In Malaysia, many people make the mistake of forgetting to pay their taxes, only to remember when the back-taxes have already piled up. While some manage to pay it off, others end up having to seek financial aid from loan companies.
To make matters worse, these people will now have to deal with debts which can easily cost them more than what they can afford later on. Don't let that happen to you. Here are a few tips to keep taxes down and your savings up.
Get reimbursements instead of allowance
Many companies in Malaysia provide allowance to cover work related expenses such as transportation and parking fees. This allowance is also factored in when calculating your tax, but reimbursements are not. To take advantage of this, ask your employer to have your expenses reimbursed based on receipt instead of giving you allowance on top of your salary. Sure, your regular payslips will be slightly lower, but you will also end up paying less taxes. This will then allow you to have more money to save in the long run.
Getting a life insurance is like hitting two birds with a stone. Aside from protecting yourself from emergency expenses during accidents or a death in the family, you can also get a maximum tax relief of around RM 6000 every year. If you have children, taking out medical and educational policies for them can save you as much as RM 3000 in taxes per individual! But do remember the tax relief for insurance will be combined with your EPF tax relief.
Exercise to save money
Under the Sports Development act of 1997, you can get up to RM 300 worth of tax deduction for buying sports or exercise equipment. Aside from the tax deduction, you will also get healthier and less prone to illnesses. This means you're less likely to make a trip to the clinic or hospital and spend less on medical bills. For tax filed 2018 onward, you can also get tax relief for gym subscriptions.
Be a Bookworm
Did you know that you can claim up to RM 1000 worth of tax deduction for purchasing reading material such as books and magazines? This is great if you're a book lover since you buy books on a frequent basis anyway. If you're not into literature, you can still take advantage of this deduction by purchasing books and giving them to others as gifts, it'll still count as your purchase. Just remember to keep the receipt to include when you file for your income tax. For income tax filed in 2018 and onward, you can also get tax relief for purchase of printed newspaper.
Be a Student... Again
Postgraduate studies can provide tax reliefs for as high as RM 5000 every year. You don't have to worry about studies taking up most of your time; even a part-time course will do as long as it's in an institution approved acknowledged by Malaysia's Minister of Finance.
These are just some of the ways you can save money on taxes. You don't have to completely change your lifestyle to pull it off. By learning more about tax deductions and keeping a log of your personal finances, you can say good-bye to all your tax troubles.