Tax Relief vs Tax Rebate: What's The Difference? Team Team

Last updated 06 April, 2021

The tax season is here again, and you’ll have to file your personal income tax returns by April 30 this year. There are so many income tax terms to understand that sometimes, we get confused. Today, we’ll be looking at the difference between tax relief and tax rebate.


What is tax relief and tax rebate?

Tax reliefs and tax exemptions are deducted from your total annual income. After deduction, this amount is known as chargeable income.

Meanwhile, tax rebate is calculated AFTER you have determined the amount of tax charged on your chargeable income. It will be deducted from your actual taxed amount.

  • Let’s say your chargeable income after tax reliefs and tax exemptions is: RM33,000.
  • The amount of tax charged on your changeable income is: RM755.
  • Since your chargeable income is below RM35,000, you can claim a RM400 tax rebate.
  • So your total tax after tax rebate is: RM755 – RM400 = RM355

Related: Malaysia Income Tax e-Filing Guide For Newbies

Types of tax relief you can claim

Here are some tax relief categories that you should fully utilise for the year of assessment 2020:

1. Lifestyle purchases: Max. RM2,500

The lifestyle tax relief amounts up to RM2,500 a year. That’s why it’s important to save the receipts for your purchases of:

  • Books, journals, magazines, printed newspapers
  • Sports equipment and gym membership fees
  • Computer, smartphones, or tablets

Your monthly bill payments for internet subscription is also eligible for lifestyle tax relief, so be sure to keep those bills as well.

2. Lifestyle purchases for tech gadgets: Max. RM2,500

You can claim an additional RM2,500 if you’ve bought a PC, smartphone, or tablet between 1 June and 31 December 2020.

You can claim a lifestyle tax relief of up to RM2,500 for buying smartphones, laptops, books and more.

3. Complete medical examinations: Max. RM500

If you, your spouse or child have completed a medical examination in the past assessment year, you can claim a maximum of RM500 as tax relief.

4. Further education fees: Max. RM7,000

If you’re paying for your own further education course in a recognised higher learning institution in Malaysia, you'll also be entitled to claim a tax relief of up to RM7,000.

For Masters or Doctorate students, any course of study is eligible. As for undergraduate degrees or lower, you can only claim a tax relief if you’re studying law, accounting, Islamic financing, technical, vocational, industrial, scientific, or technology.

5. Medical expenses for parents: Max. RM5,000

If your parents are undergoing treatment for specific medical conditions and this is proven by a certified medical practitioner, you can claim up to RM5,000.

This includes expenses for equipment, care, or treatment for their condition. Your parents must also be residing in Malaysia where the treatment is provided locally.

For the complete list of tax reliefs that you can claim, please refer to Lembaga Hasil Dalam Negeri (LHDN).

Related: 7 Tax Exemptions in Malaysia You Should Know About

You’re entitled to a RM400 tax rebate if you and your spouse choose to be jointly assessed, and your joint chargeable income does not exceed RM35,000.

Types of tax rebate you can claim

You should make full use of these tax rebates.

1. For yourself: RM400

If your chargeable income (after tax reliefs and deductions) does not exceed RM35,000, you can claim a tax rebate of RM400.

2. For your husband/wife: RM400

You’re entitled to a RM400 tax rebate if you and your spouse choose to be jointly assessed, and your joint chargeable income does not exceed RM35,000.

3. Departure levy paid for performing umrah and pilgrimage to holy places

Anyone who travels from Malaysia by airplane to perform umrah or other kinds of religious pilgrimage can claim this rebate. You will receive a rebate for the amount of departure levy you have paid. You can also claim this rebate twice during your lifetime.

4. Zakat

Tax rebates are also given to Muslims that pay Zakat. The rebate amount will be based on how much they paid during the tax year.

Remember to file your income tax by April 30, 2021 at the ezHASiL platform.

Need more info about income tax filing? Check out these articles:

Source: Lembaga Hasil Dalam Negeri (LHDN)

The team is comprised of many talented individuals, sharing their knowledge, experiences and research to help others make better financial decisions.


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