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Tax Relief system in Malaysia

The tax season is seemingly never far away, causing a few nervous glances with each thought. Anyone who is eligible for taxes in Malaysia is sure to be worried about how much tax they are due for the tax assessment year. Thankfully, with tax relief, you are sure to have less to worry about come tax assessment. To ensure you can better prepare for the coming tax year, we bring you everything you need to know about income tax relief Malaysia.

What is Income Tax Relief in Malaysia?

Deductions and reliefs are ways for individuals to lower their tax bills or be refunded a portion of tax after the fact. Income tax relief in Malaysia refers to the specific amounts that can be subtracted from your total tax, therefore, lowering your tax bill. With the right knowledge and planning, your tax bill will be significantly lower than the original amount.
Income tax relief applies to both income and expenditure, so you can still get tax relief on already made purchases. Generally, tax relief aims to lower the taxes of individuals and lighten the financial burden on Malaysian citizens. To that end, income tax relief in Malaysia covers a wide range of earnings and expenditures.

New income tax reliefs for YA 2021

The covid-19 pandemic left a noticeable strain on everyone in the world, especially concerning finances. To that end, the Malaysian government has revised the income tax reliefs, making increments and adding new categories to the list of reliefs available. The income tax reliefs available for YA 2021 include:

Self, and dependent relatives

• Individual relief

Everyone with taxable income is qualified for the individual relief, a tax relief of RM9,000. This relief is automatic and will be done once you register for your taxes.

• Higher education fees

If you are paying for your higher education by yourself, then you are eligible for relief of up to RM7,000. Certain criteria must be met including the course of study, the education level, and the institution in question. Courses in upskilling or self-enhancement purposes that are recognized by the National Skills Development Act 2006 can also be eligible for reliefs of up to RM1,000.

• Spousal fees and alimony

Any individual paying alimony to an ex-spouse can claim a relief of up to RM4,000. There will need to be formal proof of these payments for the individual to be eligible.

Medical

• Parents medical expenses

Individuals whose parents have medical conditions that require specific treatments can be eligible for relief of up to RM8,000. There will need to be proof from a certified expert before the individual can claim this relief. This relief covers fees for treatments, special needs, and caretakers.

• Self, spousal, or dependent medical expenses

If you or your spouse or dependents are undergoing serious medical treatment, then you can claim a relief of up to RM8,000. As of YA 2020, the relief was only about RM6,000. IVF and IUI treatments also fall in this category along with Alzheimer’s diseases, AIDS, and major organ transplants. There is also a special relief of up to RM1,000 for medical checkups and vaccination expenses.

Disabled Persons

• Disabled person(s) equipment

Any equipment for a disabled person purchased for yourself, a spouse, a child, or a parent can see you earn a tax relief of up to RM6,000. The individual in question will need to be certified disabled and hold a Department of Social Welfare (JKM) registration.

• Disabled individual

Any disabled individual, registered with JKM qualifies for tax relief of RM6,000.

• Disabled spouse

If your spouse is disabled and registered with the JKM, you can claim tax relief of RM5,000. This fee has been increased from YA2020 which was RM3,500, an RM1,500 increase.

• Disabled children

If you have an unmarried disabled child, as registered with the JKM, then you can claim tax relief of RM6,000. The age of the child isn’t a factor in this situation and disabilities can be either physical or mental.

Additionally, if you have an unmarried disabled child pursuing higher education, then you can claim an exemption of RM8,000. This relief applies to disabled children schooling both at home and abroad provided they meet all the criteria.

Lifestyle

• Lifestyle purchases

You can claim tax relief of up to RM2,500 for personal expenses involving lifestyle equipment for yourself, a spouse, or your dependents. Items like books, gym equipment, computers, smartphones, and internet bill all fall under this classification.

• Other lifestyle purchases

In the aftermath of the covid-19, you can further claim a relief of up to RM2,500 for tech purchases like laptops and smartphones.
You are also able to claim a further RM500 for lifestyle purchases relating to sports activities.

Parental fees

• Breastfeeding equipment

A breastfeeding mother who has a child under 2 years of age, can claim relief of up to RM1,000 relief for any breastfeeding equipment. In keeping with this assessment, this claim can only be used once in two years.

• Childcare fees

If your child is in a daycare center or a kindergarten, you can claim tax relief of up to RM3,000. Where parents are filing taxes separately, only one parent can claim this relief.

• National education savings scheme (SSPN)

Any parent who has made contributions to the SSPN is eligible for relief of up to RM8,000 according to their net contribution for the year.

• Unmarried children under 18

For parents who have children under the age of 18, and who remain unmarried, there is a tax relief claim of RM2,000. When the parents are filing separately, only one of them can make this claim.

• 18+ years of children in higher education

In the case of further education, parents with children over 18 pursuing a full-time education may make a tax relief claim. If the child in question is involved in a preparatory program, the parent can claim a relief of up to RM2,000. For children over 18 involved in a full-time undergraduate or graduate program, the parent can claim a relief of RM8,000.

Insurance and investments

• Life insurance, EPF, or approved schemes

Depending on an individual’s classification, there are tax reliefs ranging between RM3,000 and RM7,000. For pensioners in the public sector, there is a tax relief claim of up to RM7,000 for life insurance premiums. Likewise, employees in the private sector without a pension can get a tax relief of up to RM3,000. Additionally, these employees can also get up to RM4,000 as relief for contributions to EPF contributions.

• Deferred annuity and private retirement scheme

Anyone who has made a deferred annuity scheme or a private retirement scheme (PRS) contribution can get a tax relief of up to RM3,000.

• Education and Medical Insurance

For those who pay insurance premiums relating to education or medical benefits, there is a tax relief of up to RM3,000. You can claim this benefit if you, a spouse, or a child are the subject of this premium.

• SOCSO

Those who make contributions to SOCSO are entitled to an RM250 relief claim.

Tourism

• Domestic travel expenses

If you have traveled locally, you can claim RM1,000 in tax relief depending on other factors.

One thing you need to note when it comes to claiming tax relief is that further proof may be needed. Any documents relating to your claim should be kept in case it is required sometime in the future.

How can Premia TNC Help You with Income Tax Relief?

Premia TNC provides consultation services dedicated to helping out clients through the taxation process. With our services, you can expect to get a favorable tax fee, through good use of relief.

FAQs

Can one individual claim more than one relief?

Yes, you can claim any reliefs you qualify for as long as you meet the requirements. You may be required to prove that you qualify for relief in some cases, especially when it comes to disability.

Are reliefs and deductions the same thing?

No, reliefs and deductions are not the same things. While they both contribute to you paying lower taxes, reliefs merely reduce your due tax. Deductions on the other hand, directly lower your income, lowering the taxable amount.