iMoney Malaysia recently hosted a Livestream event on Facebook to help our social media followers maximise their tax reliefs.
The event featured guest speaker Liyun Chan, Certified Financial Planner from FinWealth Management, whose 15+ years of experience revealed invaluable insight into the claims available to Malaysians in the coming tax season. Our CEO, Wai Hun helped our viewers to better relate to each type of tax relief by providing clear and simple examples that every Malaysian can find in daily life.
The event covered a number of topics, including the difference between tax relief and tax rebates, the types of lifestyle, healthcare and insurance reliefs as well as the different reliefs available for the employed, self-employed and the unemployed.
Here are five key points we learned from this #TaxTalk:
1. Declare your side income for tax correctly
Many might be confused over where freelancers and gig workers fit in with regards to taxable income. Liyun explains that such workers can be considered as ‘self-employed,’ so long as they are not under any employment contract.
Freelancers who participate in one-off jobs or irregular business activities are required to file their taxes under the BE form, or residents who do not carry on business. On the other hand, Freelance work which involves regular business (e.g. selling Nasi Lemak to neighbors every morning) will have to file said income under the B form. Additionally, for those who are filing under form B, the event went into great detail, explaining which expenses are deductible.
2. File your income tax even if you lose your job
The event also outlined what the unemployed should do when tax season comes about. For those who have earned less than RM34,000 (after EPF) in annual income last year, they are not required to file their taxes. However, those who have already registered for tax filing will have to file their taxes annually, even if they did not meet the minimum requirements.
There are certain tax exemptions offered to people who have received compensation for job loss. For those who have become unemployed due to illness, full exemption is offered for any compensation received. For any other reason, a RM20,000 exemption is available for each completed year of service with the same employer for YA2021.
3. Make the most of your special lifestyle tax reliefs (until 31 December 2022!)
The #TaxTalk also went over certain tax reliefs that caught the attention of the audience. In particular, there is an additional special extra RM2500 lifestyle tax relief for people who are seeking to purchase new PCs, tablets, and smartphones.
This tax relief is also available until 31 Dec 2022, meaning it is still a claim that you can make in your income tax filing next year. Remember, this is on top of the existing RM2500 lifestyle relief, bringing the total up to RM5000!
4. Don’t forget to claim for your Covid-19 tests and vaccinations
Since we are still living under the threat of the pandemic, life and medical insurance relief was another topic that generated a lot of interest. Healthcare tax relief is notably prominent as it offers up to RM8000 in tax relief for parental healthcare, so long as they reside in Malaysia.
An additional RM8000 tax relief is also available for self, spouse, and child healthcare, including up to RM1000 in medical checkups, COVID-19 tests, and vaccinations each.
5. Income that you make from outside Malaysia is exempt from tax until 2026
Although the government had announced in Budget 2022 that all foreign sourced income (FSI) will be taxable from 2022, the latest official announcement has extended the exemption until 31 December 2022 for individuals.
However, income from a business partnership outside Malaysian is not included in this exemption. This type of income is still taxable for companies, who are only allowed to exempt dividend income from outside Malaysia from taxes.