Income Tax Malaysia – Deductions, Reliefs, Rebates and Exemptions – YA2015

Income Tax Malaysia – How to save and pay less tax in YA2015

Good tax planning

Good tax planning for Malaysia
Photo: freedigitalphotos.net

 

Whether you like it or not, everyone is bound to file and pay tax to government when time comes. For those working for companies – employees, your deadline for submission is on 30 April and for those with business income, the deadline for filing submission is on 30 June. Do you know that you have a grace period of 15 days for submission is you do the tax filing via online submission. Just go to this website to file tax online: https://e.hasil.gov.my/.  If you need any help, feel free to contact us and we will try to help you.  

 

14 Ways to Maximize Your Savings on Income Tax Malaysia – YA2015

1) Medical expenses for parents includes hiring a maid – RM5,000

The maximum medical expenses for parents which could be claimed is RM5,000. You should accumulate all the medical check-ups that your parents undergo which includes specialist consultation, small operations, yearly normal check-ups, early cancer check-up, vaccination, orthopedic consultations, hospitalisation and even dental treatment limited to tooth extraction, filling, scaling and cleaning. You can even claim deductions for the maid you hired for your parents who require special care or require day care or home care services. To claim this, you would require the doctor’s letter that your parent’s medical condition requires special care.  

2) Basic Supporting Equipments – RM6,000 (for YA2015)

Don’t look down on this relief of RM6,000. It can really bring down your tax bracket and reduce your tax as well. These basic supporting equipments include buying crutches, special bed, walking stick (“tongkat”)… and of course please don’t confuse this “tongkat” with “tongkat ali” ya. Buying “tongkat ali” cannot claim unless it is prescribed by the doctor, then claim under medical expenses. So do collect and keep these basic supporting equipment receipts as well for tax relief claims.

3) Annual medical checkup – RM500, Medical for serious diseases –  RM6,000 (for YA2015)

You are given RM500 limit for complete medical examination for yourself, spouse or children. So if you have a practice to for an annual medical check-up or to do a comprehensive blood check with Pathlab or the Healthcare Centre, remember that this is claimable as well.  It’s good to once in a while do a full body check up so that you can detect any early symptoms of critical illness.

The maximum of relief of RM6,000 a year is given to reimburse any medical expenses for serious diseases for self, wife and child. This relief includes the full medical examination amount of RM500 (if any). You have to note that serious diseases includes AIDS, parkinson’s, cancer, renal failure, leukaemia, heart diseases and related diseases which is not spelled out… So maybe is based on LHDN’s discretion as well whether sickness such as kidney failure that require frequent kidney dialysis qualifies as serious disease. In my opinion, the insurance coverage of the 36 critical illnesses would be a great reference of serious diseases… What do you think?

4) Improve yourself by taking courses and get refunded – RM5,000

Now is your chance to upgrade yourself by going for courses and improvement programs to keep up to the ever changing and demanding world. Remember to obtain and keep the receipt for the training that you attended, be it locally or international. You can claim up to RM5,000 for the training programs that you attend for the purpose of:

a) For acquiring skills or qualification on technical, vocational, industrial, scientific, ICT, accountancy, Islamic finance and law.
b) Masters or Doctorate level of any course of study.

5) Adopt the culture of reading and get rewarded – RM1,000

The government campaigns for good reading culture among Malaysians by giving subsidy of RM1,000 in forms of claims from the purchase of books, journals, magazines and all sorts of publications. This purchases could include the textbooks required for your children, comic books and e-books that you buy online. Do remember to keep the receipts when you visit the book shop.

6) Replace PC – RM3,000 (iPad or a tablet no more claimable)

Is your computer running slow recently due to lack of speed and not much space left in your hard disc? Your computer is more than 3 years old? Fret no further, you can get yourself a new computer and be refunded up to RM3,000. Answer from LHDN regarding if the tablet can be claimed under self relief: If the tablet computer only have computer features and is for home and family use only, then it will be treated as “computer” and is entitled to the personal income tax relief of up to RM3,000, claimable once in 3 years. A tablet or an iPad can also be claimed as long as it does not have a calling and SMS feature but you still can use it with WiFi and 3G features to make calls from Skype, Tango, WeChat, etc. This claim can be done once in every 3 years.

From assessment year 2013, the Inland Revenue Board of Malaysia (LHDN) has declared that tablet devices, which include Apple’s iPads, Samsung Tab and Google’s Nexus 9, are not included in the list of tax deductible items. Bad news for us… no more claims for these cool gadgets…

7) Take up a sport to improve your fitness – RM300

In government’s effort to drive good health and sports for Malaysians, you can be refunded on the sport equipment purchased during the year. Now you can buy your dream bicycle, badminton racquet, squash balls, golf balls, etc. This claim excludes sports attire such as swimsuits and sports shoes. Anyways, take this chance to keep fit and stay healthy! However, this relief is not applicable for membership for fitness club or even swimsuit and sports wear as well. So please ensure that you only claim your sports equipment for this relief…

8) How buying insurance can reduce your income tax – RM9,000

This is a big topic by itself. Will try to summarize in a nutshell on how you can save on tax by insuring yourself and your family. You can claim 2 types of insurance/scheme:

  • Life insurance premiums and Employees Provident Fund (EPF) : RM6,000
  • Education or medical insurance premiums for self, spouse, or child: RM3,000 

You can get exemption on the insurance premiums which include life insurance, investment link products, education plan and medical insurance plan.

9) Invest in Private Retirement Scheme – RM3,000

This is not really new and not entirely old investment in the market – Private Retirement Scheme (PRS) introduced 3 years ago. You can invest with AIA and get an exemption of up to RM3,000 on your investment. Please click here for more details on AIA PRS. So in essence, you can use insurance as a form a forced savings with protection, and get some returns, and at the same time, you can get tax exemption! Call us to know more.

This Private Retirement Scheme (PRS) /Annuity Premium investment relief of RM3,000 is only given up till 2021. So continue investing every year to maximise your tax reliefs and at the same time, save for a more comfortable retirement.

10) More children means more relief given – RM1,000 per child

Every child is given RM1,000 ordinary child relief and there is no maximum to the number of children you can have. So this means, the amount of children in the family would determine on the amount of relief from tax. If they are already 18 and above, still unmarried and studying pre-university, you are still eligible to claim RM1,000 for each child. If they continue to study diploma or degree, you can claim up to RM4,000 relief for each child doing further studies. Of course, you can totally ignore the opportunity to claim children relief once they are married.  

11) Savings in SSPN scheme – RM6,000

With effect from YA 2012 until YA 2017, net saving under National Education Savings Scheme (SSPN)’s scheme for your children can reduce your tax. If you plan to let your children study in Malaysian Universities, you can open a SSPN account for each of your children and get relief from tax. With this scheme, you can save for your children’s education, get insurance protection for low income earner, annual dividend and at the same time reduce tax! Click here for more information: http://www.ptptn.gov.my/

12) Deductions for donation to approved institutions

You may want to declare any donations you have made especially to approved institutions such as “approved” old-folk homes, schools, temples, churches, mosque and charitable organisations to claim for more deductions. Please note that the donation amount that can be claimed is restricted to 7% maximum of total income. You can check the list of approved institutions at: http://www.hasil.gov.my/ You can check out some donations that do not have restriction of 7% for example, donations to the government and state government. Refer to the website for more information: http://www.hasil.gov.my/

13) For married couples where both earn income, file your tax separately

Consider filing separately if you are married as the reliefs and rebates are twice the amount where both of you can claim for the maximum reliefs and deductions based on your individual income. Moreover, if both of you file separately, your chargeable income maybe be lower with lower effective tax bracket.

14) Reduce your tax further with tax rebate

So after all the deducting all the reliefs as mentioned above from your taxable income, if your chargeable income is less than RM35,000, there is a rebate of RM400. Payment for zakat or fitrah is subjected to the whole amount of the tax charged.  

The ultimate plan

All in all, you must abide to the Malaysian tax law. The rule is to safe tax and not to evade the income tax Malaysia. This is done by minimizing your chargeable income by maximizing the reliefs, deductions, and rebates. Knowledge can help you reduce your tax. One final reminder that I want to emphasize is to keep proper records for 7 years, get the filing done and keep every single receipt. Be it small or big items, even the faded receipts like the petrol slips, keep it as an evidence of that you have paid the amount and entitled to the claim.

Contact us if you have any tax planning queries.

 

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