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The Definitive Guide To Personal Income Tax In Malaysia For 2018

Find out everything you need to know about filing your personal income tax in Malaysia by April 2018!

Chapter 4

Tax Reliefs For Year Of Assessment 2017 (Tax Filed In 2018)

What is a income tax relief? Tax reliefs are set by LHDN, where a taxpayer is able to deduct a certain amount for money expended in that assessment year, from the total annual income. These are for certain activities or behaviours that the government encourages or even necessities or burdens to lighten our financial loads.

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

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Tax reliefs Malaysia

What can you claim for reliefs this year?
Image from spectrumtaxrelief.com

In our example, a taxpayer would have been taxed about 10% of his total chargeable income of RM84,300 if he had claimed no tax reliefs at all.

However, with the self & dependent tax relief of RM9,000, life insurance & EPF relief at RM6,000, his total chargeable income is now RM69,300, hence, he would only be taxed about 8% of his chargeable income.

Other than the above three common tax reliefs, there are many other reliefs tax payers in Malaysia can maximise.

As announced in the 2017 budget, the government has added a lifestyle tax relief to the list, 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.

Refer to this list of the income tax relief 2017 Malaysia:

Individual Relief Types
Amount
Self and dependent
RM9,000
Insurance & other policies
Life insurance and EPF including not through salary deduction
RM6,000
Deferred annuity and Private Retirement Scheme (PRS) – with effect from year assessment 2012 until year assessment 2021
RM3,000
Insurance premium for education or medical benefit including not through salary deduction
RM3,000
Contribution to the Social Security Organisation (SOCSO)
RM250
Applicable to certain taxpayers
Husband/Wife/Alimony payments
RM4,000
Medical expenses for parents

OR

Parent

Limited 1,500 for only one mother

Limited 1,500 for only one father
RM5,000

OR

RM3,000
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
RM7,000
Medical expenses for serious diseases for self, spouse or child
RM6,000
Complete medical examination
Lifestyle:
(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
RM2,500
Purchase of breastfeeding equipment
Disabled individual
RM6,000
Disabled wife/husband
RM3,500
Basic supporting equipment (for disabled self, spouse, child or parent)
RM6,000
Applicable to tax paying parents
Ordinary child relief
RM2,000
Each unmarried child of 18 years and above who is receiving full-time education ("A-Level", certificate, matriculation or preparatory courses)
RM2,000
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 2017 minus total withdrawal in year 2017)
RM6,000
Child care fees to a child care centre or a kindergarten
RM1,000

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 reliefs 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.

Income Tax Calculator
Want to calculate how much tax you could be saving with tax reliefs?

Use our income tax calculator to find out!

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