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The Ultimate Guide to Tax Deductions for Expats and Malaysians

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Filing your taxes? You may qualify for some of these tax relief items and you don’t even know it yet! Use this quick guide to see how you can reduce your taxes legally.

Though paying your taxes makes you a respectable citizen, you don’t have to pay much more than what you’re supposed to. This guide will help you get your taxes done to your best benefits before the due date of 30 April 2013.

Tax Relief = Amount of tax breaks that can reduce your taxable income.

Individual and Dependent Relatives

All tax payers enjoy this tax relief

Your deductible amount: RM9,000

Medical Expenses for Parents

For medical treatments, special needs and carer expenses certified by medical practitioners. Includes medical care and treatment provided by a nursing home as well as a basic, non-cosmetic dental treatment.

Your deductible amount: Up to RM5,000

Basic Supporting Equipment

Supporting equipment’s refer to those used by a disabled individual, spouse, child or parent, such as haemodialysis machine, wheelchair, artificial limbs and hearing aids.

Your deductible amount: Up to RM5,000

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Disabled Person

All disabled persons automatically get this tax

Your deductible amount: RM6,000

Education

For any course up to tertiary level in law, accounting, Islamic financing, technical, vocational, industrial, scientific or technology skills; and any course to acquire Masters or Doctorate degree at institutions recognized/approved by the authorities.

Your deductible amount: Up to RM5,000

Medical Expenses for Serious Diseases

Diseases that qualify: AIDS, Parkinson’s disease, cancer, renal failure, leukaemia, heart attack, pulmonary hypertension, chronic liver disease, fulminant viral hepatitis, head trauma with neurological deficit, brain tumour or vascular malformation, major burns, major organ transplants and major amputations. Tax relief is provided for self, spouse and child.

Your deductible amount: Up to RM5,000

Medical Examination

Get this tax relief when you, your spouse or your child undergo a medical examination. Relief is capped at RM500 per person, and should not exceed RM5,000 when added together with Medical Expenses for Serious Diseases.

Your deductible amount: Up to RM500 per person for self, spouse and child

Books, Journals, Magazines and Publications

Good news for all bookworms as this applies for both hard copies and electronic books. Take note relief items do not cover newspapers and banned reading materials.

Your deductible amount: Up to RM1,000

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Computer

That’s right; you get tax relief just for buying a computer for personal use! Take note you can only do this once every three years.

Your deductible amount: Up to RM3,000

Net Deposit in Skim Simpanan Pendidikan Nasional (SSPN)

If you contribute to SSPN for your child’s education, you get tax relief for the amount you’ve deposited minus the amount you’ve withdrawn for the year.

Your deductible amount: Up to RM6,000

Sport Equipment

This covers a full range of sporting activities under the Sports Development Act 1997. For the general public, just know that your swim suit, sport shoes, golf balls and shuttlecocks are all deductible!

Your deductible amount: Up to RM300

Broadband Subscription

You heard right! You get tax deduction simply for having a broadband line back home. Until we hear otherwise, taxes filed in 2013 will be the last year this tax relief item will be available.

Your deductible amount: Up to RM500

Interest on Housing Loan

If you have a home loan for a property that isn’t rented out, you get tax relief for 3 consecutive years starting from the date in which your interest is first expended. This applies only for residing Malaysians, and is limited to one unit per person as well as for SPAs executed between March ‘09 and 31 December ’10.

Your deductible amount: Up to RM10,000

Husband/Wife or Alimony Payment

For sole bread earners, you get this tax relief if your spouse has no income and has elected for joint assessment. You also get this if you’re paying alimony to a former wife under a formal agreement (provided that the deduction for wife and alimony payments shall not exceed RM3,000)

Your deductible amount: RM3,000

Disabled Spouse

All persons living with a disabled spouse automatically qualify for this.

Your deductible amount: RM3,500

Children

You get tax relief of various amounts if you have children. These include:
(a)    RM1,000 per unmarried child under 18
(b)    (b) RM1,000 per child of 18 and above who is unmarried and undertaking fulltime education
(c)    RM4,000 per child of 18 and above who is unmarried and receiving further education in Malaysia (Diploma and above) or outside Malaysia (Degree and above) at an institution approved by the authorities.
(d)    RM5,000 per disabled child
(e)    RM9,000 per disabled child of 18 and above and receiving education in Malaysia (Diploma and above) or outside Malaysia (Degree and above) at an institution approved by the authorities.

NOTE: You can only claim 50% if you and your spouse are both filing individual assessments and claiming for tax deductions for your children.

Your deductible amount: Up to RM9,000 per child

Insurance and Provident Fund

You’ll enjoy this tax relief if you have life insurance for yourself or your spouse, or if you contribute to EPF or any other approved provident funds/pension schemes.

Your deductible amount: Up to RM6,000

Private Retirement Schemes (PRS) & Deferred Annuity

For those who contribute to a PRS, you’ll get a tax relief for your contribution and total payment of deferred annuity. To find out what PRS is, go to www.imoney.my/articles/prs.

Your deductible amount: Up to RM3,000

Education & Medical Insurance

If you’re paying for an education or a medical insurance for yourself, your spouse or your child; you’ll get to enjoy this tax relief.

Your deductible amount: Up to RM3,000
You will also get to deduct form your taxable income for gifts, money or contributions you’ve made including those made to the Government and local authorities, approved organisations, approved sport activities/ bodies, project of national interest (as determined by the Ministry of Finance), libraries, public facilities for disabled people, healthcare facilities (approved by the Ministry of Health) and national or state art galleries.

Tax Rebate

You can also enjoy tax rebate (the amount you can deduct from the taxes you’re obliged to pay (NOT taxable income)

For Self: RM400
You will enjoy this if your taxable income (i.e. Total Income minus Tax Relief) is less than RM35,000 per year.

For Spouse: RM400
You will enjoy this if your taxable income (i.e. Total Income minus Tax Relief) is less than RM35,000 per year and you’re entitled to a deduction of RM3,000 for your spouse under Tax Relief for Husband/Wife or Alimony Payment.

For Zakat or Fitrah: The actual RM expended
You will enjoy this if you’ve paid Zakat, Fitrah or any other obligatory Islamic religious dues.

How to Calculate Your Taxes?

Click on iMoney tax relief guide to learn how to calculate your taxes. The full info graphics for the above content is also available at iMoney Home Loan Calculator tool.

The Ultimate Guide to Tax Relief for Expats and Malaysians was provided by iMoney.

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