During tax season, most of us are scrambling to file our taxes. However, did you know you can reduce your taxes each year to a much lower amount? Besides the tax reliefs issued by the Inland Revenue Board of Malaysia (IRBM), there are also some tips and tricks you can take advantage of.
But what are tax reliefs?
It helps you, as a taxpayer, to reduce a certain percentage of money you spend on an array of things in a year from your total income.
You can get tax reliefs in Malaysia on a wide range of things—housing loan interests, sports equipment, breastfeeding equipment, education fees, and even for your medical insurance premium.
First, let’s dive into the individual income tax relief you’re eligible for.
|Serial Number||Individual Relief Types||Amount (RM)|
|1||Self and dependent||9,000|
|2||Medical expenses for parents OR Parent Limited 1,500 for only one mother Limited 1,500 for only one father||5,000 (Limited) OR 3000 (Limited)|
|3||Basic supporting equipment for disabled self, spouse, child or parent||6,000 (Limited)|
|5||Education Fees (Self)
|6||Medical expenses for serious diseases for self, spouse or child||6,000 (Limited)|
|7||Complete medical examination for self, spouse, child||500 (Limited)|
|9||Purchase of breastfeeding equipment||1,000 (Limited)|
|10||Net savings in SSPN's scheme (total deposit in year 2017 minus total withdrawal in year 2017)||6,000 (Limited)|
|11||Child care fees to a Child Care Centre or a Kindergarten||1,000 (Limited)|
|12||Husband/Wife/Alimony Payments||4,000 (Limited)|
|14||Ordinary Child relief||2,000|
|15||Each unmarried child of 18 years and above who is receiving full-time education ("A-Level", certificate, matriculation or preparatory courses)||2,000|
|16||Each unmarried child of 18 years and above that:
|17||Disabled child (Additional exemption of RM8,000 disabled child age 18 years old and above, not married and pursuing diplomas or above qualification in Malaysia, including bachelor degree or above outside Malaysia in programme and in Higher Education Institute that is accredited by related Government authorities)||6,000|
|18||Life insurance and EPF, including not through salary deduction||6,000 (Limited)|
|19||Deferred Annuity and Private Retirement Scheme (PRS) - with effect from year assessment 2012 until year assessment 2021||3,000 (Limited)|
|20||Insurance premium for education or medical benefit, including not through salary deduction||3,000 (Limited)|
|21||Contribution to the Social Security Organization (SOCSO)||250 (Limited)|
Budget 2019, which was released in November 2018, included new changes to tax reliefs:
Now that you know where you can claim tax relief, let’s look at different ways you can maximise them and pay lower taxes.
In 2013, the Malaysia government said if your annual income is less than RM34,000 annually after all your EPF deductions, your income won’t be taxable.
So, if you’re drawing RM2,800 or less each month as salary, you may need to only pay the bare minimum in taxes.
If you’re donating huge lump sums towards charitable, public, religious, or civic causes, you may be granted tax deductions from the government.
However, to qualify for this particular tax deduction, you have to donate a substantial percentage of your income towards philanthropic causes.
You get a tax relief limit of RM2,500 on your lifestyle expenses. These include gym membership fees, internet subscriptions, buying printed newspapers, and purchasing smartphones and tablets.
You can qualify for a tax deduction of RM5,000, especially if you’re pursuing higher education like a Masters or a Doctorate degree.
If you’re making alimony payments for your husband or wife, you’re eligible for a limited tax relief of RM3,000. And if you’re supporting a disabled spouse, you get a tax relief of RM3,500.
If you’re a mother with children up to 2 years old, you’re eligible for a tax relief of up to RM1,000 on breastfeeding equipment every 2 years. Considering that good quality breastfeeding equipment is a little expensive, this tax relief is a lifesaver for new mothers and expecting mothers.