What Happens If You Forget To File Your Income Tax?

Few things are less exciting than doing your taxes.

But alas, if you earn more than RM34,000 a year after deductions, you have to file your taxes. You should get this sorted before the deadline comes around.

If you forget to do so, you could face fines, penalties and even imprisonment. Here’s what you need to know.

What happens if you miss the deadline?

You can still file your income tax, but you may face an interest charge. According to the Inland Revenue Board Of Malaysia (LHDN), failing to pay your taxes on time will incur a 10% increment on your payable tax.

If you forget to file them altogether, there are two scenarios that could happen:

• The LHDN could choose to have you prosecuted if you fail to furnish your tax returns. In this case, you may incur a fine of RM200 to RM20,000 or face imprisonment of not more than six months (under s.112(1) of the Income Tax Act 1967).
• You could escape prosecution, but the Director General could make you pay a penalty according to the amount that you would have owed for that year of assessment (this amount does not take into account any tax relief that you would have received). The penalty listed in s.112(3) of the Income Tax Act 1967 is equal to three times the amount owed; however, the Operating Guidelines No. 5 2019 (GPHDN 5/2019) breaks this down into three tiers.

Period	Penalty
12 months	15%
More than 12 months, until 24 months	30%
More than 24 months	45%

Read More: LHDN’s Voluntary Disclosure Programme For Tax Evaders

Unfortunately, even if the tax filing deadline has already passed, you’ll still have to file your taxes. Here’s how to file your taxes through e-Filing.

How to avoid missing tax deadlines next year

Don’t want the same thing to happen next year? Consider setting a digital calendar reminder that repeats annually. The income tax deadline is usually on April 30 (manual submission) or May 15 (e-Filing), so you could set it some time at the start of April to give yourself extra time if anything goes wrong.

• Subscribe to iMoney.my for regular updates

If you need extra reminders, you could (excuse our self-promotion) sign up for our newsletter or subscribe to our Facebook and Instagram page. We regularly post income-tax related info during tax season, so you won’t miss it.

But for some of us, having enough tax reminders isn’t a problem. After all, come tax season, your employer may give you an EA form, news outlets will publish articles on filing taxes and your insurance agent may send you a statement for tax filing.

• Start preparing early

The problem is that we tend to put it off…until it’s too late. We get it – filing taxes can be a huge pain, especially when you have a year’s worth of receipts of statements to plough through.

• Automate tax documents tracking

On the upside, there are a few things you can do to make it less painful:

• Label emails. Create a custom label or folder in your inbox (e.g. Tax 2021). This allows you to label any tax-related documents you get as soon as it hits your inbox.
• Cloud storage. If you’ve got a cloud storage subscription (Google Drive, Apple iCloud, Dropbox, etc.) set up a folder for your taxes. Whenever you get a tax-related document, you could move it to that folder, no matter what device you’re using. You could also take photographs of your receipts and store digital versions in the cloud.
• Physical storage. If you need to deal with physical documents, designate a place to store them. Depending on your needs, this can be as simple as a transparent folder marked with the year.
• Know your documents. Organising your documents won’t help if you don’t know what to organise in the first place. So get acquainted with what kind of income you need to file and what reliefs you are eligible for.

When tax season arrives next year, filling up the form will be much easier, as you’ll already have most of your documentation ready.

Don’t be tempted to skip filing altogether

If it’s way past the deadline, you may be tempted to skip filing altogether. You shouldn’t. If you get audited, you could get into serious trouble.

Read More: Tax Offences And Penalties In Malaysia

During an audit, a tax agent would check all information related to your income and expenses. You would need to give evidence to prove that your declared income, claims, relief and rebate are accurate. If you’re found guilty of not filing your taxes, you’ll face a fine or imprisonment for tax avoidance.

So if you’ve accidentally missed the tax deadline, the best thing to do is simply file as soon as you can. You’ll incur extra charges, but it’s better than risking the wrath of LHDN. Next year, you’ll be better prepared.

This article has been updated on May 17, 2024.