INTRODUCTION Results and analysis

2195 taxpayers to perform the said responsibilities Sandford and Wallschutzky, 1994; Barr et al., 1977; Hajah Mustafa, 1998. The importance of tax knowledge has attracted many researchers. Recent literatures suggested that tax knowledge is one of the important psychological variables in the tax compliance environment Kirchler, 2007; Hofmann, Hoelzl and Kirchler, 2008 and Kirchler, Hoelzl and Wahl, 2008. In this regards, the knowledge of taxpayers under SAS is required to ensure the system works smoothly. Apparently, it has been noted that the implementation of SAS, despite its benefits to the taxpayers, has indeed placed an arduous burden on taxpayers especially in term of ensuring that they possess sufficient level of knowledge in taxation Saad, Mansor and Ibrahim, 2003. In other words, taxpayers will have to learn and understand the tax laws which have been labelled as complex especially for the ordinary taxpayers McKerchar, 2001. Failure to comprehend the tax laws might lead to the difficulty in performing the required tasks. For instance, it was reported that in the first year of SAS implementation in Malaysia, majority of taxpayers failed to submit accurate tax returns 396 . The similar phenomenon was also reported in Japan when SAS was first implemented Hajah Mustafa, 1998. As a matter of fact, the issue of whether taxpayers are able to perform their responsibilities has been a central debate among researchers Jackson and Milliron, 1986; Marshall, Smith and Armstrong, 1997; Sakurai and Braithwaite, 2003. This is because the implementation of SAS requires a complete change in taxpayers‘ compliance obligations and mind sets. However, regardless of its complication, SAS has introduced a shift of paradigm in terms of responsibility towards taxpayers‘ knowledge in regards to the accuracy of their tax returns. SAS introduces a new phase of tax responsibility by transferring the obligation of providing accurate information to taxpayers as the information reveal by them will be accepted as genuine and at 396 Sources: www.thestar.com.mynews , 20 May 2005 Friday 2196 face value by the tax authority. Under SAS, the tax returns submitted by taxpayers will be deemed as the notice of assessment stating the amount of tax liability. The notice of assessment was issued by the tax authority under the former system. With this shifting of responsibility, taxpayers are required to comprehend relevant knowledge embedded in the tax laws, rulings, regulations, guidelines and administrative procedures in order to fulfil the criteria for appropriate compliance under SAS, which manifested the correct computation of tax liability Loo and Juan, 2005. This notion indicates that taxpayers face greater responsibilities under SAS as compared to that of under OAS which only requires taxpayers to declare their income and provide relevant supporting documents to the tax authority with regards to their income. It has been opined that SAS demand time and effort from taxpayers in preparing their tax returns as it is subject to certain level of tax knowledge requires from the taxpayers Alexander, 1974; James, 1994; Williams, 1999. In addition, information provided by taxpayers is assumed by the tax authority to be accurate and bona fide, hence added pressure for taxpayers in defining accuracy of information revealed. Nonetheless, to reduce the complication of the filing process, tax authority has arranged various programs to educate taxpayers in preparing themselves to carry out the assessment of their income. Taxpayers must be made understand of the sequential steps to compute their tax liability including determining the total income, identifying qualified deductions, understanding taxable income and calculating the tax payable James, 1994. The sequential steps would be beneficial for taxpayers as it would help them to perform the tasks well and comply voluntarily with the tax laws. Further, it has been viewed that in order to achieve voluntary compliance, taxpayers need to be informed Singh and Bhupalan, 2001. Apart from seeking knowledge, taxpayers are also required to keep proper documents and records besides understanding the content of the tax returns as a whole Brand, 1996; O‘Connor, 2001; Loo and Juan, 2005. 2197 εany previous studies have addressed the issue of the level of taxpayers‘ knowledge. However, issue on what constitute tax knowledge for a lay taxpayers is still lacking in the literature. Barjoyai 1992 for instance, highlighted that the features of taxation has made the knowledge more difficult to be comprehended by non-tax background individual. Although taxation has been claimed to be universal, the territorial factors have made tax system diverse. This divergent is mainly due to the different tax application practices in different countries which make it very localized. Furthermore, the rapid change in tax laws has made the individual tax knowledge outdated and less useful. These limitations have made the tax knowledge ambiguous thus highlight the issue of the composition of necessary knowledge requires by taxpayers in order to keep them equipped and parallel with the latest development of tax updates. Hence, to fill up the existence of gap in this field, this paper examines the dimensions of tax knowledge needed by non-business taxpayers 397 in assessing their income according to the requirement of tax laws and SAS. The remainder of this paper is organized as follows: literatures cited to support the study, methodology used to collect data, findings, discussions, recommendation and conclusion of the study.

2.0 LITERATURE REVIEW

Taxpayers‟ Responsibilities Under the former assessment system known as official assessment system OAS, taxpayers are required to declare their incomes in the return form and submit the completed form to the Inland Revenue Board IRB. The IRB on the other hand is responsible to raise the assessment of the income declared by taxpayers to determine the tax liability for each taxpayer. However, with the introduction of SAS, there is a switch of responsibilities between the taxpayers and IRB officers. Under the new system, the responsibilities of taxpayers have been broadened to include 398 : 397 In the first year of SAS implementation on individual taxpayers in Malaysia i.e. year 2004, 86 of Malaysian taxpayers was individual taxpayers and 57 of the total was individual with non-business income 2004 IRB Annual Report. 398 Source: http:www.netax.demon.co.ukresponse.htm March 16, 2005 and 2003 IRB Annual Report. 2198  Prepare own tax returns accurately including assessing own income to determine correct tax liability;  Understand and follow all procedures defined by IRB which include complying to relevant provisions in the Income Tax Act 1967 as amended ITA 1967;  Inform the IRB of all their financial affairs;  Interpret IRB schedules and forms;  Getting their submissions right first time as the self-completed returns are deemed as the notice of assessment;  Adhere to strict timetables and deadlines which include submitting the returns together with correct tax payment on the prescribed date i.e. 30 April each year or else will be subject to penalties; and  Keep detailed records and documents pertaining to annual tax computation for the period of seven years. With the new responsibilities placed on taxpayers, it is viewed that SAS emphasises and works on knowledge-oriented basis. Alexander 1974 listed the necessary aspects for taxpayers to perform their responsibilities which include the following:  Mathematical accuracy;  Familiarity of allowable exemptions and deduction;  The format of tax return form;  Simple tax laws and regulations; and  Taxpayer assistance provided by tax authority. Knowledge on the above-listed are necessary as the preparation of tax returns involves income assessment and computation of tax liability which is considered quite cumbersome Alexander,