Chapter 4
Tax Reliefs For Year Of Assessment 2016 (Tax Filed In 2017)
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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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. Refer to this list of the income tax relief 2017 Malaysia:
| Self and dependent | |
| Life insurance and EPF | |
| Deferred annuity and Private Retirement Scheme (PRS) – with effect from year assessment 2012 until year assessment 2021 | |
| Insurance premium for education or medical benefit | |
| Contribution to the Social Security Organisation (SOCSO) | RM250 |
| Husband/Wife/Alimony payments | |
| Medical expenses for parents OR Parent Limited 1,500 for only one mother Limited 1,500 for only one father | OR RM3,000 |
| Education fees (Individual) | |
| Medical expenses for serious diseases | |
| Complete medical examination | |
| Purchase of books, journals, magazines and publications | |
| Purchase of personal computer (once in every 3 years) | |
| Purchase of sport equipment for sport activities (i.e. racquets, balls, golf sets) | |
| Disabled individual | |
| Disabled wife/husband | |
| Basic supporting equipment (for disabled self, spouse, child or parent) | |
| 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 | |
| Disabled child | |
| Additional exemption per unmarried disabled child age 18 years old and above, who is pursuing: (i) diplomas or above qualification in Malaysia (ii) bachelor degree or above outside Malaysia in programme and in Higher Education Institute that is accredited by related Government authorities | |
| Net saving in SSPN's scheme (with effect from year assessment 2012 until year assessment 2017) | |
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.
Use our income tax calculator to find out!
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