Clear taxes before you die or taxman will hound your family

 |Sep 20, 2017

KUALA LUMPUR: As the quote goes, only two things are certain – death and taxes. And even death won’t absolve your estate from having to pay your tax arrears. Even if the amount is a paltry RM25.

The Inland Revenue Board warned all Malaysians to pay all taxes owed before their death to avoid having their families penalised over the unpaid sums.

IRB chief executive Datuk Sabin Samitah told China Press in an email interview that tax collections are calculated based on the deceased’s income — including the day before his death.

According to Malay Mail Online, at the time they died, 18,798 individuals had defaulted RM169.5 million in tax during the 2001 to 2015 period. Outstanding tax amounts ranged between RM25 and RM2.6 million.

“The Inland Revenue Board takes harsh measures and also encourages taxpayers to immediately clear off all outstanding taxes, to avoid their children or the inheritors from being in trouble after their death.”

Sabin said IRB would seek payment of the outstanding taxed from the estate, as Section 74(5) of the Income Tax Act requires the will executor to ensure there is no outstanding taxes before distributing the deceased’s assets.

Under Section 106, Sabin said IRB could sue the will executor to collect the taxes owed, if the latter fails to clear off the outstanding tax when the deceased has left behind assets.

“The will’s executor can also, under Section 104 of the same law, be barred from leaving the country,” he said.

Executors of a deceased’s will can include the spouse or children.

For those unable to clear off the deceased’s outstanding tax in one go, he said they could visit IRB offices to discuss payment plans.

He advised the children of a deceased individual or the will executor to check with the IRB to determine if there are outstanding taxes or refunds for excess payments

The law also allows the IRB to seek the freezing of a deceased’s assets to ensure that it would be able to obtain payment for outstanding taxes, he warned.