Employers must provide their employees with an EA Form, or statement showing annual pay, at year’s end. It provides information about the employee’s earnings in the previous year which include the salary, bonus, commission etc. This information has to be used by employees for purposes of tax reporting during the tax season.
Content Outline
What is the EA Form?
At the end of each year, employers are required to give their employees an EA Form. Among other details, the form contains the employee’s earnings they received in the preceding year, being salary, bonuses, and commissions. During tax season, employees must use this information to file their individual tax returns.
EA Form or Statement of Remuneration from Employment, which summarizes an employee’s annual earnings from their employer. It serves to support employees in declaring their income accurately to LHDN so as to facilitate tax payment.
Since it does not matter whether the employees are permanent, temporary or part-time as long as they have worked for over one week and been paid, Form EA must be given to them.
This form encompasses various income categories, including:
- Gross salary
- Overtime pay
- Commissions
- Bonuses or gratuities
- Allowances (e.g., travel and meals)
- Benefits-in-kind (e.g. health, company perks)
- Value of Living Accommodation (VOLA)
- Employer-contributed private pension funds
- Compensation for loss of employment
There is no requirement to present Form EA directly to LHDN, nonetheless, failure to do so can lead to fines up to RM20,000 or six months jail sentence or both.
Please note that Form EA for the year ended 31st December 2022 should be submitted on or before 28th February 2023.
How to get the EA Form
It can be obtained by an employee through their employer’s Human Resources department. The form must be provided to the workers by 28th of February in the year following the year they were hired. Download here.
How to use the EA Form
Employees will then submit this Form into their personal tax returns e filing at LHDN. A form that has numerous boxes for various types of incomes. The employees, in turn, will have to indicate their annual earnings from the year prior.
Here are some tips for using the EA Form
- Ensure you keep a signed copy for your records. If you get audited by tax authorities, then you may require it in future.
- In case of any queries from LHDN, contact your employers’ Human Resources Department or a tax specialist.
Benefits of the EA Form
Numerous advantages are associated with the use of the Form by parties on the side of the employees and employers. The Form helps the employees in filing their personal income tax. These are all the necessary details that the employees need for filing correct returns before the stipulated deadline.
It ensures employers that their workers are remitting the right tax. The form also provides protection against tax authorities’ penalties for employers.
Conclusion
The EA Form holds immense importance for both employees and employers. It is essential for accurate income tax filing by employees and must be provided by employers before February’s end the following year. FastLane ensures you never miss this crucial deadline. Our HR and payroll software simplifies generating and submitting EA Forms promptly, ensuring effortless compliance. Get a free quote today.