Financial Literacy is a convergence of finance, credit and debt management. It covers a vast area of our lives such as understanding how to check the bank accounts, what it means to use a credit card and how to avoid falling in debt. It impacts the daily issues an average family makes when trying to balance a budget, buy a home, fund the children’s education and ensure an income at retirement.
Financial literacy is important because it equips us with the knowledge and skills, we need to manage money effectively. Without it, our financial decisions and the actions we take—or don’t take—lack a solid foundation for success.
Taxes are the fees levied on individual or corporation by the government in order to help fund public works and services—and to build and maintain the infrastructures used in a country—the government usually taxes its individual and corporate residents. The tax collected is used for the betterment of the economy and all living in it.
In Malaysia and many other countries in the world, taxes are applied to some form of money received by a taxpayer. The money could be income earned from salary, capital gains from investment appreciation, dividends received as additional income, payment made for goods and services, etc.
A percentage of the taxpayer’s earnings or money is taken and remitted to the government. Payment of taxes at rates levied by the state is compulsory, and tax evasion—the deliberate failure to pay one's full tax liabilities—is punishable by law.
Most governments use an agency or department to collect taxes; in Malaysia, this function is performed by the Lembaga Hasil Dalam Negari.
Taxes are imposed depending on a variety of factors, including the taxpayer's filing status—married filing jointly, married filing separately, single or head of household. Which status a person has can make a significant difference in how much they are taxed.
The source of a taxpayer's income also makes a difference in taxation. It's important to learn the terminology of the different income types and other categories that affect how income is taxed.
Learning this information enables taxpayers to manage their finances for the best outcome on their net yearly income. Techniques that can help include annual tax-loss harvesting to offset investing gains with investing losses and estate planning that works to shelter inherited income for heirs.
There are several very common types of taxes:
Income Tax —a percentage of individual earnings filed to the federal government
Corporate Tax—a percentage of corporate profits taken as tax by the government to fund federal programs.
Sales Tax—taxes levied on certain goods and services
Property Tax—based on the value of land and property assets
Tariff—taxes on imported goods imposed in the aim of strengthening internal businesses
Government usually are considerate enough to give leverage to people with Allowable Deductions and Tax Credits but there are specification and limitations that we must pay attention to.
Always keep your self-posted on the latest updates and information from LHDN.