Lower Your Income Tax Through Education

Written by Farhan Gazi

Tertiary education is expensive; even if you choose to go to a public university. There is a massive amount of expenses that go into earning a diploma or degree – more than just paying fees.

Accommodations need to be found if your child will be studying far away; transportation will need to be arranged; textbooks need to be bought; and young adults eat more food than you would expect.

Fortunately, there is tax relief for investing in education. Some of these reliefs are straightforward and quite obvious. Others are exceptions to the general rule and sometimes get overlooked – like the National Education Savings Scheme (SSPN) from PTPTN.

The following image shows you just what kind of education-related tax relief are available.

Education Tax Relief

Self

While it’s common to apply for tax relief for your children’s college fees, it is also possible to obtain tax relief from your own education expenses. This applies if you’re looking to take additional training or certification; regardless of whether you’re doing it for work related reasons or just self-improvement.

This relief falls into two categories:

1. Education expenses other than a degree at Masters or Doctorate level for acquiring law, accounting, Islamic financing, technical, vocational, industrial, scientific or technological skills of qualification;
2. Degree at Masters or Doctorate level for acquiring any skills or qualifications

Children

This is the more commonly known form of tax relief for parents. Basically, you are allowed to claim relief at different levels based on your child’s education.

Children aged 18 and above doing A-levels, matriculation, or other preparatory courses full time result in a lower tax relief limit that those doing their diploma or degree.
Lifestyle
Lifestyle tax covers a wide variety of items including electronic gadgets, sports equipment, and books. This part of the tax relief can be used for expenses related to extracurricular activities or for school supplies.

For example, this relief can be used for:

1. Textbooks
2. Exercise books
3. Laptops

It is especially important that you save your receipts from these purchases, as you may need them as evidence. Most of us tend to throw away our receipts for smaller items, but they can add up over time to more tax relief.

SSPN Savings

This is the least common version of tax relief, largely because it is an exception to the rule. For the most part, savings accounts do not provide any sort of relief from income tax. Unless those savings are deposits made to a PTPTN: SSPN savings account.

This relief is calculated based on the total deposits made into the SSPN-i account over the calendar year, minus any withdrawals that may have been made.

The SSPN account also offers two more tax incentives in addition to the savings relief. You will be able to claim an additional RM7,000 in tax relief with an SSPN-i Plus account (as it counts as contributing to a takaful plan).

Couples are encouraged to open separate accounts for their children to make the most of their tax relief. The total adds up for those who file their taxes separately and want to increase their overall relief.

SSPN savings tax relief is not averaged out over the year, so you can still benefit even if you make a single big deposit at the end of the year. This means the tax relief is still applicable if you open an account right before 31 December!

Cabutan SSPN 2019

PTPTN holds a special prize draw each year for all SSPN account holders. You are automatically entered into the draw when you open an account and participate for each year your account remains active.

This year also features a second draw to celebrate the SSPN’s 15th anniversary.

There is one more draw to be made for this year for the months of November and December. Winners will be drawn after 31 December 2019, so there is still time to open an account and enter the contest.

The prizes and number of winners for each draw are as follows.

PTPTN has made opening a SSPN account extremely easy for all Malaysians. You can elect to go to any PTPTN office, or just use the new lovesspn.com website and register online (no supporting documents needed).

While tax relief and cash prizes are nice to have, it is important to remember that the SSPN accounts were created to help Malaysians save for education. It could be you trying to earn that Masters degree you’ve always wanted, or you could be a new parent looking to prepare for the future of your child.

Regardless, the goal is to provide an education for all to make for a better Malaysia; both now and in the years to come.