Income tax seems to be a word that creates a lot of stress. Especially, when it is the end of the assessment year and when you have to submit the documents for claims. But, if you look at it without any notions, you can find a lot of ways to claim back the tax you would pay solely based on your income. Do you believe that your lifestyle could get you some portion of the tax you have paid back to you? That’s true. Your hobbies could get your tax back to you! The sense of responsibility you have, in terms of life insurance, retirement plans, etc., could get some portion of the tax you have paid back.
Income Tax Relief
Given below is a list of ways that can fetch you income tax relief:
- Save on Goods and Services Tax (GST): Yes, you read it right. Your contribution to GST can save you from paying income tax. If you have paid GST on any merchandise you have purchased, then you can submit the purchase receipt to claim income tax relief. For instance, consider that you bought an item for RM2,500 and the amount you paid for it is RM2,650 inclusive of 6% GST. In this case, do not mention the bill amount to be RM2,500. Instead, mention the bill amount to be RM2,650 and submit the bill so that you can get relief for the GST you have paid.
- Lifestyle: Your lifestyle can fetch you some tax relief when you purchase books, journals, magazines, etc. for yourself, your spouse or your children. This category also provides tax relief when you buy a computer, smartphone, sports equipment, etc. You can also claim your internet subscription. You can get a relief of up to RM2,500 under this category. Even if the activities like reading, sports, etc. do not interest you much, you can gift them to people around you and still get a tax relief.
- Childcare Centres: If you have kids who go to kindergarten or childcare centres, you can get a tax relief of up to RM1,000 per year. However, you need to make sure that:
- The childcare centre is registered with Department of Social Welfare for 5 consecutive years and the assessment commenced in the year of 2013.
- The kindergarten operator is registered with the State Education Department i.e., under the Education Ministry of Malaysia.
This regulation is brought-in to ensure child’s safety and to provide tax relief.
- Skim Simpanan Pendidikan Nasional (SSPN) Account: This is a savings facility offered by the Malaysian government in order to save money for your child’s higher education. Banks like Maybank offer special accounts for this scheme. In addition to getting a tax relief of up to RM6,000, you can also earn an interest of up to 4% p.a. over the money you have saved in the SSPN account. The government has renamed the scheme in 2018 as SSPN1M (SSPN 1 Malaysia.
- Life Insurance and EPF: The premium you pay for your life insurance policy can get you tax relaxation. Though there is no separation mentioned for life insurance and EPF, they both together can fetch you up to RM6,000 tax benefits. You can also top up your insurance premium to get the maximum relief possible. If your insurer does not remind you of the tax benefit, ask your insurer to provide you with a statement of your insurance policy that has a clear breakdown of your premium under different categories.
- Medical Expenses for Parents: You can get tax benefit up to RM5,000 when you spend on medical expenses of your parents. In case of the medical expenses of only your father or only your mother, then the maximum relief you can expect is RM1,500 each. Don’t forget to preserve the medical bills, in any case!
- Disability: If your spouse is disabled, you can get a tax relief of RM3,500. You can get tax relief of up to RM6,000 if you are raising a disabled child. If your child is unmarried, is 18 years of age or above and is pursuing studies in Malaysia or abroad at an accredited college or university, then you can get an additional relief of RM8,000.
- Medical Check-up: It is always good to get a complete health check-up once in a year. This can be helpful in detecting many serious disorders at the initial stages and to cure them sooner. Malaysian government supports this activity by providing RM500 tax relief on the medical examination for you, your spouse and children.
There are many more ways in which you can save on the income tax:
- If your spouse does not earn or earns less than RM35,000 per year, then you can make a joint assessment. This can be more profitable.
- If both husband and wife are earning above RM35,000 per year during the assessment year, then it is better to file the assessment separately.
- The higher income earner among husband and wife must take up the child’s education expenses to claim for tax relief. Dividing the expenses may not be profitable.
- If you have more than one child, you can receive more under child relief category.
If you think keeping track of all these is a hassle, then you might be losing a lot of money in the form of tax. So, go ahead and start collecting the bills and receipts of each purchase you make to save a considerable amount at the end of the assessment year.