Unlocking the Secrets of Personal Tax: What You Need to Know (Applicable for YA 2023)
The tax filing season can be a stressful time for individual taxpayers, and the common objective among taxpayers often revolves around reducing income tax burdens and ultimately paying less income tax. However, many taxpayers often lack awareness of updates and changes to tax reliefs, resulting in missed chances for potential tax savings during the filing process. In this article, we will cover a variety of personal tax reliefs to ensure that you do not miss out on any tax-saving opportunities during this year’s filing!
First, let's find out when you can start filing your taxes. According to the latest announcement from the Inland Revenue Board (IRB), individual taxpayers can start filing their taxes for the year of assessment (YA) 2023 through e-filing starting 1 March 2024. Individual taxpayers who do not carry on business and earn only employment income are required to file their tax returns using Form BE by 30 April. Taxpayers with business sources of income are required to file their tax returns using Form B, with a deadline of 30 June. However, there is a grace period of 15 days for submission made through the IRB e-filing system.
Personal tax reliefs can be subdivided into four categories, (A) Personal deduction (B) Lifestyle, medical and related equipment (C) Deduction for children (D) Contribution & others.
Now let's delve into each category to understand the tax reliefs available:
- Individual & dependent relatives
Automatically granted to individuals for themselves and their dependent relatives.
Tax Relief: RM9,000 - Further deduction for disabled person
You are eligible to claim this deduction if you are certified in writing by the Department of Social Welfare (DSW) as a disabled person.
Tax Relief: RM6,000 - Further deduction for disabled spouse
Taxpayers with a disabled spouse are eligible for a further deduction of RM5,000 under this relief. Where the disabled spouse is living together with the taxpayer with no income and opts for joint assessment.
Tax Relief: RM5,000 - Husband/ wife / payment of alimony to former wife
You're entitled to a deduction of RM4,000 if your spouse has no source of income / no total income or has elected for joint assessment in your name. This relief is not applicable if your spouse has a gross income exceeding RM4,000 from sources outside Malaysia.
Deduction for alimony payment to a former wife is capped at RM4,000. Only those who have entered into a formal alimony agreement are eligible for this tax relief.
The total deduction for a wife and alimony payments to the former wife is restricted to RM4,000.
Tax Relief: RM4,000 - Education fees (Self)
Tax relief can be claimed for fees incurred in the following courses of study:- Other than a degree at Masters or Doctorate level
Any course of study up to tertiary level undertaken for law, accounting, Islamic finance, technical, vocational, industrial, scientific, or technical skills or qualifications undertaken in any institution or professional body in Malaysia recognized by the Malaysian Government or approved by the Minister of Finance. - Degree at Masters or Doctorate level - any field or research program
The course of study must be undertaken in any institution or professional body in Malaysia recognized by the Malaysian Government or approved by the Minister of Finance. - Any course of study undertaken for the purpose of up-skilling or self-enhancement recognized by the Director General of Skills Development under the National Skills Development Act 2006 is eligible for a deduction of up to RM2,000.
- Other than a degree at Masters or Doctorate level
- Medical expenses for parents
Expenses on medical treatment for parents which qualify for a deduction include:- medical care and treatment provided by a nursing home; and
- dental treatment limited to tooth extraction, filling, scaling and cleaning but excluding cosmetic dental treatment expenses such as teeth restoration and replacement involving crowning, root canal and dentures.
Tax Relief: Up to RM8,000 - Basic supporting equipment for disabled self, spouse, child or parent
This deduction applies to the purchases of necessary basic supporting equipment for personal use, spouse, child or parent. However, this deduction will only be applicable if the disabled individual is registered with the Department of Social Welfare (DSW) as a disabled person.
Basic supporting equipment includes items such as hemodialysis machine, wheelchair, artificial leg and hearing aids but excludes spectacles and optical lenses.
Tax Relief: Up to RM6,000 - Lifestyle relief for self, spouse or child
You are eligible to claim relief for the purchase of:- Book, journals, magazines, newspapers and other similar publications;
- Personal computer, smartphone or tablet (excluding additional charge for warranty);
- Sports equipment for any sports activity as defined under the Sports Development Act 1997, gym membership fees; and
- Monthly internet subscription fee registered in your own name.
- Additional lifestyle relief for self, spouse or child
This additional lifestyle relief is specifically granted for the purchases of sport-related equipment and activities, including:- Purchase of sports equipment for any sports activity listed under the Sports Development Act 1997 (excluding motorized two-wheel bicycles);
- Payment of rental or entrance fee to any sports facility; and
- Registration fee for any sports competition organized by approved and licensed organizers by the Commissioner of Sports under the Sport Development Act 1997.
- Breastfeeding equipment
Tax relief is provided for the purchase of breastfeeding equipment for breastfeeding children aged 2 years and below. Qualifying equipment includes breast pump kits, ice packs, breast milk collection and storage equipment, and cooler sets or cooler bags.
This relief is exclusively for women taxpayers and is only allowed once in every two (2) years of assessment. In the case of a joint assessment, it's only allowed if the assessment is in the wife's name.
Tax Relief: Up to RM1,000 - Medical expenses for serious disease
- This relief covers medical expenses for yourself, your spouse, or your child suffering from serious diseases
- Includes the treatment of Acquired Immune Deficiency Syndrome (AIDS), Parkinson’s disease, cancer, renal failure, leukemia, heart attack, pulmonary hypertension, chronic liver disease, fulminant viral hepatitis, head trauma with neurological deficit, tumor in brain or vascular malformation, major burns, major organ transplant and major amputation of limbs.
- Fertility treatment for self or spouse
- Vaccination expenses (up to RM1,000) for an individual, spouse or child, including:
- Pneumococcal;
- Human papillomavirus (HPV);
- Influenza;
- Rotavirus;
- Varicella;
- Meningococcal;
- Combination of tetanus-diphtheria-acellular-pertussis (Tdap); and
- Coronavirus Disease 2019 (COVID-19).
- Complete medical examination (up to RM1,000)
- Complete medical examination for self, spouse or child;
- COVID-19 detection test including purchase of self-detection test kit for self, spouse or child; and
- Mental health examination or consultation for self, spouse or child
- Intervention expenditure (up to RM4,000) for a child who is aged 18 years old and below in relation to the following:
- Assessment for the purposes of diagnosis of learning disability
- Early intervention programme or rehabilitation treatment for learning disability
-
Conditions:
- A diagnostic assessment certified by a medical practitioner registered with the Malaysian Medical Council;
- Early intervention and rehabilitation programmes conducted by Health Profession Practitioners registered under the Allied Health Profession Act 2016;
- Expenses qualified as deductions for (i) and (ii) are for the following categories
- Autism Spectrum Disorder;
- Attention Deficit Hyperactivity Disorder (ADHD);
- Global Developmental Delay (GDD);
- Intellectual Disability;
- Down Syndrome; and
- Specific Learning Disabilities.
- The treatment must be carried out in Malaysia.
Tax Relief: Up to RM10,000
- This relief covers medical expenses for yourself, your spouse, or your child suffering from serious diseases
- Electric vehicle charging facility
You may claim tax relief for fees relating to installation, rental, and purchase including hire-purchase of equipment or subscription for use of an electric vehicle charging facility for your vehicle, provided that the electric vehicle is not used for commercial purposes.
Tax Relief: Up to RM2,500 - Unmarried child < 18 years old
A deduction of RM2,000 per child is allowed if your child is unmarried and below 18 years of age at any time during the basis year.
Tax Relief: RM2,000 per child - Unmarried child ≥18 years old (Receiving Full-time Instruction)
A deduction of RM2,000 per child is allowed if your child is unmarried, 18 years of age and above, and receiving full-time instruction (Matriculation, pre-degree, A-level or equivalent)
Tax Relief: RM2,000 per child - Unmarried child ≥ 18 years old (Further Conditions Apply)
A deduction of RM8,000 is available if your child is unmarried, 18 years of age and above, and meet the following conditions:- Receiving full-time instruction (excluding matriculation course / pre degree / A-Level) at a university, college or other similar educational establishments in Malaysia;
- Receiving full-time instruction outside Malaysia in respect of a degree (including a degree at Master or Doctorate level) or the equivalent of a degree; or
- Serving under articles or indentures to qualify in a trade or profession in Malaysia.
- Unmarried disabled child
Relief of RM6,000 is allowed if you have an unmarried disabled child.
Tax Relief: RM6,000 per child - Unmarried disabled child ≥ 18 years old
An additional relief of RM8,000 is allowed if you have an unmarried disabled child, 18 years of age and above, and meet the following conditions:- Receiving full-time instruction (excluding matriculation course / pre degree / A-Level) at a university, college or other similar educational establishments in Malaysia;
- Receiving full-time instruction outside Malaysia in respect of a degree (including a degree at Master or Doctorate level) or the equivalent of a degree; or
- Serving under articles or indentures to qualify in a trade or profession in Malaysia.
- Child care fees
You can claim relief of up to RM3,000 for childcare fees for your child aged 6 or below, provided that:- The child care center is registered with the Department of Social Welfare (DSW) pursuant to the Child Care Centre Act 1984 under the Ministry of Women, Family and Community Development; or
- The kindergarten is registered with the Ministry of Education Malaysia pursuant to the Education Act 1996.
Tax Relief: Up to RM3,000 (Even if you have more than one child who fulfils the mentioned conditions) - Life insurance and EPF
Starting from 2023, the tax relief for pensioned public servants, other than pension scheme public servants and self-employed are as follows:- Up to RM3,000 for life insurance premium payments and takaful contributions or additional voluntary contributions to EPF; and
- Up to RM4,000 for contributions to an approved provident fund or voluntary contributions to a provident fund.
Tax Relief: Up to RM7,000 - Contribution to SOCSO or EIS
Contributions made to the Social Security Organization (SOCSO) and the Employment Insurance Scheme (EIS) are deductible during the assessment year.
Tax Relief: Up to RM350 - Private Retirement Scheme (PRS) and Deferred Annuity
A tax relief of up to RM3,000 is applicable for PRS contributions and deferred annuity premiums. If electing for joint assessment, the allowable deduction is also capped at RM3,000.
Tax Relief: Up to RM3,000 - Net deposits in Skim Simpanan Pendidikan Nasional (SSPN) for child
The Skim Simpanan Pendidikan Nasional (SSPN) is a savings plan introduced by PTPTN. Taxpayers can open an SSPN account for their children to use as their future education fund. A tax relief of up to RM8,000 is available for the net amount deposited in SSPN account (deposit less withdrawals for the year).
Tax Relief: Up to RM8,000 - Insurance premiums for education or medical
The total deduction in respect of premiums paid for insurance on education and medical benefits for an individual, husband, wife, or child is limited to RM3,000.
Tax Relief: Up to RM3,000
(A) Personal Deduction
(B) Lifestyle, Medial and Equipment Related
(C) Deduction for children
(D) Contribution & others
Income tax rebates
Income tax rebates are granted to individuals to reduce their overall income tax liability. Unlike tax relief, which reduces your chargeable income, tax rebates are directly deducted from the final tax amount. Below are the available rebates that you should be aware of for your 2023 tax filing.
- Tax rebate for self
You are entitled to a tax rebate of RM400 if your chargeable income does not exceed RM35,000.
Rebate: RM400 - Tax rebate for spouse
A further RM400 rebate can be claimed if your spouse does not receive an income or if you opt for joint assessment.
Rebate: RM400 - Tax rebate for departure levy for Umrah travel / religious travel for other religions
This tax rebate is granted to any individual who leaves Malaysia by air for the purpose of performing Umrah or other religious pilgrimage but not for the purpose of performing hajj. This claim is restricted to a maximum of two (2) trips in a lifetime, and the following supporting documents are required:- Umrah - a copy of the visa issued by the embassy of the Kingdom of Saudi Arabia
- Any other religious pilgrimage - written verification by a recognised religious body
- Rebate for Zakat and Fitrah
Rebate is granted for payment of obligatory Zakat and Fitrah in the basis year.
Rebate: Actual amount paid
In summary, it's crucial to highlight that the information presented above is specifically applicable for the YA 2023. We hope this information will assist you in maximizing your claims and reducing your tax burden effectively.
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