A promising Malaysian tax budget for 2013 this Friday?

Broadening income tax bracket will benefit the rakyat as a whole

IN the next few days, the Finance Minister will share with the rakyat the financial health of the country and the Government’s proposed budget for the next 12 months.

With the mission of “Driving Transformation Towards a Developed Nation”, the Government would have the unenviable position of balancing the economy of the country amidst the uncertainties in the external market, as well as ensuring that the plight and wishes of its rakyat are not forgotten, especially in these challenging times.

As tax consultants, we have the opportunity to hear from our clients their expectations and hopes for the upcoming budget. This article aims to analyse some of these expectations as well as the writers’ views as fellow taxpayers and as a rakyat.

Lower taxes

Looking back at the past four budgets, the Government has introduced various ways of lowering the taxes for resident individuals. (See graphics)

While a reduction in tax rate is always a welcome relief to any taxpayer, it would still depend on which level the rates are reduced as it may only benefit certain taxpayers as can be seen in 2010 whereby only those in the highest tax bracket benefited from the 1% tax rate reduction.

What the Government has not introduced is the broadening of the income tax bracket, especially at the lower rates, which will not only benefit those from the lower and middle-income group but the rakyat as a whole, with a higher disposable income. (See tables)

The tax relief available in respect of premiums for education or medical insurance has not been reviewed since 2000. Further, the RM3,000 tax relief limit covers both education and medical insurance.

As education and healthcare are essential for every rakyat and his family, the Government should consider granting tax relief for each category of the insurance premium separately – one for education and another relief for medical insurance.

The Government has also not reviewed the child relief, which has remained at RM1,000 per child below 18 years of age since 2004. Any parent will vouch that providing for a child’s wellbeing is neither easy nor cheap. Any increase in child relief for tax purposes would be welcomed.

Affordable homes

Over the last few months, the news of spiralling property prices has been hitting the media.

Currently, the Real Property Gains Tax (RPGT) regime for residents and non-residents are the same, i.e. tax is charged on the gain from sale of real property depending on the duration of ownership of the real property regardless of the residence status of the seller.

Genuine resident home buyers, particularly young families who do not yet have high disposable income, are usually at the losing end compared to non-resident buyers, who are usually buyers with higher purchasing power and who perhaps have more speculative intentions.

In the past, the Government has introduced incentives such as stamp duty exemptions. However, the threshold to qualify for the exemption is limited to those properties which have value not exceeding RM350,000, thus leaving young city folks hard-pressed to find homes within this range given the spiralling property prices.

An effective measure previously introduced by the Government was the deduction in respect of interest expended by individuals to finance the purchase of residential property.

Unfortunately, this incentive was only valid for purchases whereby the sale and purchase agreement was executed within a specific period of time, which has since lapsed. The Government could re-introduce this incentive.

The Government could also consider imposing different RPGT rates for residents and non-residents. If there is a concern that foreign investors will shy away as a result, conditions could be put in place for non-residents to be eligible for the resident rates, for example:

 

• having stayed in Malaysia for a number of years or
• set up business operations in Malaysia for a number of years, etc.

Alternatively, to quell speculative transactions, the Government could consider increasing the RPGT rates for disposals made within five years from the date of acquisition of the property, which is currently at 10% and 5%, to perhaps the present corporate tax rate of 25%. Disposal after five years will be exempted from RPGT. Genuine home buyers should not be adversely affected by this measure.

A similar measure, although from a stamp duty perspective, was adopted by a neighbouring country whereby affected buyers are required to pay an Additional Buyer’s Stamp Duty on top of the existing Buyer’s Stamp Duty. The affected buyers are mainly foreigners and non-individuals, or individuals who owned more than one or two residential properties. This is also an avenue for our Government to consider.

By NEOH BENG GUAN and NG SUE LYNN

·Neoh Beng Guan is executive director of KPMG Tax Services Sdn Bhd while Ng Sue Lynn is director.

Team building is a balancing act in an organization

It is important to remember that there are no bad competencies or bad profiles
 

BUILDING teams in an organisation is becoming an increasingly complex and challenging task.

Many organisations are employing the use of assessment tools to give another perspective of the individuals being considered for the purpose of recruitment or even succession planning, which is often an integral part of building a cohesive team. As an executive search consultant and coach, I have found such tools to be very insightful in many instances. One of the biggest lessons for me as a result of using such assessment tools is that bringing together diverse groups of competencies often result in stronger teams.

Most people would choose to work with people who are like themselves. It is a common perception that people with similar personality types will likely be on the same wavelength and get along well together. However, I had the opportunity to work closely with a colleague who is very frank and direct in her communication and work style. My personal style of communication is almost a direct opposite of hers whereby I gravitate to being a lot more diplomatic. Both of us work well together because we can bridge the gaps in each other's work style and cover a lot more ground when collaborating on projects. In most cases when dealing with savvy clients, they want to know the truth but the tactful delivery of facts are also equally important.

As a leader, I am not keen on finding someone exactly like me, as I know I am not perfect and having clones of myself would only magnify my faults. By understanding my own personality profile better, I am able to surround myself with people who are able to bring other competencies to the table and by working together, we would be able to support each other to produce better results and more holistic solutions and better results.

I have noticed that more and more leaders are becoming aware of the need for diversity in their workspace. A decade or two ago my clients often wanted me to look for people who were almost identical to themselves or someone within their organisation. “Just find me someone like John,” or “Don't you have any candidates like my deputy?”

However, employers and leaders are now becoming savvier when it comes to building teams. They are realising that by building diverse teams they are able to address more of their customers' needs and reduce their blind spots. Even clients who have not been exposed to any psychometric assessment tools are able to splice together a profile by using terminology that they are familiar with. For example, I spoke with a client who wanted me to find him a chief operating officer who could think strategically like his head of corporate strategy but the individual also needed to be literate with numbers like his finance director and able to deep-dive to fix problems. Whilst this may seem like a tall order, this description was able to provide another perspective and added another dimension to the job description, which in most cases is only a two-dimensional document. Hence, it became a lot easier to understand the client's requirements from that point onwards.

The results of an assessment project can sometimes be an eye-opener and a driver for change. One such organisation, a multinational company in the manufacturing sector, discovered through an assessment project that the majority of their managers were classified as innovators. Being innovative is a highly desired skill in many organizations, especially in leadership roles. On the other hand, innovators are generally out-of-the-box thinkers and are not very likely to analyse pitfalls well or they may be less detail oriented when it comes to implementation. Faced with the study results, their top management embarked on a development program to build up the other competencies their managers were lacking in. At the same time, they also made a conscious effort to hire more detail-oriented managers who could be more effective on areas of the business that called for more precision. They also created a role for a risk manager to mitigate potential risks that the innovative managers may have missed in their eagerness to try new and different approaches.

I have also come across leaders who have the misconception that their subordinates cannot be better qualified than the leaders themselves. These were usually leaders who enjoyed having their own “kingdoms” and didn't want to “rock the boat.” They tend to hire “yes” men who would carry out instructions without questioning or offer any kind of resistance. As a result, the organisation is likely to stagnate at some point, as there will usually be a bottleneck when it comes to making decisions. The calibre of the managers hired would be of a lower level, as the leader would not want to have subordinates that may outshine them as leaders. As such most decision-making will have to be directed to the top management, as these managers would not be empowered to make decisions.

Although it is not ideal, the leader preferred this approach and this might even work well until the business grows beyond the tipping point whereby the leader will eventually need to empower some capable managers to take on more of the decision-making tasks. As an employee and team member, it is useful to know what our competencies are as this will pave the way for us to develop ourselves in areas that we may not be as proficient in. We can align ourselves to mentors who may have a profile that complements ours or who can help us develop these competencies. It is also handy to know your colleagues' profiles where possible so that we can use the right communication style to get our message across.

For instance, some people prefer receiving emails as this gives them time to craft an appropriate response whilst others may want to have a face-to-face discussion so that they can obtain immediate feedback. At times, this information also tells us why we are unable to get along with certain people in our organisations.

At the end of the day, it is important to remember that there are no bad competencies or bad profiles. Nobody is perfect. We all possess competencies; some are similar and some different from the people we work with. It is more important to know what our competencies are and to what degree they influence our communication with others. It is not just the truth but knowing the truth that makes the difference, as this is the starting point for building effective teams.

by Talking Hr with Pauline Ng

Pauline Ng is the consulting director and head of BTI Consultants. She believes that we need to understand what makes a person tick so that we can build more effective teams 

Avoid these 6 ways to hurt your reputation in a new job

There are many ways you can inadvertently damage your reputation in a new job. As my former client found out, showing up late on your first day of work is one of those ways. Here are six ways you can sabotage your reputation that you should avoid at all costs:

#1 – Show up late on your first day of work: This is my number one “no-no” when it comes to starting a new job. Showing up late may damage your reputation because it can make you look unreliable and unable to plan for potential obstacles. If you can’t even make it to work on time, do you think your manager will trust you to finish a project on time? Always give yourself plenty of extra time to get to work for the first few weeks so you can get a feel for traffic patterns and how much time you’ll need. Bring a book or magazine to read in case you get there early.

#2 – Wear inappropriate attire, based on the company culture: Wearing a dark suit is not a good idea if you’ve been hired by a start-up company where everyone wears jeans and shorts to work. Similarly, wearing too casual attire to a company where most employees wear suits five days a week won’t work either. Take the time (before your first day on the job) to understand the company’s culture and find out from your new manager or HR representative as to what attire is appropriate. Never wear perfume or cologne to work – leave these for evenings and weekends. There’s almost nothing more annoying as a manager than having to hold a discussion with a new employee because their over-powering

#3 – Refer constantly to how your previous company did things: When you keep referring to things saying, “That’s not how we did it at ABC company,” or “Where I came from, this is how we did it and it worked much better,” you will severely damage your reputation. Why? Because nobody likes an arrogant know-it-all who thinks they are better than other employees or who believes their previous company did things better. I once led a department after the parent company had purchased and merged five companies into one. Ego-bragging about former companies was so prevalent I implemented a fun way of calling attention to this negative practice. Whenever anyone used the name of his or her former company and someone pointed this out, the person had to add $1 to an empty shoebox in my office. When the shoebox was filled with money I used it for a pizza lunch for the team and to talk about the ego-bragging and why it was so detrimental to our newly combined company. After that, the negative practice almost immediately ceased.

#4 – Question the way (and why) things are done: Like I mentioned in item #3, no one likes an arrogant know-it-all. Before espousing your opinions in your new job, take the time to identify all angles of a situation. This means understanding the stakeholders, inputs, resources, processes, and outcomes/results. Once you have this information, you can dig deeper into certain circumstances using terminology such as, “Help me understand how…” and “How does department ABC then use this information to…?” How you word things is just as important as the questions you ask, so think before you speak.

#5 – Ask for time off: You’d think this would be a no-brainer “no-no”, but you’d be surprised at how often hiring managers express their frustration to me about new employees blindsiding them with time off requests. If you receive a job offer in June and your family already has vacation plans scheduled for mid-July, let the hiring manager know immediately (before you begin your new job) and proactively work with them to ensure your vacation will not disrupt the productivity of the department. Surprising your new manager with a personal time off request can damage your reputation because it can make you seem like a deceitful and immature person.

#6 – Spend time “water cooler gossiping” to get the “dirt” on people in the department: Everyone wants to get to know the people in their new company as quickly as possible – but don’t spend time finding out through the gossip “grape vine” around the water cooler or break room. Take the time to get to know colleagues first hand and form your own opinions. Don’t let other’s nasty gossip cloud your thinking when it comes to co-workers.

As my former career-coaching client found out, it can be fairly easy to damage your reputation in a new job. Once damaged, it can take time and effort to repair your work reputation. To avoid having to go through this situation yourself, be aware of the six key ways you can harm your reputation when starting a new job – and wisely avoid them!

Lisa Quast, Contributor

 

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