IRB tax arrears: Find best method to aid next-of-kin

SHAH ALAM - The government is urged to consider methods such as insurance coverage to aid next-of- kin if the deceased leaves a debt burden especially in the form of income tax arrears

Banking executive Nurul Syafikha Mohamad, 37, viewed methods such as the Mortgage Reducing Term Takaful (MRTT) used in home loans may be applicable to income taxpayers under the Inland Revenue Board (IRB).

"If the deceased left a debt, the next-of-kin are obliged to settle it before faraid (inheritance), but if such insurance can be considered (MRTT) it will mean that the debt is covered by insurance.

"This means when a death occurs, the debt relating to the financial institution or government would automatically be cancelled. However, if the deceased was a millionaire the the use of other methods could be considered," she told Sinar on Tuesday.

Sinar on Tuesday reported that the Minister in the Prime Minister's Department (Religious Affairs) Datuk Dr Mohd Na'im Mokhtar had said the decision on whether next-of-kin must pay tax arrears of deceased persons will be known by September.

Section 74 of the Income Tax Act 1967 states that the next-of-kin could be subjected to a tax assessment similar to the assessment imposed on the deceased including managing any arrears or excess tax of the deceased.

Due to this there has been a difference of opinion among muftis regarding the issue and the matter has been referred to theIslamic Religious Affairs Muzakarah Committee (MKI) National Council

Finance executive Ikhwan Abdullah, 38, said even though the next-of-kin were responsible towards any commitment the deceased had made including the income tax management, the matter needed to be viewed holistically so that family members do not continue to be burdened by other individuals' 'faults'.

"If the deceased was the head of the family who left behind a wife (who is) a housewife and three children in school they could not pay off the debts when they themselves are struggling to continue with their lives.

"Similarly, other members of the deceased's family may have a life of their own and need to support their individual families.

"I hope the government can consider this matter appropriately and maybe only ask family members who can afford to take on the burden," he explained.

Production crew Mohd Fazrul Izwan Zainal Azeman, 37, said the views of scholars and muftis regarding the tax payment of the deceased must be given attention to especially in terms of syariah law.

"In Islam we know debts must be repaid, but if it involves the debt of others it must be considered completely by looking at the capabilities of the next-of-kin to pay unless they are capable.

"If the money is taken from the property before the faraid (of the deceased), it (the payment) can be taken into account, but it must be seen whether the next-of-kin is able to live with whatever is left (after the faraid)," he said.