Maximise Your Tax Relief17 Mar 2021
It’s tax season! It’s that time of the year where we fulfill our duty as good citizens by contributing a small portion of your income to the country.
Yup! If you’re receiving a regular paycheck, it is common that your employer will deduct monthly tax payments from your employment income and submit the Monthly Tax Deduction (MTD) to IRB every month. It is also important that you understand your taxes so you can avoid paying more than you’re supposed to.
While understanding the criteria for tax computation could be a tedious process, it doesn’t necessarily have to be hard.
Who needs to pay?
If you earn more than RM34,000 annually or roughly about RM2,800 a month, then you would certainly be obliged to pay taxes. Bear in mind that this does not only include your salary from your employed job, but it also accounts for all other incomes such as rental, allowances, bonuses or commissions.
Lucky for us, the government does help to lessen the strain on these taxes by introducing tax reliefs.
What is tax relief?
In short, you can take tax reliefs as little rewards from the government for being good citizens. Tax relief takes place by legally deducting your taxes through lifestyle behaviors which the government encourages amongst others. They are given for purchases pertaining to sports and medical equipment, as well as insurance plans. Besides, tax relief is also provided to cover medical needs.
There is a variety of favourable spendings which are entitled for tax relief. It is important that you make the most out of it so you can maximise your tax relief. Do also note to always keep your proof of payment for referencing purposes.
Here’s a list of what you can claim under tax relief
|1||Individual and dependent relatives||RM9,000||- Automatic relief for individuals for themselves and their dependents|
|2||2a. Medical treatment, special needs and carer expenses for parents||RM5,000||
- Medical expenses for parents which include care and treatment by a nursing home, dental treatment (non-cosmetic).
- Must be evidenced or certificated by a registered medical practitioner.
- Treatment must be provided in Malaysia.
|2b. Parental Care||RM3,000 (RM1,500 per parent)||
- If no claims are made under medical treatment for parents, RM3,000 can be automatically deducted.
- Parents must be aged 60 and above.
- Parent income must not exceed RM24,000 each, per annum.
- Parents must be residents of Malaysia.
|3||Basic supporting equipment for the disabled||RM6,000||
- Purchase of supporting equipment for disabled self, spouse, child or parent.
- Excludes optical lenses and spectacles.
|4||Higher education fees||RM7,000||
- Up to tertiary level in law, accounting, islamic financing, technical, vocational, industrial, scientific or technology.
- Any course of study for Masters or Doctorate degrees.
|5||5a. Medical expenses on serious illnesses||RM6,000||
- For self, spouse or child.
- Includes treatment of AIDS, Parkingson’s disease, cancer, renal failure and leukaemia.
- Applicable for similar diseases such as heart attack, pulmonary hypertension, chronic liver disease, fulminant viral hepatitis, head trauma with neurological deficit, brain tumour or vascular malformation, major burns, major organ transplant or major amputation of limbs.
|5b. Medical expenses for fertility treatment||
- For self, spouse or child.
- Applicable for fertility treatment including intrauterine insemination, vitro fertilisation (IVF) treatment consultation fees and medication for couples trying to conceive.
|5c. Complete medical examination (Limited to Rm500)||
- For self, spouse and child.
- Refers to a thorough medical examination as defined by Malaysian Medical Council
- Expenses for the use of self, spouse or child.
- Purchase of books / journals / magazines / printed newspapers / other similar publications. Banned materials excluded.
- Purchase of personal computer, smartphone or tablet. Use for business purpose excluded.
- Purchase of sports equipment under the Sports Development Act 1997, including payment of gym membership.
- Payment of monthly bill for internet subscription registered under your own name.
|7||Lifestyle purchases - special additional deduction||RM2,500||
- Purchase of personal computer, smartphone or tablet for self, spouse or child. Use for business purpose excluded.
- Applicable for purchases made within the period of 1st June 2020 to 31st December 2020.
- Purchase of breastfeeding equipment for own use for a child aged 2 years and below.
- Relief applicable once in every 2 years of assessment.
|9||Child care fees for child care centres or kindergarden||RM3,000||
- Applicable for children aged 6 years and below.
- Valid for registered child care centres and kindergartens only.
- If both parents are filing taxes, the claim can only be made in either one parent.
|10||Net deposit in SSPN||RM8,000||
- Valid for any amount deposited in SSPN for children’s education.
- Applicable for total deposit minus total withdrawal in 2020.
|11||Husband / Wife / Payment of Alimony||RM4,000||
- Claimable if your spouse has no source of income or elects for a joint assessment.
- Not applicable if the wife has a gross income exceeding RM4,000 derived from outside of Malaysia.
- Requires a formal alimony agreement to qualify for this relief.
|12||Disabled husband or wife||RM3,500||- Applicable for those who have a disabled spouse.|
|13||Child relief for each unmarried child under age of 18||RM2,000||- Applicable for every child who is unmarried under the age of 18 during assessment year.|
|14||Child relief for each child above 18 years old in full-time education||RM2,000||
- Applicable for every child who is unmarried, above the age of 18, and receiving full time education.
- Valid for full-time education; matriculation/pre-degree/A-Levels, at an academic establishment.
|15||Child relief for each child above 18 years old in further education||RM8,000||
- Applicable for every child who is unmarried, above the age of 18, and receiving further education.
- Valid for full-time education in Malaysia in respect of diploma or higher (excluding matriculation or preparatory courses).
- Valid for children receiving further education outside of malaysia in respect of degree or its equivalent (including Master or Doctorate).
|16||Each disabled child||RM6,000||- Applicable for every disabled child, irrespective age.|
|17||Each disabled children in higher education||RM8,000||
- Additional relief that you can claim for every disabled child who is unmarried, 18 years old and above, pursuing higher education.
- Applicable for diplomas or higher qualification in Malaysia.
- Applicable for bachelor degree or higher, outside of Malaysia in an academic institute that is accredited by related Government authorities.
|18||Life insurance premium and EPF for pensionable public servant||RM7,000||- Applicable for life insurance premiums paid by pensionable public servants.|
|19||Life insurance premium for non-public servants||RM3,000||- Applicable for life insurance premiums paid by non-public servants.|
|20||EPF contribution for non-public servants||RM4,000||- Applicable for EPF contributions by non-public servants.|
|21||Contribution to a Private Retirement Scheme (PRS) or payment of deferred annuity.||RM3,000||- Applicable for deferred annuity and private retirement scheme (PRS) investments.|
|22||Education and medical insurance||RM3,000||
- Valid for premiums that are related to education and medical.
- Applicable for premiums in respect for yourself, spouse or child.
|23||Contribution to the Social Security Organisation (SOCSO)||RM250||- Applicable for your contributions to SOSCO.|
|24||Domestic travel expenses||RM1,000||
- Applicable for accommodation expenses at premises registered with the Ministry of Tourism, Arts and Culture.
- Applicable for entrance fees to tourists attractions from 1st March 2020 onwards till 31st Dec 2020.
*Types of tax relief and criteria are subject to change as announced by the government.
Make sure to just take a minute to dive into your different expenses for the assessed year and maximise your claims through whichever applicable. Remember to be wary of the filing deadlines too! You can find out more about the tax-filing deadline here.
As for the tax-filing channels, you can do it via:
i. Online via the official government portal (Recommended)
ii. Over the counter at Inland Revenue Board (IRB) Malaysia
iv. POS Malaysia Outlets
You may refer to the government’s official portal @ LHDN or simply follow their social media channel for the latest updates.
Nevertheless, the tax season is a great time to review your financial wellness. It’s also a good time to ensure you have sufficient protection to align with your goals. With multiple tax relief benefits on insurance, you have now more reasons to review your insurance policy.
Take a minute to check out Gibraltar BSN’s insurance plans here.