Which tax form should Malaysians use for side income?

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Tax Form Guidance for Malaysian Side Income

Malaysians with side income have specific tax return forms to consider based on the nature of their earnings. For income that does not constitute carrying on a business, such as rents, interest, royalties, pensions, or other periodical payments, the BE form is appropriate. However, if the side income resembles a business enterprise, including e-commerce activities, individuals must use Form B, which accommodates both employment and business income.
Declaration of Non-Business Side Income

Income sources that do not involve actively conducting a business can be declared using the BE form. This includes earnings from property rentals, interest, discounts, royalties, premiums, pensions, annuities, and other periodical payments. The category of "other gains or profits" also encompasses income from occasional broadcasting, lecturing, or writing, provided these activities are not structured as a formal business.
Using Form B for Business-Like Side Income

When side income activities are akin to a business enterprise, such as operating an online store or engaging in e-commerce, Form B is the required tax return. This form is designed for individuals carrying on business activities, and it allows for the declaration of both employment income and income derived from business operations. Registering a side business as a sole proprietorship incurs a fee of RM30 if using one's own name or RM60 if using a trade name or registering with a partner.
Claiming Business Expenses

Individuals who register their side income as a business and file using Form B are eligible to claim certain business-related expenses. These deductible expenses can include loan interest for business purposes and repairs for vehicles used in the course of business. For online businesses specifically, claimable expenses may also cover web maintenance fees, domain renewals, web consultant fees, internet charges, server rentals, and associated utilities, though personal or domestic utilities are not permitted deductions.
Record Keeping and Compliance

It is imperative for individuals to retain relevant financial documents for a period of seven years. This includes records such as payment gateway statements, invoices, purchase receipts, income statements from advertising partners, and sales confirmations. Failure to accurately declare side income or deliberately understating revenues can result in significant penalties, including fines up to RM20,000, potential imprisonment, and travel bans, underscoring the importance of transparent tax reporting.

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Which tax form should Malaysians use for side income?

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