Personal Income Tax 2016 Guide

PART 4

Tax Reliefs For Year Of Assessment 2015 (Tax Filed In 2016) What is a income tax relief? Tax reliefs are set by LHDN,

where a taxpayer is able to deduct a certain amount for money expended in that assessment year, from the total annual income. These are for certain activities or behaviours that the government encourages or even necessities or burdens to lighten our financial loads.

For income tax Malaysia, Tax reliefs can help reduce your chargeable income, and thus your taxes. If planned properly, you can save a significant amount of taxes.

In our example, a taxpayer would have been taxed about 10% of his total chargeable income of RM84,300 if he had claimed no tax reliefs at all.

However, with the self & dependent tax relief of RM9,000, life insurance & EPF relief at RM6,000, and special tax relief of RM2,000, his total chargeable income is now RM67,300, hence, he would only be taxed 7% of his chargeable income.

Other than the above three common tax reliefs, there are many other reliefs tax payers in Malaysia can maximise. Refer to this list of the income tax relief 2016 Malaysia:

Individual Relief Types Amount

Self and dependent RM9,000

Special relief [THIS YEAR ONLY]Eligibility: Earning RM8,000 per month or below (aggregate income of up to

RM96,000 annually)RM2,000

Insurance & other policiesLife insurance and EPF RM6,000

Deferred annuity and Private Retirement Scheme (PRS) RM3,000

Insurance premium for education or medical benefit RM3,000

Applicable to certain taxpayersHusband/Wife/Alimony payments RM3,000

Medical expenses for parents RM5,000

Education fees (Individual) RM5,000

Medical expenses for serious diseases RM6,000

Complete medical examination RM500Purchase of books, journals, magazines

and publications RM1,000

Purchase of personal computer (once in every 3 years) RM3,000

Purchase of sport equipment for sport activities (i.e. racquets, balls, golf sets) RM300

Disabled individual RM6,000Disabled wife/husband RM3,500

Basic supporting equipment (for disabled self, spouse, child or parent) RM6,000

Applicable to tax paying parentsOrdinary child relief RM1,000/per childEach unmarried child of 18 years and above who is receiving full-time education ("A-Level", certificate, matriculation or preparatory courses)

RM1,000/per child

Each unmarried child of 18 years and above that is: (i) receiving further education in Malaysia for diploma or higher (excluding matriculation/preparatory courses)(ii) receiving further education outside Malaysia for degree or its equivalent (including Master or Doctorate)(iii) the instruction and educational establishment shall be approved by the relevant government authority

RM6,000/per child

Disabled child RM6,000/per childAdditional exemption per unmarried disabled child age 18 years old and above, who is pursuing:(i) diplomas or above qualification in Malaysia(ii) bachelor degree or above outside Malaysia in programme and in Higher Education Institute that is accredited by related Government authorities

RM6,000/per child

Net saving in SSPN's scheme RM6,000

There really are a lot of tax reliefs and if you plan your reliefs effectively every year, you could be saving thousands in taxes every year.

Quick tips

On top of just looking at tax reliefs, how you file can make a difference. For married taxpayers, you need to consider whether to file for joint or separate assessment to maximise on the tax reliefs such as spouse relief, and also which spouse to claim for child relief. Depending on the income differences between the spouses claiming joint or separate can have a big impact on your tax savings.

Thank You…SOURCE : WWW.IMONEY.MY/ARTICLES/INCOME-TAX-2016/TAX-RELIEFS-FOR-YEAR-OF-ASSESSMENT-2015

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