In my previous article, we mention and list down the chargeable income categories and tax deductibles. Please bear in mind that we don't want you to avoid paying tax but to optimize them according to what's allowed under the law. To recap, below is the list of tax deductibles.
Tax Deductibles:
1. Individual and dependent relatives - RM9,000
2. Medical treatment, special needs and carer expenses for parents (Medical condition certified by medical practitioner) OR Parent (Restricted to 1,500 for only one mother and to 1,500 for only one father) - RM5,000 or RM3,000
3. Basic supporting equipment for disabled self, spouse, child or parent - RM6,000
4. Disabled individual - RM6,000
5. Education fees (Self) - RM7,000
-Other than a degree at masters or doctorate level - Course of study in law, accounting, islamic financing, technical, vocational, industrial, scientific or technology
-Degree at masters or doctorate level - Any course of study
6. Medical expenses for serious diseases for self, spouse or child OR Complete medical examination for self, spouse, child (Restricted to 500) - RM6,000
7. Lifestyle – Expenses for the use / benefit of self, spouse or child in respect of: - RM2,500
i. purchase of books / journals / magazines / printed newspapers / other similar publications (Not banned reading materials)
ii. purchase of personal computer, smartphone or tablet (Not for business use)
iii. purchase of sports equipment for sports activity defined under the Sports Development Act 1997 and payment of gym membership
iv. payment of monthly bill for internet subscription (Under own name)
8. Purchase of breastfeeding equipment for own use for a child aged 2 years and below (Deduction allowed once in every 2 years of assessment) - RM1,000
9. Child care fees to a registered child care centre / kindergarten for a child aged 6 years and below - RM3,000 (updated under PENJANA)
10. Net deposit in Skim Simpanan Pendidikan Nasional (Total deposit in 2019 MINUS total withdrawal in 2019) - RM8,000
11. Husband / wife / payment of alimony to former wife - RM4,000
12. Disabled husband / wife - RM3,500
13. Each unmarried child and under the age of 18 years old - RM2,000
14. Each unmarried child of 18 years and above who is receiving full-time education ("A-Level", certificate, matriculation or preparatory courses). RM2,000
15. Each unmarried child of 18 years and above that: - RM8,000
i. receiving further education in Malaysia in respect of an award of diploma or higher (excluding matriculation/ preparatory courses).
ii. receiving further education outside Malaysia in respect of an award of degree or its equivalent (including Master or Doctorate).
iii.the instruction and educational establishment shall be approved by the relevant government authority.
16. Disabled child - RM6,000 + 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
17. Life insurance and EPF INCLUDING not through salary deduction total RM7,000
i. Pensionable public servant category
ii. Life insurance premium
iii. OTHER than pensionable public servant category
iv. Life insurance premium (Restricted to RM3,000)
v. Contribution to EPF / approved scheme (Restricted to RM4,000)
18. Deferred Annuity and Private Retirement Scheme (PRS) - with effect from year assessment 2012 until year assessment 2021 - RM3,000
19. Education and medical insurance (INCLUDING not through salary deduction) - RM3,000
20. Contribution to the Social Security Organization (SOCSO) - RM250
21. PENJANA - special tax relief of up to MYR 2,500 is available to resident individuals for the purchase of a handphone, notebook, or tablet from 1 June 2020 to 31 December 2020
22. PENJANA - Travel related expenditure including: (i) accommodation expenses at premises registered with the Ministry of Tourism, Arts and Culture Malaysia; and (ii) entrance fees to tourist attractions RM1,000
The below items are the ones that we missed out easily:
1. Item 6 - Medical Expenditure
Most people don't know that you can deduct up to RM500 for full medical checkup by spouse, ownself and children.
2. Item 7 - Lifestyle
This has been expanded to include Internet, Newspaper, Sports Equipment and Gym memberships. However, consumables like sport shoes, shuttlecocks are not included.
3. Item 8 - Breastfeeding equipment
Good news for young parents are breastfeeding equipment like breast pumps, storage cups etc are allowed for deduction from your chargeable income.
4. Item 9 - Child care fees up to RM3,000 exemption
Under PENJANA this has been bumped up to RM3,000 per year. Do keep your childcare's receipts. The catch is the centre has to be registered with Director General of Social Welfare under the Child Care Centre Act 1984 or kindergartens registered under the Education Act 1996
5. Item 18 - PRS contribution
You may earn money by investing in PRS and also get tax exemption up to RM3,000.
6. Item 19 - Medical Insurance
If you have a insurance plan (life + medical card), you will have to get your insurance company to provide a statement to split out between the life and medical coverage portion.
7. Item 20 - SOCSO
SOCSO contribution can be exempted from chargeable income since few years ago. For those under self-employed category, it's also wise to contribute to SOCSO and get yourself covered with some social safety net (financially).
8. Item 21 - Special Tax Relief
You may now buy Tablets, Smartphones and Computers under the Special Tax Incentive provided under PENJANA. The limit is RM2,500 so do not forget to purchase one if you are need to replace your old laptop or tablet and benefit from the additional tax deductions.
9. Item 22 - Travel related expenditure
You may stay at hotels that is registered with Ministry of Tourism, Arts and Culture Malaysia and claim deductions up to RM1,000. Entrance fees to theme parks etc is also included.
So, with about a month left to year end 2020, do plan your purchase ahead so that you can benefit from the tax deductions.
Read Previous Article: Malaysia Income Tax 2020 Guide
