A Checklist To Maximise Your Income Tax Relief


checklist to maximise income tax relief 2017

2017 is winding down and before we enter 2018, here is what you can do to save money  through income tax relief.

Income tax rate reduction was announced during the tabling of Budget 2018 recently. This meant Malaysians with taxable income between RM20,000 – RM70,000 will enjoy a 2% tax reduction. However, that rate would only take effect in the 2018 assessment year, which means you will only see savings from the reduced income tax rate in 2019. Also, employees with an annual income of about RM42,000 are no longer taxable. Women can also rejoice. In a move to encourage more women to enter the workforce, there will be tax exemption of 12 months for women who are re-entering the workforce after 2 years of work break for the year of assessment 2018.

But it’s not too late yet for you to take advantage of income tax relief for 2017. To see the unchanged income tax rate for 2017, click here.

See also:
The New T20, M40 And B40 in Malaysia
Key Points From Bajet (Budget) 2018 Malaysia

4 Things To Do Now To Maximise Income Tax Relief

GST claims

Yes, you read that right. You can include GST into your income tax relief. But, this is provided that the GST you have paid is an item that is included in the list of income tax relief. Some may have been confused and taken out the GST amount from the price for items they can claim for income tax relief.

For example, you bought a computer for RM3,500 and the price includes the 6% GST. When claiming for income tax relief, you should include that total amount. You don’t have to exclude the GST amount. Using the computer purchase as an example again, this is because some people may have put the tax relief as RM3,290 (RM3,500 – 6% GST) because they excluded the GST amount. So remember to include the full amount inclusive of GST.

Lifestyle

There are various items included for income tax relief within this category which are:

  • books, journals, magazines, printed newspapers
  • sports equipment and gym membership fees.
  • computer (only applicable for purchase made once in 3 years)
  • payment of a monthly bill for internet subscription

The maximum income tax relief amount for the lifestyle category is RM2,500. So if you bought a computer that cost more than that, you can no longer include your gym membership, internet subscription and others for income tax relief. Do also take note if you have a golf club membership which also has gym facilities, it would not qualify for this income tax relief.

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Childcare and Kindergarten

Parents who send their children to childcare center and kindergarten will be able to enjoy income tax relief of maximum RM1,000. However, in order to enjoy this tax relief, parents must ensure that:

  • an individual or a company operating a childcare center has been registered with the Department of Social Welfare for 5 consecutive years of assessment commencing from:

-Year of assessment 2013, for an existing childcare center
-The first invoice issued by a childcare centre that commences its business from year of assessment 2013

  • Any kindergarten operator (existing or new) are eligible for the tax exemption provided that  it is registered with the State Education Department under the Ministry of Education

The logic behind this is if the childcare center and kindergarten are registered with the relevant authorities, parents can have peace of mind that their child is in better care and the place is regulated. Therefore, parents should ensure that the child care center and kindergarten they send their children to are registered, firstly for their child’s safety, and secondly as they will also get to enjoy income tax relief. Make sure you save the receipts as the tax relief amount you can get is RM1,000.

SSPN-i scheme

Here’s another income tax relief that parents should be taking advantage of. Parents, as well as guardians and legally adoptive parents who have an SSPN-i account for their children,  will be given tax relief up to a maximum of RM6,000.00 per year on the net deposited into the account. The calculation of net deposit is:

total deposit in the year 2017 – total withdrawal in the year 2017

And here’s a tip for parents with more than one children, both parents provided they are taxpayers should make use of this income tax relief to maximize the income tax relief.

Breastfeeding Equipment

Will you be expecting children in 2018? Take advantage of the income tax relief for breastfeeding equipment. New mothers who are taxpayers with children of up to 2 years old can get a tax relief of up to RM1,000 for breastfeeding equipment every 2 years. Good quality breastfeeding equipment can be pricey, therefore this tax income relief should be taken note of for expectant mothers.

Here’s the full list of tax relief for year of assesment 2017. Make sure you go through this list so you won’t miss out on any tax relief that you are eligible for.

Tax Relief Year 2017
Individual Relief Types Amount (RM)
Self and Dependent 9,000
Medical expenses for parents

OR

Parent
Limited 1,500 for only one mother
Limited 1,500 for only one father

5,000 (Limited)

OR

3000 (Limited)

Basic supporting equipment for disabled self, spouse, child or parent 6,000 (Limited)
Disabled Individual 6,000
Education Fees (Self)
(i) Other than a degree at Masters or Doctorate level-for acquiring law, accounting, Islamic financing, technical, vocational, industrial, scientific or technological skills or qualifications;
(ii) Degree at Masters or Doctorate level-for acquiring any skills or qualification
7,000 (Limited)
 Medical expenses for serious diseases for self, spouse or child  6,000 (Limited)
 Complete medical examination for self, spouse, child 500 (Limited)
Lifestyle:
(i) Purchase of books journals, magazines, 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 motorized two-wheel bicycles) and gym memberships for self, spouse or child; and
(iv) Payment of monthly bill for internet subscription
2,500 (Limited)
Purchase of breastfeeding equipment 1,000 (Limited)
Net saving in SSPN’s scheme (total deposit in year 2017 MINUS total withdrawal in year 2017) 6,000 (Limited)
 Child care fees to a Child Care Centre or a Kindergarten 1000 (Limited)
Interest expended to finance purchase of residential property. Relief of up to RM10,000 a year for three consecutive years from the first year the interest is paid.
Subject to the following conditions:(i) the taxpayer is a Malaysian citizen and a resident;
(ii) limited to one residential unit;
(iii) the sale and purchase agreement is signed between 10th March 2009
and 31st December 2010; and
(iv) the residential property is not rented out.
Where:
(a) 2 or more individuals are eligible to claim relief for the same property ; and
(b) total interest expended by those individuals exceeds the allowable amount for that year. Each individual is allowed an amount of relief for each year based on the following formula:
A x B
C
where;
A = total interest allowable in the relevant year;
B = total interest expended by the relevant individual in the relevant year;
C = total interest expended by all the individuals.
 10,000
(Limited)
Husband/Wife/Alimony Payments  4,000 (Limited)
Disable Wife/Husband  3,500
Ordinary Child relief 2,000
Each unmarried child of 18 years and above who is receiving full-time education (“A-Level”, certificate, matriculation or preparatory courses). 2,000
 Disabled child

Additional exemption of RM8,000 disable child age 18 years old and above, not married and pursuing diplomas or above qualification in Malaysia @ bachelor degree or above outside Malaysia in program and in Higher Education Institute that is accredited by related Government authorities

 6,000
 Life insurance dan EPF INCLUDING not through salary deduction 6,000 (Limited)
 Deferred Annuity and Private Retirement Scheme (PRS) – with effect from year assessment 2012 until year assessment 2021 3,000 (Limited)
Insurance premium for education or medical benefit INCLUDING not through salary deduction  3,000 (Limited)
Contribution to the Social Security Organization (SOCSO)  250 (Limited)

Source: Inland Revenue Board of Malaysia


As a final note, when filing for your income tax remember to not under declare your income. Many people tend to do so. You will then have LHDN come after you for all of your under declared income down the road plus you will also be fined and risk being jailed.

See also:
What Happens If You Miss The Tax Filing Deadline

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