Well folks, looks like tax season is upon us once again. Despite being a grown man in my late 20s, I have to admit that I still barely know anything about filing my taxes.
However, despite what you might assume, taxes aren’t likely to wipe out all your hard earned savings. In fact, if you know what you’re doing, you might end up paying the government far less than you’d expect.
If you haven’t filed your taxes yet, note that the deadline for this year’s income tax e-filing has been extended to 15 May 2022. If you miss this deadline, you may have to pay for an extension period. If you have any outstanding fines, you could receive an extra penalty!
But whether you’re a first time taxpayer or a long-suffering veteran, there are some things that everyone should be aware of. To help you out, we’re going to look at something that every Malaysian taxpayer should know: tax reliefs.
What Are Tax Reliefs?
To put it simply, tax reliefs are a way for you to reduce your chargeable income. This determines your personal tax rate — the lower your chargeable income, the less you’ll be taxed.
Whether you’re a first time taxpayer or an old hat trying to save some money, here are some of the tax reliefs that you can claim for 2021.
Self, Parents and Spouse
1) Automatic individual relief (RM9,000)
You can become eligible for a tax reduction of RM9,000 by simply filling in the LHDN e-Filing form. Just as the name suggests, this is automatically done by the system.
2) Alimony/partner fees (up to RM4,000)
Those paying alimony to their ex-wives or partners that aren’t working can receive a deduction — but only if there is a formal alimony agreement to back it up.
3) Medical expenses for parents (up to RM8,000)
If your parents have a medical condition requiring specific treatment, this covers all expenses caused by medical treatments, special needs and caretaker expenses.
Please note that this only applies to those currently staying and receiving treatment in Malaysia. You must have a written certification from a registered medical practitioner or qualified carer.
4) Medical expenses for self, spouse or children (up to RM8,000)
This can be claimed if you, your spouse or your children are undergoing medical treatment for serious health issues such as AIDS, heart attacks, organ transplants, etc. It can also be claimed by married couples for fertility treatments such as IVF or IUI.
Note that up to RM1,000 in relief is dedicated to a full medical checkup for yourself, spouse or children. This includes COVID-19 screenings or vaccination expenses.
5) Further education fees: self (up to RM7,000)
You can make a claim for educational fees from any institution or professional body listed by the Ministry of Higher Education Malaysia.
For Masters and Doctorate degrees, any course of study is eligible. However, for undergraduate or lower degrees, only courses linked to the following are counted:
- Islamic finance
1) Breastfeeding equipment (up to RM1,000)
Mothers who have purchased personal breastfeeding equipment can claim this if they have a child aged two years and below.
Note that this deduction can only be made once in every two years.
2) Childcare fees (up to RM3,000)
This tax relief is available for parents with children currently in daycare centres or kindergartens.
Note that this deduction can be claimed by either the mother or father, but not both.
3) SSPN (up to RM8,000)
The Skim Simpanan Pendidikan Nasional (SSPN) is a savings plan that encourages parents to invest in their child’s future education. Parents who contributed last year are eligible to a tax relief, though you’ll need to collect a tax document from SSPN first — this can be done either online or in person.
4) Unmarried child aged below 18 (up to RM2,000 per child)
Parents may receive a tax relief for each unmarried child under the age of 18. Again, note that this deduction can be claimed by either the mother or the father, but not both.
5) Unmarried children aged 18+ pursuing full time education (up to RM8,000)
This is for parents with unmarried adult children who are full time students pursuing:
- A diploma or higher within Malaysia
- An undergraduate, Masters or Doctoral degree outside Malaysia
- Any courses at institutions of higher learning recognised by the Ministry of Higher Education
Note that there is also a RM2,000 tax relief for parents of adults undergoing preparatory courses such as foundation or A-Levels.
1) Equipment for disabled self, spouse, child or parent (up to RM6,000)
This tax relief is available for purchases of special support equipment such as wheelchairs, hearing aids, artificial legs, etc. Spectacles and optical lenses are excluded.
Note that the disabled individual has to be registered with the Department of Social Welfare (JKM) and be certified as OKU.
2) Disabled individuals (up to RM6,000)
If you are a disabled individual who’s been registered with the JKM, you become eligible for an extra RM6,000 deduction.
If your spouse is disabled, then you are entitled to a RM5,000 deduction.
If your unmarried child is disabled (physically or mentally), you can claim another tax relief of RM6,000.
3) Disabled child aged 18 and above pursuing higher education (up to RM8,000)
Parents of adult disabled children pursuing higher education can receive an extra deduction. This counts whether their children are receiving their education in Malaysia or overseas.
1) Life insurance and EPF (up to RM7,000)
The amount of tax relief you receive under this section will change depending on whether you’re working in the private or public sector.
- Retired public servants are not qualified for EPF contribution reliefs, but can claim a tax relief of up to RM7,000 for life insurance premiums or Takaful contributions
- Employees in private or public sectors with no pensions can receive a tax relief of up to RM3,000 and can also claim up to RM4,000 for EPF contributions or other approved schemes
2) Private retirement scheme (PRS) and deferred annuity (up to RM3,000)
This tax relief applies for anyone who’s made contributions to the PRS or deferred annuity scheme from 2012 to 2025.
3) Education and medical insurance (up to RM3,000)
This relief can be claimed for insurance premiums related to education or medical benefits for yourself, spouse or children.
4) SOCSO (up to RM250)
Your contributions to the Social Security Organisation (SOCSO) can be claimed.
1) Lifestyle purchases for self, spouse or child (up to RM2,500)
You are entitled to claim this tax relief if you have purchased any of the following:
- Reading materials: books, journals, magazines, printed newspapers, etc. Banned and offensive materials excluded.
- Personal electronics: smartphone, tablet, computer, etc.
- Sports equipment: golf balls, shuttlecocks, gym memberships, etc. Motorbikes and club memberships which provide gym facilities are excluded.
- Internet subscription: must be registered under your own name.
2) [Special] Purchase of personal computer, smartphones or tablet for self, spouse or child (up to RM2,500)
This is an addition to the lifestyle relief mentioned above that was first introduced in 2020. It allows you to claim another RM2,500 for any personal computer, smartphone or tablet purchased within the year 2021.
Note that this relief can only be claimed if you buy the device for non-business purposes and it does not extend to additional charges for warranty.
3) [Special] Tourist accommodation or attractions (up to RM1,000)
This is another tax relief introduced during the MCO period to stimulate our country’s tourism and travel industry. You can claim this relief for any accommodation charges or entrance fees to tourist attractions made between 1 January 2021 and 31 December 2021.
Note that this only applies if your travel agency has been approved by the Ministry of Tourism, Arts and Culture (MOTAC).
4) [Special] Expenses related to personal sports activities (up to RM500)
The third special lifestyle tax relief is meant for sports-related expenses. This includes:
- Purchase of sports equipment (not including motorbikes)
- Payment of rental or entrance fees to sports facilities
- Payment of registration fees for sports competitions (only if the organiser is approved and licensed by the Commissioner of Sports)
You Don’t Have to Be Scared of Taxes
If you haven’t sorted out your taxes yet, be sure to do it before the deadline on 15 May 2022!
If you’re not familiar with the process, dealing with taxes can feel pretty intimidating. However, it’s something that we all have to go through eventually. Even if you don’t like dealing with taxes, it’s the responsibility of every Malaysian.
After all, without our tax money, how would we pay for all the public services like road maintenance, healthcare, education, etc.? For more details on how your taxes work, you can pay a visit to the website of the Inland Revenue Board of Malaysia (LHDN).
For those looking for more information about dealing with Malaysian taxes, be sure to check out: