1. Cut-off Income
If your income falls below the government’s mandated minimum, chances are that you may only need to pay the bare minimum in income taxes. In some countries, this amount may be based on the minimum wage, while others may indicate a specific amount for the cut-off.
Starting in 2013, the Malaysian government determined that any annual income falling below the cut-off of RM 34,000 after EPF deductions (about RM2,800 per month or less) shall not be taxable. However, this figure may change over time.
One of the most popular forms of partial tax relief comes for those with a dependent, or someone who relies solely on the taxpayer for basic monetary needs. The most well-known examples of this are parents raising small children or minors, provided they are the taxpayer’s biological or legally adopted children, or taxpayers who are supporting elderly parents.
Malaysia offers tax reliefs not only for parents but also for those supporting disabled patients. In the case of the latter, provisions are made to partially cover medical expenses incurred in the care of the disabled dependent. These reliefs are capped at RM 1,500 each for ordinary children and unmarried children over 18, and RM 9,000 for disabled dependents.
3. Spousal Support
If you’re married, you might be eligible for a tax relief not unlike that for dependents. Malaysia offers limited tax relief of RM 3,000 for those making alimony payments towards their husband or wife. Tax relief of RM 3,500 also exists for those supporting a disabled spouse.
4. Donations and Gifts
The government may also grant tax deductions to avid philanthropists, who may donate large sums of their income towards public, civic, charitable, or religious causes. It’s worth noting, however, that a sizable percentage of your income must go into the donation before you can qualify for the tax deduction.
In Malaysia, for example, the amount of aggregate income eligible for tax deductions is limited to 7% if you have made a monetary donation to approved institutions, organizations, sports bodies, or projects and National Interests vetted by the Ministry of Finance.
In countries with a robust public services infrastructure, residents may expect to pay little to nothing for their studies. If you’re paying your own way through college or university, you might be entitled to a tax exemption.
In Malaysia, you may qualify for a tax deduction of up to RM 7,000 if you are pursuing higher education – specifically if you are pursuing a degree at the Masters or Doctorate level.
6. Purchase of Various Print Materials
While this is not widespread, some countries may entitle you to a small tax deduction that serves as your “allowance” for buying print materials such as books, magazines, journals, and other similar publications. You can deduct RM 2,500 from your taxes for the purchase of print and digital materials except for newspapers and banned books.
Remember these exceptions when you file your income tax. Make sure to make it before the deadline! It’s a good thing the Inland Revenue Board now allows you to pay your taxes using your Visa, Mastercard, or American Express credit card. Visit https://byrhasil.hasil.gov.my/for more information.
7. Lifestyle Tax Relief
Effective for the assessment year 2017 (tax filed in 2018), the lifestyle tax relief at a limit of RM2,500 yearly will include new categories which are
- purchase of printed newspapers
- smartphones and tablets
- internet subscriptions
- gymnasium membership fees.