Tax Filing for Part-Time and Side-Income Earners in Malaysia: Do You Need to Declare?

If you earn side income in Malaysia, from freelancing, tutoring, e-hailing, selling online, or any other source, you are required to declare it to LHDN once your total annual income from all sources exceeds RM34,000 (after EPF deductions). Ignorance of this rule is not an excuse LHDN accepts, and undeclared income carries penalties that can exceed the tax itself.

This guide explains the thresholds, which return form to use, and how to correctly combine employment salary with side income on a single return.

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What counts as “side income” in Malaysia?

LHDN treats any income earned outside primary employment as taxable. Common sources include:

• Freelance or contract work (design, writing, coding, consulting)
• Tutoring or coaching fees
• E-hailing (Grab, AirAsia Ride) or food delivery income
• Online selling (Shopee, TikTok Shop) where the activity is recurring and profit-oriented
• Rental income from property
• Commission income reported on a CP58 form
• Royalties from content, music, or IP licensing

Note: Amanah Saham (ASNB) dividends are tax-exempt. A part-time job where you receive a second EA form is additional employment income, not business income, and follows the Form BE path below.

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The key threshold: RM34,000

Under the Income Tax Act 1967, a Malaysian tax resident must register with LHDN and file once their net annual income exceeds RM34,000 after mandatory EPF deductions (Source: LHDN, “When Is Income Taxable?”). For salaried employees this translates to roughly RM3,000 to RM3,111 per month gross. For the self-employed with no EPF contributions, the RM34,000 threshold applies directly to gross income.

What if I already file a return for my salary?

If you are already a registered taxpayer and you earn side income, you must declare it on the same annual return regardless of the amount. There is no separate lower threshold for side income once you are already filing. Even RM200 earned tutoring a neighbour’s child must be included.

If your total income is below RM34,000 after EPF deductions and you are not yet registered, filing is not legally required. Registering voluntarily is advisable if you plan to apply for a bank loan, visa, or government tender, as LHDN records are frequently requested as proof of financial standing.

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Form BE vs Form B: which one do you use?

This is the most common point of confusion. The answer depends on whether your side income qualifies as business income.

Situation	Correct Form	Deadline (e-Filing, YA 2025)
Employment income only (EA form from employer)	Form BE	30 April 2026
Employment income + SSM-registered business / freelance	Form B	30 June 2026
Business or freelance income only (no employer)	Form B	30 June 2026
Partnership income	Form B	30 June 2026

Source: LHDN Filing Programme, YA 2025 / 2026.

Form BE is for individuals with no business income. If you do part-time work for a single employer and receive a second EA form, you still use Form BE and simply add the second EA to the same return.

Form B is required the moment you earn income classified as business income: freelance work, self-employment, commission under a CP58 form, e-hailing income, or any activity registered with SSM as a sole proprietorship or partnership. Starting from YA 2024, Form B must be filed exclusively via e-Filing on the MyTax portal. Manual paper submission is no longer accepted (Source: LHDN).

What if my freelance work is not SSM-registered?

You are not legally required to register every small side hustle with SSM. If your side income is unregistered, LHDN accepts reporting it under “Other gains and profits” on Form BE. However, if the activity is recurring, profit-oriented, and commercially structured, LHDN may reclassify it as business income and require Form B. When in doubt, use Form B, as it gives you access to business expense deductions that can lower your tax bill.

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How to combine salary and side income on one return

All income streams go into a single tax return for the year.

Documents to gather: EA form from each employer (issued by 28 February), CP58 form for commission income, bank statements or invoices for freelance work, and rental agreements for property income.

Where each income goes: On Form BE, employment income goes under Section B2 and non-business other income (unregistered freelance, rental, royalties) goes under Section B5. On Form B, business income is entered under Section B3 with a Profit and Loss summary; employment income from a separate job still goes under its own section.

Reliefs available to all filers (YA 2025): individual relief RM9,000; EPF contribution up to RM4,000; life insurance premium up to RM3,000; education fees up to RM7,000; lifestyle expenses up to RM2,500. Form B filers can additionally claim allowable business expenses (equipment, software, proportional home-office costs) directly against business income.

Tax rebate: if your chargeable income after all reliefs does not exceed RM35,000, a personal rebate of RM400 applies, reducing tax payable to zero for many lower-income earners (Source: LHDN Tax Rate, YA 2025).

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Malaysia’s progressive tax rates (YA 2025)

All income, salary and side income combined, is taxed under a single progressive schedule. The first RM5,000 is taxed at 0%. Rates rise gradually to 30% on chargeable income above RM2 million.

Chargeable Income (RM)	Tax Rate
0 – 5,000	0%
5,001 – 20,000	1%
20,001 – 35,000	3%
35,001 – 50,000	8%
50,001 – 70,000	13%
70,001 – 100,000	21%
100,001 – 400,000	24%
400,001 – 600,000	25%
600,001 – 2,000,000	26%
Above 2,000,000	30%

Source: LHDN, Tax Rate (Individual), YA 2025. Rates apply to the income within each band, not to total income.

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What happens if you do not declare?

Failure to declare taxable income is an offence under Section 113 of the Income Tax Act 1967. Penalties include a fine of RM1,000 to RM10,000 per offence plus an additional penalty equal to twice the tax undercharged. In serious evasion cases, criminal prosecution applies.

LHDN cross-references SSM records, bank data, and platform payment feeds. The agency actively audits e-commerce sellers and gig workers. Voluntary disclosure before an audit always attracts lower penalties than post-audit detection.

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Practical example: full-time employee with tutoring income

Ahmad earns RM60,000 as a software engineer and RM15,000 tutoring students privately (unregistered). His combined gross is RM75,000. After EPF relief (RM4,000 cap), individual relief (RM9,000), and lifestyle relief (RM2,500), his chargeable income is roughly RM59,500, placing part of it in the 13% to 21% tax bands.

He uses Form BE, entering employment income under Section B2 and tutoring income under Section B5 (other income). Because he is on Form BE, he cannot deduct tutoring expenses. Registering as an SSM sole proprietorship and switching to Form B would let him claim equipment and materials against that RM15,000.

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Key takeaways

• You must declare side income if your total annual income (after EPF) exceeds RM34,000, or if you are already a registered taxpayer, regardless of side-income amount.
• Use Form B if any of your income is from a registered business or activity that LHDN classifies as business income; use Form BE for employment income and minor non-business extras.
• Form B gives you access to business expense deductions that Form BE does not.
• All income streams are combined on a single return under Malaysia’s progressive tax schedule.
• E-Filing is the only accepted channel for both Form B and Form BE from YA 2024 onwards.
• Voluntary disclosure before an audit always attracts lower penalties than LHDN catching undeclared income first.

For more on personal tax management, read our guides on tax-efficient investing in Malaysia and understanding EPF withdrawals and tax treatment.

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Frequently asked questions

Do I need to declare income from selling items on Shopee or TikTok Shop?

It depends on whether the activity is a business. Occasional sales of personal items are generally not taxable. However, if you buy goods to resell, run a shop profile, and earn regularly, LHDN treats it as business income that must be declared on Form B. LHDN has been auditing e-commerce sellers more actively since 2023.

I earned only RM5,000 from freelancing this year. Do I still declare it?

If your combined income (salary plus freelance) exceeds RM34,000 after EPF deductions, yes, the RM5,000 must be included. Below that threshold and not yet registered, filing is not legally required, though registering voluntarily is good practice.

Can I deduct my laptop and home internet from my freelance income?

Only if you file Form B as a business income filer. On Form B, you can claim allowable business expenses including equipment, software, and a proportional share of utilities used for the business. On Form BE (other income), no expense deductions are available against that income.

Is rental income from a single property considered “business income”?

Generally no. Passive rental is classified under Section 4(d) of the Income Tax Act as non-business income, reported on Form BE or the rental section of Form B. Standard personal reliefs still apply. The exception: if you run the property as a serviced accommodation or short-term rental with added services, LHDN may reclassify it as business income.

My employer already deducts PCB. Do I still need to file?

PCB (Potongan Cukai Berjadual) covers employment income only. It does not account for side income. If you earn anything beyond your salary, you must still file so LHDN can assess your total liability and issue a refund or top-up notice.