Income tax issue.

Week 12.1 Income tax issue.

For the case of silver, the margin for silver is quite small. Thus, let said for a start you want to earn RM1000.00 per month and your margin is 5%. To earn that kind of money, your money you need to have RM20,000.00 turn over per month. Definitely, your salary is not RM20,000.00. Off course since it is a large amount, you need to get it from oversea, the money has to be sent via bank wire. The bank will have a record of your transaction.

Most supplier will require the actual purchaser to do the bank wire. On top of that the shipping address must match the delivery address. A third party cannot send the money on your behalf. Well, you can also ask them to buy on your behalf by giving them your contact. They may want to take a cut of what you earn. However, over time then you will see silverselangor, silverkedah, silverpenang etc coming up like mush room. You decide what is the best option. Once it is given away, it is gone forever, that why there is always some trade secret only to be learned and never to be told.

In the case of gold, most of the supplier is local. However, the margin is even smaller around 0.5% to 2%. Thus, to earn RM1,000 per month, your monthly turn over have to be RM50,000.00. If you think it is cash deal and you can get away with it by all means go ahead but I do think LHDN is much smarter than that.

After some time, let said one year your bank account will show a transaction of 12 x RM20,000.0 0 which is RM240,000.00, however your monthly salary is RM5000/ month and yearly salary it is just RM70,000.00. Thus, hell lot of explanation is required when income tax department comes and audit you. Thus, you have no choice but go to KL Sentral and register at SSM. Then, by the month of March every year get a Borang B from LHDN and declared your profit or loss if any. Bear in mind you also need to keep a proper record of your transactions and expenses. The best way to do it is to do it every week or every month. Thus, continuous discipline is required. If you think it not worth the effort then limit yourself to become an investor, annual transaction within 50% - 70% of your annual salary. Then, you are exempted from capital gain tax. For more information about being a trader or investor, look at my previous article. Trader vs investor. For more info on taxation, you should consult an accountant not me.

Given the profit you made, you can also start to explore some other things in life. Other business venture or research which may required some capital to start with. With the profit made in this business, you may want to look at other things as well.