It is really better to Submit your Tax Form earlier?
Which side of the fence are you on? Submit earlier or wait till the tax return deadline?
Statistic says Malaysians prefer last-minute submit a tax return. That’s why every year we will see IRB provide 15 days grace period to submit after the official deadline.
Seriously let us assume, if you can get all your documentation ready on time, this might even be as soon as February when the tax return form is open for tax return submission. But is filing early really such a good idea? The standard answer for most tax questions is: “It depends”.
Not every taxpayer is better off submitting their tax return earlier.
It is not uncommon for a tax expert to advise client to apply for an extension of time and delay submission as long as possible. Probably I will discuss this point further in future write up.
Let’s zoom in on the advantages and disadvantages of filing early. We will weigh them at the end.
Advantages (the rosy side of things first)
- Got a refund? If you’re supposed to get a tax refund from IRB, you might as well get your money back as soon as you can. Especially if you are going to do the manual way, ie. mail your tax return form. The IRB is less busy in February than in April. The processing time to scan the form and process your refund can be speed-up.
- Have peace of mind. Seriously, it has to get done one way or the other, why not get it over as soon as possible. Life is easier if you don’t procrastinate. “Just do it la..!”
- The tax office and the online submission system will be less crowded. Remember, with a population of 32 million people, there are 2.27 million eligible taxpayers.
That is a lot of people cramping to submit together in a narrow timeframe (usually the crowd jams up 3 days before submission official and extended deadline). Most of the tax agents and taxpayers will be trying to use the online tax filing system at roughly the same time. Not enjoyable to pack in sardine every year (well the truth is some do feel it is super muhibbah to jom submit tax together gether).
- You won’t be late. Many will submit tax returns last minute, but this is always very risky. What if you get sick? What if you are missing some key information and need to rely on a third party to retrieve them?
There are too many uncertainties to put off something like filing your tax return until the last minute.
- You’ll be more accurate. If you’re not rushed for time, you’ll be more likely to avoid errors when you submit tax return. You’ll have the luxury of time to ensure that you have everything you need and that it’s done correctly.
Disadvantages (the ugly truth to consider)
- Why pay early? If you owe the IRB money, better off putting the money in the bank and earning some interest.
- You may need to revise your tax return again. Sometimes HR, banks, and investment firms do come back a month after sending your documentation and say, “Sorry, sorry, we made a mistake. Here’s the correct statement.”
For those who “chill, relax, taking a little longer time to file your return” will help to ensure that Ms Wong from HR is in time to recheck her work and issue the right EA Form before the tax submission deadline.
- Greater chance of being audited. This point is hearsay. It is a game of statistics. Some tax agents believed that early birds are more likely to be audited. It is reverse psychology.
The rationale is if the vast majority of the taxpayer submit their Form BE last minute (as usual), then there are so many submitted tax returns that the odds of being selected statistically will be way lower, right?
Compared to the lonely few birds who submit early, you do the maths and see. Seriously, some tax experts even go the extra mile to think that getting an extension lowers the odds even more since the IRB is already busy (and behind) with their audits. Again that’s a speculative answer.
Consider the argument presented above on whether to submit a tax return earlier, if you’re in a situation that makes it more likely that you’ll be audited and you don’t need your refund or copies of your return right away, it can be wise to wait.
You can get the return ready and signed back to your tax agent. Set a reminder, say 1 to 2 weeks before the official tax filing deadline.
On the other hand, if your return is simple, you’re due for a tax refund, and you need the tax refund now, you may want to submit your tax return earlier.
Again the standard answer is: “Depends”. It is up to your situation and makes the smart choice for your circumstances.
Talk to your tax agent, they will work out a plan for you. Especially for taxpayers who have tight finances (or some who simply don’t feel like paying so much out front), don’t wait till the last minute.
Let your tax agent know earlier so that they can help you to apply for a tax return deadline extension of time. Work things out and even arrange for a tax instalment for the final tax payable.
Disclaimer: As usual this is purely the opinion of the author. Presented based on my own perspective of the subject matter, Anything to do with tax and law, please do consult a qualified professional it all depends on your unique facts and circumstances.