If you are not careful with all your finances, you might be paying more than you should in taxes. In Malaysia, the government provides various ways of tax reliefs which when calculated properly would constitute a substantial amount in your taxable income. It is therefore very important that you are aware of tax reliefs provided in Malaysia which are listed and explained below.
Self and Dependent – RM9,000
This is a standard tax relief where RM9,000 is deducted from your yearly income including bonus and allowances.
Medical Expenses and Basic Medical Equipment’s
This will involve medical expenses for your parents which can amount up to RM5,000. For medical equipment for the disabled, an additional RM5,000 can be deducted.
If you have a disability, you can claim a tax relief of an additional RM6,000.
– This is for your own education fees where you can deduct up to RM5,000 yearly.
Medical Expenses for serious diseases
This is applicable for yourself, your spouse or your children. Tax relief in this section is up to RM5,000. If you, your spouse or your children have conducted a complete medical examination, you can enjoy tax relief of up to RM500 which is part of the RM5,000 mentioned earlier.
Purchase of books, journals, magazines, publications and computers.
Each year, you can get tax relief from the purchase of books and publications and this can be up to RM1,000 from your yearly income. You must ensure that you have the receipts of the purchase.
If you buy a computer, laptop or computer equipment, you can claim your relief of up to RM3,000. However, this can be enjoyed only once every 3 years.
Savings in Skim Simpanan Pendidikan Nasional (SSPN).
The government gives a tax relief for your net savings in the SSPN who will send you a statement for income tax purposes. This has been increased from RM3,000 to RM6,000 for 2012.
Purchase of sport equipment for sport activities
– You can claim up to RM300 relief for any sports equipment like football boots and jerseys each year.
Each year you can claim up to RM500 in tax relief through any broadband services you engage in registered under your name.
Income Tax Relief on Interest of Housing Loan
The government allows individuals to enjoy tax relief of up to RM10,000 on interest of housing loans each year.
Husband/Wife (for joint assessment) /Alimony Payments
For divorcees, you can claim up to RM3,000 for alimony payments.
For every ordinary child, you will enjoy tax relief of RM1,000 per child regardless of number of children. If your child is above 18 years old, studying in tertiary levels and not married, you can claim an additional RM1,000. For children who are disabled, an additional RM5,000 will be relieved.
EPF and Life Insurance
– your yearly EPF (Employees Provident Fund) contribution and Life Insurance payments must be added together where you cannot exceed RM6,000.
Private Retirement Scheme and Deferred Annuity
– this option allows you to enjoy tax relief of up to RM3,000.
Education and Medical Insurance – you can enjoy tax relief of up to RM3,000 for paying your education and medical insurance.
As the Malaysian income tax system now practices a self-assessment scheme, it means that if there are no problems with what you declare and submitted, the IRB will carry out what is necessary. However, if there are doubts or ambiguity, you might be called in for further explanation. Therefore, you must keep all the documents like invoices and receipts for up to 7 years with which they can be disposed after that if there are no further enquiries from the IRB.