Finally I got the answer why I have the extra income tax to pay in 2005. I just received my EA statement in 2007 this morning and discussed with a good friend of mine about this.
The answer is simply about the ESOS, the ESOS was offered in 2005 but I only exercise it in 2007. LHDN recalculate my tax according my annual income in 2005 + my ESOS return , and the balance amount that I have to pay is RM294.68.
I really understand this. When we cannot assume that we got the whole return when the investment says the return is XX%.
We shall calculate in this way the real rate of return : Return- Infation rate - Income Tax rate.
The real formula will be shared to you soon as I left the formula at home. So please note, the important note is inflation erodes the real rate of return (that is, the return less the inflation rate) from an investment.
I simply love the day, I learn something.