Tax Reliefs For Year Of Assessment 2016 (Tax Filed In 2017)

What is a income tax relief? Tax reliefs are set by LHDN, where a taxpayer is able to deduct a certain amount for money expended in that assessment year, from the total annual income. These are for certain activities or behaviours that the government encourages or even necessities or burdens to lighten our financial loads.

For income tax Malaysia, tax reliefs can help reduce your chargeable income, and thus your taxes. If planned properly, you can save a significant amount of taxes.

In our example, a taxpayer would have been taxed about 10% of his total chargeable income of RM84,300 if he had claimed no tax reliefs at all.

However, with the self & dependent tax relief of RM9,000, life insurance & EPF relief at RM6,000, his total chargeable income is now RM69,300, hence, he would only be taxed about 8% of his chargeable income.

Other than the above three common tax reliefs, there are many other reliefs tax payers in Malaysia can maximise. Refer to this list of the income tax relief 2017 Malaysia:

Individual Relief Types	Amount
Self and dependent	RM9,000
Insurance & other policies
Life insurance and EPF	RM6,000
Deferred annuity and Private Retirement Scheme (PRS) – with effect from year assessment 2012 until year assessment 2021	RM3,000
Insurance premium for education or medical benefit	RM3,000
Contribution to the Social Security Organisation (SOCSO)	RM250
Applicable to certain taxpayers
Husband/Wife/Alimony payments	RM4,000
Medical expenses for parents OR Parent Limited 1,500 for only one mother Limited 1,500 for only one father	RM5,000 OR RM3,000
Education fees (Individual)	RM7,000
Medical expenses for serious diseases	RM6,000
Complete medical examination	RM500
Purchase of books, journals, magazines and publications	RM1,000
Purchase of personal computer (once in every 3 years)	RM3,000
Purchase of sport equipment for sport activities (i.e. racquets, balls, golf sets)	RM300
Disabled individual	RM6,000
Disabled wife/husband	RM3,500
Basic supporting equipment (for disabled self, spouse, child or parent)	RM6,000
Applicable to tax paying parents
Ordinary child relief	RM2,000
Each unmarried child of 18 years and above who is receiving full-time education ("A-Level", certificate, matriculation or preparatory courses)	RM2,000
Each unmarried child of 18 years and above that is:  (i) receiving further education in Malaysia for diploma or higher (excluding matriculation/preparatory courses) (ii) receiving further education outside Malaysia for degree or its equivalent (including Master or Doctorate) (iii) the instruction and educational establishment shall be approved by the relevant government authority	RM8,000/per child
Disabled child	RM6,000/per child
Additional exemption per unmarried disabled child age 18 years old and above, who is pursuing: (i) diplomas or above qualification in Malaysia (ii) bachelor degree or above outside Malaysia in programme and in Higher Education Institute that is accredited by related Government authorities	RM6,000/per child
Net saving in SSPN's scheme (with effect from year assessment 2012 until year assessment 2017)	RM6,000

There really are a lot of tax reliefs and if you plan your reliefs effectively every year, you could be saving thousands in taxes every year.

Quick tips

On top of just looking at tax reliefs, how you file can make a difference. For married taxpayers, you need to consider whether to file for joint or separate assessment to maximise on the tax reliefs such as spouse relief, and also which spouse to claim for child relief. Depending on the income differences between the spouses claiming joint or separate can have a big impact on your tax savings.