To all our valued client

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To all our valued client Powered By Docstoc
					1st December 1999


To all our valued client

This is an important circular. Please take some time to read
the contents.
Dear Sir / Madam

Taxation

Each year before the end of the calendar year we write to you to inform you of
the importance of getting your documents ready for filing of income tax. This
year makes no difference but there are changes to the tax system from year
2000 which we would like to explain to you. This will help to clear any
uncertainties you may have of our services and also the charging of our fees.
Your cooperation is required if we are to comply with all the provisions of the
law as well as in enabling us to provide you with timely advice on a variety of
issues.

We would like your feedback so that we know your needs and also to allow us
to vary our resources to provide you with better services to improve your
business. Our philosophy is to see our clients grow and prosper through our
association.

To achieve all this we need your co-operation. This is more important with the
new tax system.

The general election is over and it is unlikely that there will be changes to the
2000 Budget proposals.

The budget and amendments to the various legislation will bring into effect the
following matters.

1.     The filing of two tax return forms in year 2000

       This is required because in 2000 there will be a change in the way tax
       is assessed on income. Before 2000 tax was assessed on income the
       year before (preceding year) but for 2000 there is a changeover to tax
     being assessed on income earned in the current year (current year). As
     a result there will be one tax return for the income earned in 1999
     (preceding year) and one tax return for the income to be earned in
     2000 (current year).

     Even though income tax payable on income earned in 1999 is waived
     income tax returns have to be filed.

     The income tax return for the preceding year will have to be filed within
     30 days from the date of the issue of the prescribed form. Usually the
     forms are issued by the end of February of each year. For 2000 this
     would mean that all income tax returns have to be filed by 31 st March
     2000.

     The income tax return for the current year will have to be filed within six
     (6) months following the close of the accounting period. The second tax
     return will apply to all clients. Those with a December 31 year-end will
     have to file the year 2000 return (current year) not later than June 30.

     Therefore every client will be filing two tax return forms in year 2000.

2.   Change to self assessment

     Limited companies will be subjected to self assessment from the year
     2001 and for other businesses it will be from year 2003.

     The taxpayer will have to calculate their own tax to pay for each
     year.

     No notice of assessment (Form J) will be issued because the income
     tax return will be the notice of assessment.

3.   Estimate of tax payable

     With the introduction of self assessment where you calculate your own
     tax you will have to pay this tax on an estimated basis in monthly
     instalments.

     The estimate has to be furnished to the tax office no later than 30
     days before the beginning of the basis (relevant) year.

     Eg. A company with a January 31 year end.

     The company will be on the 2000 current year assessment for the year
     ended January 31 2000 and 2001 current year assessment for the year
     ended January 31 2001.

     Therefore the company will have to furnish an estimate of tax payable
     for 2001 in the prescribed form before December 31 1999.
     The estimate of tax payable shall not be less than the tax payable
     in the previous year of assessment. For 2001 the estimate of tax
     payable shall not be less than the tax payable for the year of
     assessment 1999 (income earned in 1998).

     The estimate may be varied in the sixth month of the basis (relevant)
     year.

4.   Tax payable

     The estimated tax payable can be paid in monthly instalments over the
     accounting period. Payment has to be paid in the second month
     after the commencement of the accounting period and should be
     paid before the 10th day of each month.

     We would like to draw your attention to the phrase ‘due and payable’.
     The due and payable date means that cash has to be collected by the
     tax office on the said day not for you to remit your money to them by
     that date. For taxpayers outside Kuala Lumpur this means allowance
     for cheques and payments to be cleared by the banks.

     The final payment shall not be later than six months after the end
     of the accounting period.

     If the tax payable computed when you file your income tax return is
     higher than the estimate of tax payable the balance has to be paid
     together with the final payment or together with your income tax return.
     If, however, the difference exceed 30% a penalty of 10% of the tax
     payable on the difference will have to be paid.

     The current schedular tax deductions on salaries and bi-monthly tax
     payments will continue.

5.   Liability

     Responsibility has been extended to any person who assist in or
     advises a taxpayer in the preparation of the income tax returns.

     This has been made more onerous by reference to understatement of
     the tax liability.

     Therefore if a taxpayer underestimate his tax liability he and his
     tax agent can be charged in court.

6.   What does all these mean?

     What it means is that there has to be greater cooperation between you,
     the client and us as the service provider

     (i)    in the timely filing of tax returns
        (ii)    in the estimation of tax liability

        (iii)   in the payment of tax

        To carry out all these functions efficiently and be cost effective there
        has to be an efficient system to record and process your business
        transactions.

        We will also be revising our terms of engagement and our assignment
        terms to reflect the greater responsibility expected of us as a result of
        the onerous provisions of the new legislation.

Form E and Benefits-in-kind

Every employer should receive a Form E – Return of Remuneration by an
Employer at the beginning of each calendar year. This is a summary of the
salaries paid to employees and each employee should receive a statement –
Form EA. The salaries should include the value of benefits-in-kind enjoyed by
the employee. Employees include directors. The Form E should be filed within
30 days of receipt of the form.

Schedular tax deductions

Tax should be deducted from each and every payment of salary to employee
including directors. Failure to deduct tax in accordance with the prescribed tax
tables could result in penalties as high as 100% of the tax that should have
been deducted.

It is always cheaper to do it correctly.

Accounting

It may be necessary to invest in an accounting system that will provide you
with timely information for you to make your estimate of tax payable and to
finalise your accounts for the filing of the income tax return within the
prescribed time of six months.

If you require our assistance please do not hesitate to contact us.

PLEASE DO NOT DO NOTHING.

Penalties are very costly.

Audit

To reduce cost and to be effective we would appreciate that all audit
schedules be completed for our audit. Audit is distinct from accounting and in
the past we have had to do a lot of accounting work during our audit.
We will be revising our audit procedures and will include new assignment
terms to monitor the time taken to complete your audit. This is to provide you
with a better understanding of our role and responsibilities.

Legislation – Licences

Please ensure that you have complied with all the necessary licensing
requirements or renewals.

Time-table

Due to the very tight schedule we would appreciate that accounts should be
ready for audit or for filing of tax returns not later than two months after the
close of the accounting period.


Other services

We provide a range of management services and are here to help. Through
our association with other professionals and within Morison International we
will try to find a solution for you. It will be more cost effective if everything is
done right the first time.

Fees and Credit Period

The last two years have been very difficult. We have tried to be flexible and
there is a cost to our flexibility. We have had to revise our credit control and
would appreciate that you will understand our position. Your co-operation in
settling our fees promptly will be greatly appreciated.

If there are any difficulties we will try to accommodate you with instalment
payments and other mode of payments.


Yours sincerely.
SQ ASSOCIATES




*This is a computer generated letter and requires no signature.




991201X

				
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