What are the top ten most common Malaysian tax relief for year assessment 2019 and filing in 2020? Have you maximized your eligible tax relief?
Contents
10 Common Malaysian Tax Relief for Year of Assessment 2019
1. EPF Contribution
Maximum Tax Relief: RM4,000
Criteria: Total employee contribution to EPF capped at RM4,000 (Previously EPF + Life Insurance was combined as a single tax relief and capped at RM6,000). EPF contribution through non-salary deduction (i.e. voluntary contribution) is included as well for tax relief purposes.
2. Life Insurance Premium
Maximum Tax Relief: RM3,000
Criteria: Payment of life insurance premiums in the year of assessment. Previously Life Insurance was combined as a single tax relief with EPF contribution and capped at RM6,000.
- For Life, 100% of premiums paid eligible for tax relief as life policy.
- For Education/Life, 100% of premiums paid eligible for tax relief as education policy OR life policy.
- For Medical/Life, 60% of premiums paid eligible for tax relief as medical policy OR 100% of premiums paid eligible for tax relief as life policy.
- Accidental/ waiver riders premiums paid are not eligible for tax relief.
- Automation premium loans are not eligible for the tax relief.
3. Insurance Premium for Medical/Education
Maximum Tax Relief: RM3,000
Criteria: Payment of medical insurance premiums in the year of assessment.
- For Education/Life, 100% of premiums paid eligible for tax relief as education policy OR life policy.
- For Medical/Life, 60% of premiums paid eligible for tax relief as medical policy OR 100% of premiums paid eligible for tax relief as life policy.
- Accidental/ waiver riders premiums paid are not eligible for tax relief.
4. Lifestyle Expenses
Maximum Tax Relief: RM2,500
Criteria: Lifestyle expenses are now grouped into a single category with the total tax relief capped at RM2,500 per year. Do keep those receipts!
- Purchase of books journals, magazines, printed newspaper and other similar publications (except banned reading materials).
- Purchase of a personal computer, smartphone or tablet (excluding hybrid computers).
- Purchase of sports equipment for any sports activity as defined under the Sports Development Act 1997 (excluding motorized two-wheel bicycles, clothes and shoes) and gym memberships.
- Payment of monthly bill for internet subscription.
5. PRS / Annuity
Maximum Tax Relief: RM3,000
Criteria: Deferred Annuity and Private Retirement Scheme (PRS) investment of up to RM3,000. This tax relief is in effect from year assessment 2012 until year assessment 2021 meaning there’s only 3 more years to qualify for the tax relief unless it’s extended.
6. SOCSO Contribution
Maximum Tax Relief: RM250
Criteria: Total employee contribution to Social Security Organisation (aka PERKESO). Do note that the maximum employee contribution is RM19.75 per month for monthly wages of RM4000 and above. Thus the maximum contribution and tax relief is actually RM237.
Rate of Contribution for SOCSO (perkeso.gov.my)
7. SSPN-i for Child
Maximum Tax Relief: RM8,000
Criteria: SSPN (National Education Savings Scheme) is a savings scheme for higher education launched in 2004. While anyone can contribute to SSPN, only parents are eligible for the tax relief of up to RM8,000 for each parent (previously RM6,000). Do note that there is a difference between SSPN-i and SSPN-i Plus which comes with insurance coverage. The calculation for SSPN-i contribution is based on total investment less withdrawals within the year.
8. Child Care / Kindergarten
Maximum Tax Relief: RM1,000
Criteria: A newly introduced tax relief for child care fees for children age 6 or below at a registered licensed Child Care Centre or a Kindergarten. Costs for private nannies or caretakers are not eligible. If both parents are filing taxes, only one parent can qualify for this tax relief.
9. Complete Medical Examination
Maximum Tax Relief: RM500
Criteria: Complete medical examination for self, spouse or child. A full medical checkup would be as defined by the Malaysian Medical Council (MMC). Medical lab test results are not a full medical checkup thus ineligible.
10. Medical Expenses for Parents
Maximum Tax Relief: RM5,000
Criteria: Medical expenses includes medical treatment for parents who are diagnosed with illness or physical/mental disabilities, medical care for parents in a nursing home, dental treatment (excluding cosmetic), and special needs expenditure such as nutritional food and disposable diapers. This claim for tax relief must include prescription/written evidence/endorsement from a certified medical practitioner. In addition, the parent must both be living and treated in Malaysia.
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