10 Common Mistakes When Filing Your Income Tax in Malaysia
Filing your income tax looks simple - log in to MyTax, key in the numbers, hit submit. Yet every year, thousands of taxpayers make the same mistakes over and over. Some end up overpaying tax without realising it, some invite an LHDN audit, and some end up with penalties of up to several hundred percent of the tax understated.
The good news: almost all of these mistakes are easy to avoid once you know what to look out for. Here are the 10 most common mistakes when filing income tax in Malaysia, plus how to fix things if you have already submitted.
1. Using the Wrong Form: BE When You Have Side Income
This is the biggest structural mistake. Form BE is only for individuals with employment income alone. The moment you have business income - freelance work, online selling, e-hailing, commissions - you must use Form B, even if your main income is a fixed salary.
Filing a BE when you have side income means that income goes completely unreported, which is an offence under the tax act. We cover this in detail in our article on tax for freelancers and side income. Note that the deadlines differ too - e-BE is due 15 May, e-B is due 15 July.
2. Not Declaring Every Source of Income
Salary gets reported, but rental income, insurance commissions, gains from business assets or digital platform income get left out. LHDN today has access to bank data, e-commerce platform data and other third-party records - a mismatch between lifestyle and reported income is one of the most common audit triggers.
Remember the basic principle: there is no minimum amount for business income. Even RM200 a month from online selling must go into the form.
A scenario that happens all the time: a private-sector employee rents out one room in their house for RM500 a month. That is RM6,000 of rental income a year that must be reported (after deducting related expenses such as a portion of assessment tax and maintenance). Many think "too small to matter" - until LHDN matches property ownership records against their tax returns.
3. Entering Zakat in the Relief Section
Zakat and fitrah are a rebate, not a relief. The difference is significant: a rebate cuts your tax bill ringgit for ringgit, while a relief only reduces chargeable income at your marginal rate. Putting it in the wrong field means your savings shrink considerably.
If these two concepts still confuse you, read our article on the difference between tax rebates and tax reliefs first - it is one of the most common points of confusion in e-Filing.
4. Claiming Reliefs Without Receipts or Eligibility
Claiming lifestyle relief for items bought for someone else, claiming parents' medical relief without a doctor's certification, or rounding numbers "roughly" without receipts - these all seem minor, but under an audit, unsupported claims get rejected and can attract penalties.
The rule is simple: every ringgit of relief must be backed by documentation, and those documents must be kept for 7 years. Digital receipts in a single cloud folder are perfectly acceptable.
5. Wrong Basic Details: Bank Account, Status, Address
A wrong or outdated bank account number is the number one reason tax refunds get stuck. The wrong marital status can affect spouse relief eligibility and the choice between joint and separate assessment - a choice that can change a household's total tax bill.
Before hitting submit, check your MyTax profile: an active bank account in your own name, a current address, and the right phone number to receive your TAC.
Specifically for couples who both work: separate assessment is almost always cheaper than joint assessment, because each person gets the RM9,000 individual relief and keeps their own lower tax brackets. Joint assessment usually only pays off when one spouse has no income or a very low one - that is when the RM4,000 spouse relief and extra rebate provide an advantage. Calculate both scenarios before choosing, rather than repeating last year's choice out of habit.
6. Copying Your EA Form Blindly
The EA form from your employer is the key reference document, but it is not always perfect. Common issues: tax-exempt allowances lumped into the gross figure, reported PCB that does not match actual deductions, or the employer wrongly ticking the "tax borne by employer" box. In fact, LHDN issued a dedicated media statement about this particular box because the mistake is so frequent.
Match your EA form against your December payslip. If the numbers do not add up, ask HR before you file - not after.
7. Missing Reliefs You Actually Qualify For
Mistakes are not just about over-claiming - under-claiming costs you too. The most commonly forgotten reliefs: SOCSO contributions, full medical check-ups (a sub-limit within medical relief), self-education fees, sports equipment, and PRS contributions. For those who qualify, each one is money that should stay in your pocket.
Spend 10 minutes reviewing the current year's full relief list on the LHDN portal before filling in your form. We have also compiled a complete strategy in our article on how to save on LHDN income tax.
8. Waiting Until the Last Minute
Filing on 14 May for a 15 May deadline is a recipe for trouble: MyTax gets congested, TACs arrive late, documents are missing, and you end up filling everything in a rush - the perfect conditions for making every mistake on this list. Late submission also carries automatic penalties under Section 112, plus a tax increase for late payment.
The cost of lateness is not small. Failure to submit a return can bring a fine of RM200 to RM20,000 under Section 112, while any tax balance unpaid after the deadline attracts an automatic 10% increase. And if you are due a refund, every month of delayed filing means your money sits with LHDN longer, earning you nothing.
File as early as March or April. The system runs smoothly, your documents are fresh in your mind, and any refund arrives sooner.
9. Not Reviewing the Final Calculation Before Submitting
The e-Filing system calculates automatically, but it is only as good as the data you enter. One extra zero on your income or reliefs can change the outcome completely - and the submission acknowledgement does not mean your numbers are right. Review the summary page: total income, total reliefs, chargeable income, tax charged, PCB, and the balance (payable or refund). Make sure every figure makes sense compared to last year.
A simple example: your salary is RM60,000 but you typed RM6,000 - the system will show a full PCB refund that looks "profitable", but when LHDN matches it against your employer's EA submission (which they receive separately), the discrepancy is immediately visible. Even an honest typo can trigger a review that drags on for months.
10. Not Keeping Proof of Submission and Records
After submitting, download and keep the e-Filing acknowledgement slip together with a copy of your form. If a dispute arises later, this is your proof of on-time filing. Store it alongside all your relief receipts and income statements for 7 years - the period during which LHDN can reopen your file for review.
The 5-Minute Checklist Before You Hit Submit
Before clicking submit, spend 5 minutes on this final review:
- Right form? Business income = Form B, salary only = Form BE
- Every income source included - salary, side income, rental, commissions
- Income figures match your EA form and actual statements
- Zakat sits in the rebate section, not reliefs
- Every relief claimed has a supporting receipt
- All eligible reliefs claimed - SOCSO, medical, lifestyle, PRS, SSPN
- Refund bank account is active and in your own name
- Summary page reviewed - chargeable income and final tax make sense versus last year
These eight quick checks close off nearly every mistake on the list above. Make them an annual routine.
Already Submitted With a Mistake? Here's How to Fix It
Don't panic - mistakes can be corrected, and acting quickly always beats staying silent:
- Before the filing deadline: Correct it directly through e-Filing. Log back in, amend the e-Form and resubmit following the amendment guidance on the LHDN portal.
- After the deadline: Submit an Amended Return Form (Borang Nyata Terpinda, BNT) within 6 months of the filing deadline, as explained in LHDN's official guidance. Important: the BNT is only allowed once, so make sure every correction is complete in a single application.
- After the 6-month window: Submit a voluntary amendment notification letter to the LHDN branch handling your file, with supporting documents, as noted by eCentral.
- If the mistake understated your tax: Come forward voluntarily before LHDN finds it. Voluntary disclosure typically attracts far lower penalties than an audit discovery under Section 113.
One interesting exception: for the "tax borne by employer" box wrongly ticked by employers on the EA form, LHDN has informed taxpayers that they do not need to submit an amended return themselves - the correction is handled at the employer level.
FAQ
What happens if I make a mistake on my tax form?
It depends on the type of mistake. If you are still within the filing period, correct it directly through e-Filing. After the deadline, submit an Amended Return Form (BNT) within 6 months. Mistakes that understate your tax can attract penalties, so acting quickly matters.
How many times can I amend my tax return?
The BNT is only allowed once per assessment year. That is why every correction should be included completely in a single application, together with supporting documents.
Will I be audited if I make a correction?
Not necessarily. Voluntary corrections are a normal process and LHDN encourages them. Audit risk is higher when LHDN discovers the mistake itself, particularly significant income mismatches or unusual relief claims.
How do I know whether to use Form B or BE?
Any business income (freelance, online selling, commissions, e-hailing), however small? Use Form B with an e-Filing deadline of 15 July. Employment income only? Form BE with an e-Filing deadline of 15 May.
How long must I keep tax receipts and documents?
7 years from the relevant assessment year. This covers relief receipts, EA forms, submission acknowledgement slips and business income statements. Organised digital copies are accepted.
If my employer made a mistake on the EA form, who fixes it?
Inform your employer so they correct it on their side first. For certain errors such as the "tax borne by employer" box, LHDN has stated that taxpayers do not need to submit an amended return themselves.
Is e-Filing safer than manual forms for avoiding mistakes?
Yes. The e-Filing system calculates automatically, pre-fills some information, and rejects clearly invalid entries. But it cannot detect unreported income or a rebate entered in the wrong field - that part is your responsibility.
Conclusion
Most tax form mistakes come down to three things: using the wrong form, not understanding the difference between reliefs and rebates, and rushing the filing without complete documents. With early preparation and a careful review before submitting, you not only avoid penalties - you may save more tax than you expected.
The money saved from penalties and overpaid tax is better put to work building long-term assets.
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