Chapter 4
Tax Relief For Year Of Assessment 2019 (Tax Filed In 2020)
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?
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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.
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.
Refer to this list of the income tax relief 2018 Malaysia:
| Self and dependent | |
| 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 assessment 2012 until year assessment 2021 | |
| Insurance premium for education or medical benefit including not through salary deduction | |
| Contribution to the Social Security Organisation (SOCSO) | |
| 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) (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 | |
| Complete medical examination for self, spouse or child | |
| Fertility or IVF treatments | |
| 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 | |
| Purchase of breastfeeding equipment | |
| 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 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 2018 minus total withdrawal in year 2018) | |
| Child care fees to a child care centre or a kindergarten | |
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.
Under the PENJANA recovery plan, there will also be an increase in income tax relief for parents on childcare services expenses from RM2,000 to RM3,000. However, this is not applicable when you file this year, as it only applies to the Year of Assessment 2020 and 2021.
Use our income tax calculator to find out!
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