What is Self Assessment?

Self Assessment is the manner in which a taxpayer works out and pays his own income tax. It is not a new tax but a system whereby the taxpayer is given the responsibility to compute his own tax liability and make payment within the specified period.

Self Assessment is a total process change from the previous formal assessment system. Under the formal assessment system, taxpayers are required to declare their incomes in the return form, submit the return form to the Inland Revenue Board (IRB) and the IRB will then raise the assessment. The notice of assessment is sent to the taxpayer and based on the tax raised in the notice of assessment, payment must be made accordingly.

Under the Self Assessment System, taxpayers are still required to complete and submit return form by the required dates to the IRB. However, no notice of assessment will be sent to the taxpayers. Instead, taxpayers will have to compute their own tax payable and make payment of the full amount at the time of filing their tax returns. At the same time, taxpayers are also required to estimate the tax to be paid for the current year and make monthly payments during the year based on the estimate.
In the case of an employee, the Schedular Tax Deduction Scheme will continue to apply i.e. tax will be deducted from the monthly salary and remitted to the IRB by the employer.

Why Self-Assess?

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 his returns correctly, compute his tax and finally submit his return form with the final payment of tax, if any.    

For the IRB, the purpose of Self Assessment is aimed at modernising and streamlining the tax administration, producing a more efficient system and faster collection of taxes, and increasing the level of income tax compliance.

When will Self Assessment be applicable?

The Self Assessment System for companies had been introduced since 2001.   For individuals i.e. sole proprietor, partnership and employee, the Self Assessment System will apply from the Year of Assessment 2004.

Source :     Inland Revenue Board, Malaysia