1967.

Sales • Sales Invoices >> Retail >> Wholesale (Distributor requisition)

• Other Income >> Bonus statements >> Other fees: per diem payment receipts, etc.

Purchases • Purchase requisition, SA-2 Order forms, etc. • Supplier invoices • Cheque stubs

Other purchases • Invoices  from suppliers, meeting venues, refreshment receipts, petrol receipts, etc. • Bank statements If for some reason you are unable to obtain either a receipt or an invoice, you should make an entry on that particular day in your diary, including information as to the purpose and for whom the expenditure was made. Your appointment diary also constitutes as a supporting record worth retaining.

Inventory

Record and update stock movement diligently, as it is required for balance sheet entry at lower of cost or market value as at the end of the accounting period.

Bank accounts • Y  ou are encouraged to open a separate bank account specifically for your AMWAY business. This is to facilitate segregation of your personal funds and your business cash flows. • A  ll cash inflows from sales should be banked in to create an audit trail before drawing them out for business expenditure. Avoid doing set offs and contra from cash sales with business expenditure as this may create confusion in accounting. • A  ny other sources of cash inflow, other than sales, for example loans or borrowings, should be deposited and maintained in separate bank accounts to facilitate book keeping and easy accounting.

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• A  ll expenditure should be paid by cheque from the business bank account. Create a payment voucher for each payment with details of suppliers’ invoice and the cheque number used to pay for the invoice. The payment vouchers can then be filed in chronological order. If cash payments must be made, ensure that both a receipt and an invoice are obtained. Then reimburse yourself from the bank account in the same manner and update the payment voucher accordingly. Standard payment vouchers are available for sale in any departmental store or book shop. • T  he information below should be written on your cheque stubs: • payee • date • amount • purpose • U  pkeep your accounting records regularly. A good practice will be to do it monthly when you can still remember the events clearly. • P  erform bank account reconciliations to your bank account in the accounting records monthly.

> OTHER BUSINESS RECORDS Daily Diary

Record your appointments and sundry cash payments such as parking fees, telephone calls, business lunches, etc.

Guest Book

Record the names of people attending business meetings in your home (i.e. sponsoring meetings, motivational and product use meetings, etc.) and their contact details.

Log Book

Keep this in your motor vehicle or van, etc., and record the meter readings at the beginning and end of each business year together with the business portion of the trip showing date, destination, and mileage.

Bonus Payment Records

Record performance bonus payments to all downline Distributors (with I.C. numbers and addresses) and get their acknowledgment for every bonus payment made to them. This will account for all performance bonuses paid out by your Distributorship. The total in these records should agree with the amount in your Profit and Loss Statement for performance bonuses paid out.

> UNDERSTANDING BUSINESS EXPENSES Business expenditures may be classified into two categories, namely:

1. Capital Expenditure

Capital Expenditures are those incurred in obtaining items for permanent use in the business and have enduring benefit. Examples are personal tape recorders, cameras, computers, office equipment, cars (special rules apply to cars and only a percentage of the claim will normally be allowed unless the vehicle is solely and exclusively for your AMWAY business), etc.

In respect of these items, a deduction of certain percentage of cost (termed as capital allowances [CA] ) is granted each year in arriving at taxable profit. These percentages are prescribed by law and illustrated as such: Common CA Rates Initial Allowance (‘IA’): - Fixed at 20% - Year of Purchase Only Annual Allowance (‘AA’): Motor Vehicles# 20% Furniture, fittings & office equipment 10% Computer and ICT Equipment* 80% # Notes: • If bought on hire purchase, interest is allowed as a deduction; the CA is calculated on the principal portion of the instalment due only. • S  ubject to the threshold limit of RM100,000 for new motor vehicle purchased on or after 28/10/2000, provided that its on-the-road price does not exceed RM150,000. • Subject to apportionment, if also used for private purposes * Notes: • Accelerated Capital Allowance on Information and Communication Technology (ICT) Equipment is extended to YA 2016.

2. Revenue Expenditure

These are expenses of recurring nature incurred in operating and maintaining the business, and exclude capital expenditure. The expenses are tax deductible in computing your profits. Examples are qualified travel expenses, office expenses, postage, certain professional fees (e.g. audit and accounting), telephone, sales aids, sales promotion expenses, equipment repairs, etc. The amount of the deduction that may be claimed is variable and depends on a number of factors. You should therefore, consult your personal accountant or obtain clarification from the IRB. When assessing whether an item of expenditure is eligible for tax relief, refer to the basic rule “wholly and exclusively incurred in the production of income.”

> HOW TO CALCULATE YOUR PROFITS AND INCOME TAX ARISING FROM YOUR AMWAY BUSINESS On the right is a sample of the Profit and Loss Statement typical of an AMWAY business. Use this to calculate profit before tax arising from your AMWAY business. The profit before tax arrived from this statement is not necessarily the chargeable income since certain adjustments are to be made to arrive at the chargeable income, for example, on the depreciation of your capital expenditure, or the business portion of expenses claimed by you.

PROFIT AND LOSS STATEMENT For the year ended 31 December 2014

SALES RM RM Wholesale (Intra-group) 24,000 Retail (Personal sales) 37,500 61,500 COST OF SALES Inventory, beginning of year 3,000 Product purchases 53,500 Less: Inventory, end of year (2,500)

54,000

Gross Margin 7,500

Other Income Performance Bonuses - received 42,000 - paid out (1,440)

40,560

Other Bonuses 7,000 Miscellaneous 500 TOTAL INCOME 55,560 EXPENSES (BUSINESS PORTION) Bank charges 200 Depreciation 4,000 Motor vehicle expenses 3,600 Business meetings 1,500 Entertainment 300 Insurance 200 Licenses, dues and subscription 200 Office printing and stationery 600 Postage and shipping 400 Rent 3,600 Repairs and maintenance 500 Sales aids and demonstration 600 Telephone 1,200 Travel 1,200 PROFIT BEFORE TAX

18,100 37,460

Computation of taxable income for YA 2014 - Single individual RM Profit before tax Add: Non allowable expenses Depreciation 4,000 Telephone (say 2/3) 800 Travel (say 2/3) 800 Entertainment 300

RM 37,460

5,900

Less: Capital allowances Say car purchased by cash on 1/1/2012, costing 60,000 CA at 20% 12,000

Assume 1/3 for business use (4,000)

TOTAL 39,360 PERSONAL RELIEF (9,000) CHARGEABLE INCOME 30,360 INCOME TAX PAYABLE AT SCALED RATES YA 2014 (Current year basis) Tax Payable CHARGEABLE INCOME RM RM On the first 20,000 300 On the next 10,360 (10,360 x 6%) 622 Total tax payable Rebate

922 (400)

Nett Income Tax Payable

522

26

march 2015

Moving Towards GST Implementation In view of the Goods and Services Tax (GST) implementation in April 2015, we have prepared a selection of frequently asked questions and answers to help you in the transition towards being a GST-compliant Distributor and company.

INTENT TO CONTINUE CUM AMAGRAM™ SUBSCRIPTION (ITCCAS) SUBMISSION 1. When is the cut-off date for ITCCAS? All ITCCAS submissions must reach AMWAY™ HQ, Petaling Jaya or AMWAY Shops before 12.00 noon on 30 March 2015.

4. Can Distributors submit online ITCCAS and pay via ePayment Gateway on 31 March 2015? No, the cut-off date for online submission is 29 March 2015, by 11.59 p.m.

2. When is the cut-off date for online submission? The cut-off date for online submission is 29 March 2015 by 11.59 p.m.

5. Can I fax in the ITCCAS for my downline(s) on 31 March 2015 and charge the payment to my credit card? It will be considered a 1 April 2015 transaction which is inclusive of GST.

3. Can I use cheque to pay for ITCCAS on 31 March 2015? No, cheque/money order payment must reach AMWAY HQ, Petaling Jaya before 12.00 noon on 30 March 2015. Failure to do so will result in the payment being considered a 1 April 2015 transaction which is inclusive of GST. Cut-off Date

Cut-off day

Time

Online

ITCCAS via

29 March

Sunday

11.59 p.m.

Walk-in

30 March

Monday

Before 12.00 noon

Cheque / Money order

30 March

Monday

Payment must reach AMWAY™ HQ, Petaling Jaya before 12.00 noon on 30 March 2015

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>>

1. All AMWAY Shops (except Brunei) and AMWAY HQ, Petaling Jaya, Order Processing Counters will open from 8.30 a.m. – 12.00 noon on 30 March 2015, Monday. 2. All AMWAY Shops will be closed on 31 March 2015. 3. Strictly NO pre-order of April 2015 promotions in March 2015.

CUT-OFF DATES AND TIME To ensure a smooth transition towards Goods and Services Tax (GST) implementation in April 2015, please refer to the following cut-off dates and time. Ordering and Product Return & Services Description

Cut-off date

Cut-off day

Time

Online delivery

29 March

Sunday

11.59 p.m.

Walk-in delivery

29 March

Sunday

4.30 p.m.

Delivery Order

Fax delivery

29 March

Sunday

4.30 p.m.

Telephone delivery

29 March

Sunday

4.30 p.m.

Pick Up Order Online pick-up

29 March

Sunday

11.59 p.m.

Walk-in pick-up

30 March

Monday

12.00 noon

Fax pick-up

30 March

Monday

12.00 noon

Telephone pick-up

30 March

Monday

12.00 noon

Product Return & Services Replacement of products

27 March

Friday

4.30 p.m.

Returns for credit refund

25 March

Wednesday

4.30 p.m.

Repairs

25 March

Wednesday

4.30 p.m.

NOTE: 1. Order Processing will open on 28 March 2015, Saturday and 29 March 2015, Sunday. 2. All shops shall open on 29 March 2015, Sunday (including East Coast Shops). 3. All orders must be collected latest by 7.00 p.m. on 30 March 2015, Monday. 4. All unpaid orders by cut-off time will be cancelled and PV/BV will be adjusted accordingly. 5. All AMWAY Shops (except Brunei) and AMWAY HQ, Petaling Jaya, Order Processing Counters will open from 8.30 a.m. – 12.00 noon on 30 March 2015, Monday. 6. Strictly NO ORDERING on 31 March 2015, Tuesday (stocktake day). 7. All shops will be closed on 31 March 2015, Tuesday. 8. Strictly NO BACKDATE of orders for March 2015.

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march 2015

AMWAY™ TRAINING/WORKSHOPS 1. Will GST be imposed on AMWAY training/ workshops? Yes, AMWAY training/workshops are considered service rendered and is subject to GST.

2. What are the new fees for AMWAY training/ workshops? Please refer to the new fees below.

No

Fees (before GST)

GST (6%)

Fees (inclusive of GST)

Remarks

1

RM12.00

RM0.72

RM12.70

2-hour workshop, registered one month before workshop date

2

RM15.00

RM0.90

RM15.90

2-hour workshop, registered less than 1 month before workshop date

3

RM50.00

RM3.00

RM53.00

One FULL DAY workshop

4

RM120.00

RM7.20

RM127.20

2 FULL DAY ARTISTRY™ Beauty and Grooming Workshop

Note: Traning/workshop fees subject to change 3. Upon cancellation of the said training/ workshop, do I get back the same amount as I paid for the training/workshop? Yes, you will be refunded the same amount in the form of a credit note.

4. Are there any changes to the mode of registration? No, you can still register via online or at your nearest AMWAY Shop/RDC.

NEW FEES FOR BUSINESS KIT AND ITCCAS Effective 1 April 2015, the new price inclusive of GST for the Business Kit and Intent to Continue Cum AMAGRAM™ Subscription (ITCCAS) are as below: AMWAY BUSINESS KIT Effective 1 April 2015

RM

Business Kit and Application Form

90.00

GST (6%)

5.40

Total (inclusive of GST)

95.40

INTENT TO CONTINUE CUM AMAGRAM SUBSCRIPTION (ITCCAS) Effective 1 April 2015

Printed AMAGRAM (RM)

Digital eLibrary (RM)

Bundle (Printed & Digital) (RM)

ITCCAS

43.00

30.00

63.00

GST (6%)

2.58

1.80

3.78

On time ITCCAS payment inclusive of GST

45.60

31.80

66.80

Late notification charges

5.00

5.00

5.00

Late ITCCAS payment inclusive of GST

50.60

36.80

71.80

For more information, log on to the official website http://gst.customs.gov.my or refer to www.amway.my for regular updates on GST. Also, you may write to [email protected] or contact Call Centre at 03-7946 2800 if you have any enquiries. More information coming your way in the next AMAGRAM.