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Individuals who are employees are also entitled to some deductions although they
are very limited in nature. Generally if the expense was incurred for the appropriate
performance of the individuals duties of employment, it would qualify for a deduction.
For example, if an employee is required to travel in the course of his duties, the
cost of traveling is deductible.
If he also receives an entertainment allowance he could claim a deduction in respect
of the entertainment expenses incurred. No claim is allowable if he was reimbursed
for that expense. Employees may also claim deductions for their subscriptions to
professional bodies if that subscription is necessary to enable him to carry on that
profession. For example a doctor needs to keep his name on the Medical Register if
he wants to retain his professional qualifications.
Personal reliefs broadly includes deductions allowable to a taxpayer according to
his circumstances and any other deductions not related to the production of income.
Personal reliefs deductions refers to reliefs for individuals, wife, child, parent,
disability, insurance and provident fund contributions. These reliefs are only available
to individuals who are resident in Malaysia. Other deductions are given to all taxpayers
with the exception of some deductions such as fees for preparing income tax returns
where individuals do not qualify.
Table 2 summarises most of the reliefs available.
| Table 2 Personal Reliefs |
|
Relief
|
Conditions
|
Amount (RM)
|
|
Reliefs deductible from Total Income
|
|
1.
|
Personal relief |
|
|
| Basic |
Available if resident individuals |
5,000
|
| Additional relief |
If disabled |
5,000
|
|
2.
|
Wife & Child relief |
|
|
|
|
Wife |
Living with him but not separately assessed or having no total income |
3,000
|
Child
(no maximum number of qualifying children) |
If disabled |
2,500
|
| If the child you maintain is under 18 years |
800
|
| If the child you maintain is disabled |
5,000
|
|
|
|
If the child you maintain is over 18 years, and receives full time education or training: |
|
| |
|
In Malaysia (maximum) |
3,200
|
| |
|
Outside Malaysia |
800
|
| |
|
Schooling in West Malaysia (for parents resident in East Malaysia) |
3,200
|
|
3.
|
Medical relief |
|
|
|
|
Own |
For a serious disease (maximum) |
5,000
|
|
|
Parents |
Parents medical expenses (maximum) |
5,000
|
|
|
Basic support equipment |
For disabled persons such as self, wife, child or parent (maximum) |
5,000
|
|
4.
|
EPF/Insurance payments |
Payments to approved funds or insurance premiums, (maximum) |
5,000
|
|
5.
|
Educational and Medical Insurance |
Premiums for insurance on education or medical benefits, (maximum) |
2,000
|
|
|
|
Including wife's payments if not assessed separately (maximum) |
4,000
|
|
6.
|
Donations and Gifts |
|
|
|
|
Gifts of money |
To the Government, local authority, approved institutions/organisations, public libraries
or libraries of schools or institutions of higher education |
|
|
|
|
Provision of facilities for disabled persons in public places |
Actual Value to be determined
|
|
|
Gifts of paintings |
To the Government, State Government or National or State are gallery |
Value to be determined
|
|
|
Gifts of money or Medical Equipment |
Gifts to any healthcare facility approved by the Ministry of Health (maximum) |
20,000
|
|
Deductions from Tax Charge
|
|
1.
|
Tax Rebate |
|
|
|
|
Basic |
Available to resident individual if chargeable income is not more than RM 10,000 |
110
|
|
|
Wife |
Additional rebate if wife living with him is not assessed separately |
60
|
|
|
Purchase of a computer |
Granted once every 5 years provided it is not used for business purposes |
400
|
|
|
Levy |
Paid for foreign workers passes (limited to tax payable) |
Actual
|
|
2.
|
Zakat, fitrah, etc |
Limited to tax payable |
Actual
|
It should be noted that it is illegal if you evade tax, and it is a criminal offence.
However, it is not illegal if you avoid taxation by planning your affairs carefully
so as to reduce the incidence of tax. So long as you do not violate the law, every
individual should make an attempt at tax planning. After all, you want to see and
enjoy the fruits of your hard work to the maximum possible extent. With planning
you can save a substantial amount of tax.
A simple example would be in the case where both the husband and wife are working
but they are not assessed separately. By opting to be assessed separately the wife
can now take full advantage of the personal relief's available to her as an individual.
The husband without combining the wife's income is now in a lower tax bracket enabling
him reduce the quantum of tax.
For all those out there who are doing their returns, be aware that although tax is
no simple matter, you should not leave your fate to the tax department. The tax authorities
will not know that you qualify for deductions if you do not make it known to them.
Make an attempt to discover what you are entitled to, you could be pleasantly surprised.
If you have already missed your claims this round, there is always tax savings opportunities
next year. So remember, the next time you are asked to make a donation or pay for
your motherís medical bill donít winch. Save the bill, it could save you some tax.
Note: The issues discussed here are highly summarised to help you better understand
the contents of your tax return. For a more detailed explanation and to fully understand
the implications of the Income Tax Act please seek professional advise.
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