Findings Results and analysis

2209 factor analysis. The Bartlett‘s Test of Sphericity for the 24 items was significant Sig. = 0.000 and measure of sampling adequacy with Kaiser-Meyer-Olkin KMO showed a value of 0.90 indicated that the appropriateness of the construct as ―meritorious‖ Hair et al., 2006. Descriptive Statistics Table 1 below shows descriptive statistics for all 24 necessary aspects of tax knowledge. Mean for all items were positive with values above 3.00. Item with the highest standard deviation was ‗the amount of relief‘ 1.5β while the lowest was ‗types of assessment i.e. joint or separate‘ 1.01. 2210 Table 1 Descriptive Statistics of Items N= 139 Item No. Items Mean Standard Deviation Minimum Maximum 1 Tax return submission date 4.12 1.23 1 5 2 Due date to settle tax payment 3.91 1.33 1 5 3 Types of assessment i.e. joint or separate 4.22 1.01 1 5 4 Person chargeable to income tax 4.02 1.06 1 5 5 Types of income subjected to tax 4.07 1.08 1 5 6 Types of income exempted from tax 3.62 1.25 1 5 7 The amount of income exempted from tax 3.43 1.36 1 5 8 Meaning of income terms in taxation such as aggregate income, total income and chargeable income 3.51 1.25 1 5 9 The steps involve in computing tax payable 3.81 1.17 1 5 10 Assessment period for employment income 3.97 1.12 1 5 11 Types of employment income 3.93 1.06 1 5 12 Types and amount of allowable 3.31 1.35 1 5 2211 donation and gifts 13 Types of relief 3.45 1.45 1 5 14 The amount of relief 3.29 1.52 1 5 15 Entitlement to relief 3.49 1.36 1 5 16 Types of individual tax rebates 3.39 1.34 1 5 17 The amount of tax rebates 3.33 1.33 1 5 18 Tax rates 3.21 1.45 1 5 19 Use of tax rate table 3.83 1.08 1 5 20 The length of period to keep proper record and documents 3.45 1.44 1 5 21 Types of record and document to keep 3.62 1.29 1 5 22 Relevant public rulings 3.18 1.36 1 5 23 Requirement to comply with the public rulings 3.17 1.42 1 5 24 Types of offences subjected to penalty 3.29 1.42 1 5 2212 Factor Analysis The next step was to run factor analysis on the item to identify the possible components for the 24 items in the measure. Table 2 presents the result of rotated component matrix in factor analysis. Similar to Md Idris and Ayob 2001, this study chose Principle Component Analysis PCA followed by a varimax rotation of all the items in the measures as it is an effective and widely accepted as a mean of exploring the interdependence among variables. As a result, four components that have Eigenvalue of 1 or more were attained. Each component that had an Eigenvalue of 1 or more is considered as significant Hair et al., 2006 with component 1 has the highest Eigenvalue i.e. 13.15. The percentage of the total variance from these four components is 74 which is considered as satisfactory with the highest percentage of total variance also comes from component 1 which accounts for 54.81. The guidelines provided in Hair et al. 2006 were applied for choosing the items for a component. Given the number of sample in the study, the guidelines suggested that the items in each component with rotated factor loadings of 0.45 or higher were considered as significant. Since each item have rotated factor loadings which fell under the specified category, all items were accepted and grouped under four components as shown in Table 2. 2213 Table 2 Rotated Component Matrix a for Necessary Aspects of Tax Knowledge N=139 Items Item No. Components 1 2 3 4 Deductions Tax Liability Computation 10 items The amount of relief 14 .877 Types of relief 13 .855 Entitlement to relief 15 .819 Types of individual tax rebates 16 .785 Types and amount of donations and gifts 12 .782 The amount of tax rebates 17 .778 Tax rates 18 .724 The amount of income exempted from tax 7 .695 Types of income exempted from tax 6 .589 Use of tax rate table 19 .535 Income Assessment Principles 7 items Assessment period for employment income 10 .854 Types of assessment i.e. joint or separate 3 .810 Types of employment income 11 .722 Meaning of income terms in taxation such as 2214 aggregate income, total income and chargeable income 8 .690 Person chargeable to income tax 4 .522 The steps involve in computing tax payable 9 .502 Types of income subjected to tax 5 .491 Rulings, Record Keeping Offences 5 items Public rulings 22 .827 Requirement to comply with the public rulings 23 .801 Types of record and document to keep 21 .663 The length of period to keep proper record and document 20 .606 Types of offenses subjected to penalty 24 .600 Due Dates 2 items Tax return submission date 1 .780 Due date to settle tax payment 2 .755 Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a. Rotation converged in 6 iterations. Eigenvalue of the components = 1 or more. 2215 These four components represent the dimensions of tax knowledge required by non-business taxpayers in order to assess their income as required under SAS. By looking at the likely similar characteristics of the items under each dimension, the dimensions were named as deductions tax liability computations, income assessment principles, rulings, record keeping offences and due dates respectively. Deductions Tax Liability Computation dimension has 10 items with the rotated factor loadings range from 0.53 to 0.88. Income Assessment Principles dimension 7 items has rotated factor loadings that range from 0.49 to 0.85 while Rulings, Record Keeping Offences 5 items has rotated factor loadings from 0.60 to 0.82. The fourth dimension i.e. Due Dates 2 items have rotated factor loadings of 0.75 to 0.78. Further, the construct reliability of each dimension was assessed. However, before assessing the internal consistency of the measures, an item inter-correlation matrix was constructed to examine the extent to which some common trait was present in the items. If there is low inter- item correlations the associated items are likely to have been inappropriately selected Nunnally, 1978 and Churchill, 1979. In this regards, Flynn, Schroeder and Sakakibara 1994 suggested that items having relatively low correlation i.e. ≤ 0.γ0 with other items have to be dropped from the measure. All inter-item correlations for each dimension of tax knowledge were above 0.40. The analysis also reveals that a considerable number of correlations exceed 0.30 which showed that the items were suitable for the instruments Coakes and Steed, 2001. Next, an internal consistency was assessed separately for each dimension of tax knowledge. The Cronbach‘s alpha values of the four dimensions were 0.95 deductions tax liability computations, 0.89 income assessment principles, 0.92 rulings, record keeping offences and 0.86 due dates. The alpha value for each dimension shows that the reliability was adequate. Ang 2000 suggested that measures with high alpha value i.e. at least 0.80 and consistent item inter-correlations could be accepted without any modification. As the alpha 2216 value for each dimension in tax knowledge measure is above 0.80 and the inter-correlations between items in the dimensions were consistent and above 0.40, the measure of tax knowledge was acceptable.

5.0 Discussions

The objective of this study is achieved as the results from factor analysis showed that there are four dimensions in individual tax knowledge. They are named as deductions tax liability computation, income assessment principles, rulings, record keeping offences and due dates. The names were allocated by observing the similar characteristics of items grouped in each respective dimension. The items in the dimensions represent the necessary knowledge that must be possessed by all taxpayers if they were to assess and calculate their own tax liability. Taxpayers must understand not only on the technical calculation aspect but also the basic concepts such as types of income subjected to tax, whether to assess income separately or joint with their spouse‘s income and the whole process of assessing income which involve various terms and concepts. In addition, taxpayers also need to be aware of tax laws and rulings that they must adhere to besides keeping sufficient documents and records as proofs of claims and deductions. It is also beneficial if taxpayers understand the different types of offences that they might be trapped into and the penalties that awaiting them. The results also indicate that knowledge of taxation is multi-dimensional and it is complex in nature. However, by determining dimensions of tax knowledge may lead to a more practical and specific definition of the concept itself. Prior studies had not address this issue leaving the researchers to employ own definitions and use different measures of tax knowledge which eventually lead to inconsistent and incomparable findings Devos, 2005; Richardson and Sawyer, 2001. 2217 Contrary to the old assessment system, SAS assumes taxpayers to have sufficient knowledge to assess own income and compute correct tax liability. Since the beginning of SAS implementation, taxpayers were not given any option. Regardless of the level of their knowledge, they have to furnish correct tax returns and pay the correct amount of tax. Under such assessment system, it is necessary to educate taxpayers and ensure that they possess necessary knowledge to perform their duties. The results in this study demonstrate the necessary knowledge that must be possessed by all taxpayers. Indeed, it is believed that a general and well accepted measure of tax knowledge could be developed and used by tax authority in order to evaluate the level of tax knowledge among taxpayers. This could be done based on the dimensions of tax knowledge identified in this study. 6.0 Recommendation and Conclusion Taxpayers ‘ responsibilities have been drastically expanded with the introduction of SAS. For an ordinary taxpayer who has not received formal tax education, the new task will more or less places burden and requires time and efforts to ensure that it is well performed Saad et al., 2003. In fact, taxation is complex and with the rapid change in tax provisions, it is not possible for taxpayers to comprehend fully all tax laws and regulations governing their tax matters. Hence, due to lack of knowledge in taxation, taxpayers may be exposing themselves to tax risk. This is because under SAS, tax authority will carry out tax audit to determine whether taxpayers had complied with the tax laws and regulations. Thus, any violate from the laws and regulations are regarded as non-compliance and will be penalised. Even though tax knowledge is complex and become obsolete easily due to changes in tax provisions, nevertheless, it can be divided into less complex elements as reflected by the results in this study. Each aspect in the dimensions will form as the basic knowledge that must be made known and understood by all taxpayers. Later, any changes can be easily updated form time to time. This basic knowledge is also the basis for planning own tax matters i.e. legal ways