Past one weeks mamak stall hottest topics, I can confidently says should be circling around 2008 budget. We should all be thanking and thinking how considerate and thoughtful are our Finance Minister 1, Finance Minster 2, Finance Minister 3, Finance Minister 4……. (hmmm how many finance minister do we have anyway? ), letting us withdraw our OWN EPF money, giving us Malaysian free education and text books, tax free dividends and etc.

 

I have to admit I am one of those Malaysian, when heard of the news ‘TAX FREE DIVIDENDS!!’, that thinks, WOW that is great, now this is something out of the box the government is doing to give the money back to the rakyat, without going into the details, until I read the article here.

 

If the article is too long confusing, let me try to help our Luk4all readers by summarizing it in bullet form as I understand:

 

Before 2007 budget

1.   You buy stock listed in KLSE, and they declare dividend, the dividend that was declared will be automatically taxed 27%

a.       Example – you buy company A stock

b.       Company A declare RM100 dividend

c.       Company A sent you a cheque of RM73

                            i.  Because RM27 goes to the government as TAX!!

 

2.   If your annual income after all deductions, is higher than 250K, you will be further taxed an additional 1% or RM1

 

3.   If your annual income is lower than 50K, after all deductions, the government will refund you 14% or RM14.

a.   This is especially good for lower income earner

b.   Even better for retiree or pensioner, they could put their money in high dividend stock, enjoy the dividend and be free of inflation.

 

After 2007 budget

4.   You buy stock listed in KLSE, and they declare dividend, the dividend that was declared will be automatically taxed 27%

a.   Example – you buy company A stock

b.   Company A declare RM100 dividend

c.   Company A sent you a cheque of RM73

                        i.  Because RM27 goes to the government as TAX!!

 

5.   If your annual income after all deductions, is higher than 250K, you will NOT be further taxed!

 

6.   If your annual income is lower than 50K, after all deductions

a.   YOU WILL NOT GET ANY REFUND, because according to Zewt, ‘it is tax free dividend, you don’t need to report it in your tax form and because you don’t need to report it, you will not get the refund in respect of taxes paid on the profits at company level’

 

THAT MEANS THE POOR, RETIREE AND PENSIONER…….. YOU HAVE JUST BEEN SCREWED OF YOUR 27% DIVIDEND!!!!!

 

When I read the article, it struck me as just another scheme, tax the corporate rich less and give back to poor LESSER as well. This is exactly the same thing we observed when we comment on RPGT here. Anyway I think we should not put it as though the corporate rich is at fault, they are the creative people that create job and business for the middle class like us, alternatively we should look at it in the way that it is design is such a way so that we can continue buying screw drives that cost RM20++ at RM200++.

 

WE ARE SCREWED!!