Learn about the TP3 form, a mandatory document for new employees in Malaysia. Discover its purpose, why it’s compulsory, and how it impacts payroll processing. Visit LHDN for more details.
What is the TP3 Form?
In Malaysia, the TP3 Form is used by employees to provide information to their new employer regarding their personal tax reliefs, deductions, and rebates during employment with previous company.
This form helps the new employer calculate the correct amount of monthly tax deductions (MTD, also known as PCB - Potongan Cukai Bulanan) from the employee's salary.
It is a mandatory form that must be completed by new employees using the offical LHDN format form and submitted to HR before upcoming payroll month. This requirement is set by Malaysia's Inland Revenue Board (LHDN).
For more information, please visit the official Inland Revenue Board of Malaysia (LHDN) website here.
What is the Purpose of the TP3 Form?
The TP3 Form ensures that the employee’s personal tax situation is accurately reflected in their monthly salary deductions. It helps employees avoid overpaying or underpaying taxes throughout the year.
Additionally, it informs the new employer about the employee's income from their previous employer within the current year.
Why is the TP3 Form Important?
A completed TP3 Form is crucial for the following reasons:
- It enables the new employer to accurately calculate PCB/MTD amounts when processing payroll for new employees in the current year.
- It is mandatory for new employees, even those who were not previously employed during the year. These employees must sign the form and either enter “RM 0.00” in the relevant fields or leave them blank.
- It reduces the risk of employees overpaying or underpaying taxes, avoiding refunds or penalties when filing annual tax returns.
- It ensures employers comply with LHDN regulations on income tax calculations and reporting.
IMPORTANT NOTE FOR EMPLOYERS
Employers should:
- Retain all completed TP3 forms,
- Be prepared to present them to LHDN upon request during a PCB audit
Submission Process
- Employee Responsibility: Submit the TP3 Form directly to their employer (not to LHDN).
- Employer Responsibility: Use the information provided to adjust the employee's MTD/PCB calculation.
- Refer to this guide for how to input the TP3 amount into BrioHR.
Example of TP3 Form Usage
Current Year: 2024
Nurul Mustafa joined Company Terbaik Sdn Bhd on 1st October 2024. Previously, she was employed by Company Megah Sdn Bhd from 1st January 2024 until 30th September 2024.
Since Nurul has income from her previous employer in the current year (Jan – Sep 2024), it is compulsory for her to submit a completed TP3 form to Company Terbaik Sdn Bhd on her first day.
This ensures her PCB calculation for October 2024 salary takes into factors previous taxable income and previous paid PCB.
What to Fill Out in the TP3 Form?
You need to complete the following sections in the TP3 Form:
- C1: Total monthly gross salary and additional salary including taxable allowance/ perquisites/ gifts/ benefit
- C3: Total EPF or Other Approved Fund contributions on all remuneration (monthly remuneration and additional remuneration)
- C4 (if applicable): Total zakat rebates or levy relief rebate for umrah travel or travel for other religious purposes (Limited to two lifetime claims)
- C5: Total MTD (excluding CP38)
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