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Thread: Reduce EPF to 8%, But Pay More Tax

  1. #31
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    Quote Originally Posted by trex92
    Ppl of the higher income group ie RM6250 basic salary would enjoy more net salary without any change in PCB.
    Is that mean ppl of basic salary higher than RM6250 need not worry about paying more income tax even if their EPF contribution remained as 8%? Sorry I still not quite understand how it works.

  2. #32
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    Quote Originally Posted by ahfatt78
    Is that mean ppl of basic salary higher than RM6250 need not worry about paying more income tax even if their EPF contribution remained as 8%? Sorry I still not quite understand how it works.
    Maybe this comparison chart will clear your confusion.
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  3. #33
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    since life insurance is usually a packaged deal with EPF, usually a significant portion of the tax relief for RM6k is already used up for life insurance payments.

    so imho, the whole big hoo-hah shouldn't be made more than what it is...

  4. #34
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    Pardon my poor Malay :
    On the KWSP 17A form, within Section A, there are two boxes and we have to choose one.

    Tick one box only :
    Box A : Pendaftaran Caruman Melebihi Kadar Berkanun
    Box B : Pindaan Caruman Melebihi Kadar Berkanun

    Can anyone help to inform, which box should I tick if I want to maintain my contribution at 11%?

    Thanks.

  5. #35
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    u should download the form KWSP 17A-Khas

  6. #36
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    Quote Originally Posted by ahfatt78
    Is that mean ppl of basic salary higher than RM6250 need not worry about paying more income tax even if their EPF contribution remained as 8%? Sorry I still not quite understand how it works.
    For personal income tax, an individual is allowed deduction for EPF and Life insurance max of RM6,000 per year. This translates into RM500 per month (RM6,000 divided by 12 months). IRB assumes that full RM500 is for EPF in calculating PCB (ie they assume everyone don't have life insurance). The method PCB is calculated is based on monthly income (basic plus allowances) less EPF (up to max of RM500) to derive ur PCB income.

    Based on this max RM500 and 8% EPF, your basic would be RM6,250. (500 divided by 8%). So if you are in the income group of RM6,250 and above, your EPF is already hitting the max RM500 EPF hence your monthly EPF no longer affects your PCB calculation. People in the above RM6,250 monthly basic group would not have any increases in PCB due to 11% reduce to 8% EPF but they would get more net salary since EPF deduction reduced. Hope this explains.

  7. #37
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    note that PCB deduction is just an amount put aside for your income tax payments... if PCB is too high, you do get refunds...

    the monthly salary calculations for EPF of RM6,250 doesn't impact your income tax in any way except the RM6k tax relief for combined EPF+insurance, and then only if you do not have any life insurance at all.

  8. #38
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    Thanks for the clarification! I will opt to remain 11% deduction.

  9. #39
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    Quote Originally Posted by ahfatt78
    Thanks for the clarification! I will opt to remain 11% deduction.
    in fact u should opt for incremental % to your 11%...get some +% from your boss too. Seriously.


    Yang Bagi 30% latotupai
    in luv with bikes...in lust with AphroditeS AWAS! Suspek is an Avid procurer to myths, lies, legends, folklores, i-ching, rumors, misinformation, cakap-ayam, spɹoʍ uʍop ǝpısdn puɐ˙˙DLL .
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  10. #40
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    Quote Originally Posted by tupai
    in fact u should opt for incremental % to your 11%...get some +% from your boss too. Seriously.


    Yang Bagi 30% latotupai
    There are many companies whereby the company contributes 15% as "employer contribution" to the EPF. This is actually another perk. I know the Fraser & Neave Group (F&N) for one does this as I was attached to one of their subsidiaries before i.e. F&N Coca-Cola Sdn Bhd.

    The other company that I worked for i.e. Nestle has both EPF (standard contribution) and there is a "pension scheme" as well. That is why people who work in Nestle seldom leave the company. You get paid 1/3 of your last-drawn salary on reaching 55. So, if you are getting RM15,000 per month as your last-drawn, you should get RM5,000 per month till you reach 70. If you kick the bucket before 70, your surviving better half gets to enjoy the pension. But Nestle stopped the pension scheme for staff joining after 1992, dunno why.... and replaced it with a gratuity payment scheme.

  11. #41
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    Quote Originally Posted by tupai
    in fact u should opt for incremental % to your 11%...get some +% from your boss too. Seriously.


    Yang Bagi 30% latotupai
    hahahh good thought lato. But HR told me that there was a maximum.

    one of the last things m did before leaving for holiday was to increase the EPF contribution to 15% (+ 12% from the employer = 27%) and he is now making arrangements to diversify what little extra money he has.

    I really agonized over keeping the money vs. taking the extra and investing it...but I think I found a wiser solution - increasing my epf contribution and investing into diverse markets.

    when the recession is over I ought to have more money and more importantly, more knowledge & experience which is worth even more than money.

    Cheers, m
    The world needs more Canada

  12. #42
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    Quote Originally Posted by trex92
    the monthly PCB deduction is based on monthly salary including allowances less EPF (up to max of RM500 since IRB assumes zero life insurance ie yearly EPF allowed RM6000 divided by 12 mths).

    The reduction of EPF from 11% to 8% would result in increase in PCB deductions if the tax payer's EPF does not reach max RM500 per month. Ppl of the higher income group ie RM6250 basic salary would enjoy more net salary without any change in PCB.
    trex92, thanks for the info. very useful and cleared up my incorrect assumption.

  13. #43
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    Quote Originally Posted by AllUrban
    hahahh good thought lato. But HR told me that there was a maximum.

    Cheers, m
    any company/employer can contribute up to 19% if they want lah...hr only follow what the stingy boss said lah...unless, yr service is NOT worth the extra % lah


    Yang Bagi maximum% latotupai
    in luv with bikes...in lust with AphroditeS AWAS! Suspek is an Avid procurer to myths, lies, legends, folklores, i-ching, rumors, misinformation, cakap-ayam, spɹoʍ uʍop ǝpısdn puɐ˙˙DLL .
    p/s Take all the above with a XL salted duck egg, wash down with 2fingers of sodium hypochoride, and suck on to a pebble size tmn negara Rock salt

  14. #44
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    Quote Originally Posted by tupai
    any company/employer can contribute up to 19% if they want lah...hr only follow what the stingy boss said lah...unless, yr service is NOT worth the extra % lah


    Yang Bagi maximum% latotupai
    well, no comments about my company...but m knows that, when he leaves, the loss will be felt all around. Pain for most, relief for some.

    Cheers, m
    The world needs more Canada

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