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The Complete Guide To Personal Income Tax In Malaysia For 2023

All you need to know for filing your personal income tax in Malaysia by April 30 this year.

Chapter 4

These Are The Personal Tax Reliefs You Can Claim In Malaysia

deduct income tax reliefs

For income tax in Malaysia, personal deductions and reliefs can help reduce your chargeable income, and thus your taxes. If planned properly, you can save a significant amount of taxes.

There are personal reliefs that every taxpayer in Malaysia can deduct once their income reaches the chargeable income level. In addition, there are other reliefs that you can deduct from your chargeable income if you had spent money in that category for the year.

iMoney Tax Relief webinar

The government has added a lifestyle tax relief during the 2017 budget, which now includes smartphones, tablets and monthly internet subscription bills. The previous laptop, books, stationary and sports equipment tax relief is now grouped under lifestyle tax too. There is also a separate tax relief for lifestyle expenses for sport activities.  In Budget 2020, an additional lifestyle tax relief  for the purchase of personal computer, smartphone or tablet for self, spouse or child was added and extended to Year of Assessment 2021.

Under the PENJANA recovery plan, there is an increase in income tax relief for parents on childcare services expenses from RM2,000 to RM3,000 which applies to the Year of Assessment 2020 and 2021.

These are the types of personal reliefs you can claim for the Year of Assessment 2021:

Individual Relief Types
Self and dependent relatives
Insurance & other policies
Life insurance and EPF including not through salary deduction

For pensionable public servants: up to RM7,000 life insurance
For non-public servants: up to RM3,000 for life insurance and up to RM4,000 for EPF
Deferred annuity and Private Retirement Scheme (PRS) – with effect from year of assessment 2012 until year of assessment 2025
Insurance premium for education or medical benefit including not through salary deduction
Contribution to the Social Security Organisation (SOCSO)
Applicable to certain taxpayers
Husband/Wife/Alimony payment to former spouse
Medical expenses for parents (treatment, special needs, carer expenses)
Education fees (Individual)
(i) Other than a degree at Masters or Doctorate level for acquiring law, accounting, Islamic financing, technical, vocational, industrial, scientific or technological skills of qualification;
(ii) Degree at Masters or Doctorate level for acquiring any skills or qualifications
Medical expenses for serious diseases for self, spouse or child (including vaccination expenses up to RM1,000)
Complete medical examination for self, spouse or child including Covid-19 screening (up to RM1,000)
Fertility or IVF treatments
(i) Purchase of books, journals, magazine, printed newspaper and other similar publications (except banned reading materials) for self, spouse or child;
(ii) Purchase of a personal computer, smartphone or tablet for self, spouse or child;
(iii) Purchase of sports equipment for any sports activity as defined under the Sports Development Act 1997 (excluding motorised two-wheel bicycles) and gym memberships for self, spouse or child; and
(iv) Payment of monthly bill for internet subscription (under taxpayer name)
Purchase of personal computer, smartphone or tablet for self, spouse or child and not for business use.
(This relief for YA2021 is an addition to the existing lifestyle relief)
Lifestyle (sports activity):
Purchase of sport equipment, facility rental, entrance fee and registration fee for licensed sports competitions.
Purchase of breastfeeding equipment (claim allowed once every 2 years)
Disabled individual
Disabled wife/husband
Basic supporting equipment (for disabled self, spouse, child or parent)
Domestic travel expenses for registered accommodation and entrance fees (for expenses incurred from March 1, 2020 until December 31, 2021)
Applicable to tax paying parents
Ordinary child relief
Each unmarried child of 18 years and above who is receiving full-time education ("A-Level", certificate, matriculation or preparatory courses)
Each unmarried child of 18 years and above that is:
(i) receiving further education in Malaysia for diploma or higher (excluding matriculation/preparatory courses)
(ii) receiving further education outside Malaysia for degree or its equivalent (including Master or Doctorate)
(iii) the instruction and educational establishment shall be approved by the relevant government authority
RM8,000/per child
Disabled child
RM6,000/per child
Additional exemption of RM8,000 of disabled child aged 18 years old and above, not married and pursuing diplomas or above qualifications in Malaysia or bachelor degree or above outside of Malaysia in program and in Higher Education Institute that is accredited by related Government authorities
Net saving in SSPN's scheme (total deposit in year 2021 minus total withdrawal in year 2021)
Child care fees to a child care centre or a kindergarten

Source: LHDN

There really are a lot of tax reliefs and if you plan your reliefs effectively every year, you could be saving thousands in taxes every year.

Quick tips
On top of just looking at tax reliefs, how you file can make a difference. For married taxpayers, you need to consider whether to file for joint or separate assessment to maximise on the tax relief such as spouse relief, and also which spouse to claim for child relief. Depending on the income differences between the spouses claiming joint or separate can have a big impact on your tax savings.

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