Number of Dependent Children (Auto VS Manual) in Employee Profile

What are the differences between the settings for the number of children when recording income tax relief in the employee profile?

Manual

We can manually select the number of employee's children - this is normally used in straight-forward cases for example non-disabled children (below age 18), as the calculation for income tax relief is relatively straightforward. 

To make the changes under the manual setting, refer to the below steps.

Step 1

Navigate to the employee profile, click on Bank & Statutory (a), and then on the Edit (b) button.

Step 2

Under the Income Tax section, select Manual and adjust the number of children accordingly as per the highlighted space as shown in the image below. 

Step 3

The recorded number of children will now impact the total qualifying child relief amount, as an element in the employee's tax calculations. 

You may check this by navigating to Payroll(c)  > Transaction(d) > Payroll Figures Take On(e).

Step 4

Select the employee name and scroll down to section (D)Total Deduction. Under (6)Total qualifying child relief, the tax relief amount is reflected according to the number of children, you have edited in the employee profile just now in Step 2. 

Do note also that this is an uneditable field.

1 Child Tax Relief = RM 2000
9 Child Tax Relief = RM 18,000

Auto

For auto, we need to select the number of employees' children according to the Child Category. This is used in more specific cases, namely: 

• Children over the age of 18 years studying full time
• Children over the age of 18 years and receiving full-time instruction at diploma level onwards in an institution of higher education in Malaysia or degree level onwards in an institution of higher education outside Malaysia.
• Disabled children as certified by the Department of Social Welfare
• Disabled children receiving full-time instruction at diploma level onwards in an institution of higher education in Malaysia or degree level onwards in an institution of higher education outside Malaysia.

If an employee has a combination of children categories between any of the named above, you may use this Auto setting to calculate the tax relief of children correctly as per the categories. 

The function of the Auto button, in summary, is that it captures the exact computation of child relief according to these different categories. For example, refer to Step 2. You can see that 1 disabled child equals 3 children relief and 1 disabled child studying in higher education institutions equals 7 children. This will then impact the tax relief calculation accurately according to the specificities of the situation.

To make the changes under the auto setting, refer to the steps below.

Step 1

Navigate to the employee profile, click on Bank & Statutory (a), and then on the Edit (b) button.

Step 2

Under the Income Tax section, select Auto and adjust the number of children based on the listed categories

According to this adjustment, the number of children will reflect based on the tax relief amount in the highlighted space as shown in the image below.

Step 3

The recorded number of children will now impact the total qualifying child relief amount, as an element in the employee's tax calculations. 

You may check this by navigating to Payroll(c)  > Transaction(d) > Payroll Figures Take On(e).

Step 4

Select the employee name and scroll down to section (D)Total Deduction. Under (6)Total qualifying child relief, the tax relief amount is reflected according to the table as shown in Step 3.

1 Child Tax Relief = RM 2000
4 Child Tax Relief = RM 8,000