Is your company ready for E-invoicing?

Ultimate Guide to Income Tax Relief 2023 (for e-Filing 2024)

Are you ready to maximise your tax savings for the upcoming e-Filing 2024? From medical expenses to education and lifestyle expenditures, understanding these tax reliefs can help you minimise your taxable income legally.

Let’s explore the list of tax reliefs provided by the Inland Revenue Board of Malaysia (LHDN) for the Year of Assessment 2023, to familiarise yourself with the various tax reliefs available to resident individuals.

There are 4 categories of tax reliefs, namely Individual, Contribution, Lifestyle and Child. For many of these reliefs, you can only claim up to the maximum amount allowed instead of the whole expenses. Since we practise Self-Assessment in Malaysia, you should keep all the receipts for eligible relief for up to 7 years, just in case LHDN would like to double confirm.

A. Individual Tax Relief

A. Individual Tax Relief​

The reliefs in this category are meant to reduce the taxable income of taxpayers. Those who are disabled or with disabled spouse are entitled to a higher relief.

Taxpayers who are studying, whether it’s further education or upskilling programmes, are also entitled to the tax relief on education. However, please note that the cap for those taking upskilling programmes is currently set at RM2,000.

No
Types of Relief
Amount (RM)
1
Individual and dependent relatives
9,000
2
Husband / wife / payment of alimony to ex-wife
4,000
3
Disabled individual
6,000
4
Disabled husband / wife
5,000
5
Education fees (Self):
1. Any course of study, other than Master’s or Doctorate level
2. Any course of study, at Master’s or Doctorate level
3. Course recognised by the Director General of Skills Development, undertaken for the purpose of upskilling or self-enhancement (Restricted to RM2,000)
7,000

B. Contributions

B. Contributions

Reliefs in this category are claimable for those who contribute to Social Security Organisation (SOCSO), Employment Insurance Scheme (EIS), Civil Servant Retirement Fund (KWAP), Employees’ Provident Fund (EPF) or other similar schemes, as well as those who purchase Life Insurance, Family Takaful, Education Insurance or Medical Insurance.

Those who contribute to any Private Retirement Schemes (PRS) may claim the amount they have contributed, up to a cap of RM3,000, while those who deposit into the National Education Savings Scheme (SSPN) for their children may claim the net amount they have deposited, up to a cap of RM8,000.

No
Types of Relief
Amount (RM)
6
Contribution to the Social Security Organisation (SOCSO) and Employment Insurance Scheme (EIS)
350
7
Life insurance and EPF
For civil servants, private sector employees self-employed individuals:
1. Mandatory contributions to approved schemes or voluntary contributions to EPF (excluding private retirement schemes) or contributions under any written law
(Restricted to RM4,000)

2. Premium for Life insurance, family takaful or additional voluntary contributions to EPF (Restricted to RM3,000)
7,000
8
Deferred Annuity and Private Retirement Scheme (PRS)
3,000
9
Net deposit in National Education Savings Scheme (SSPN) (Total deposit in 2023 minus the total withdrawal in 2023)
8,000
10
Education and medical insurance
3,000 (Restricted)

C. Lifestyle and Medical Expenses

Under this category, taxpayers may claim medical expenses on serious diseases for themselves, spouse or children, fertility treatment, vaccination, medical check-up, mental health examination or consultation, as well as assessment or treatment or intellectual disabilities up to RM10,000.

There is also a separate relief on medical treatment, special needs and caregiver expenses for taxpayers’ parents up to RM8,000, as well as the purchase of basic supporting equipment for ownself, spouse or child if he or she is disabled, up to the amount of RM6,000.

For breastfeeding moms with kids under the age of 2, she may claim up to RM1,000 for breastfeeding equipment. Note that this relief can only be claimed once every 2 years.

In terms of lifestyle items, purchase of personal computers, smartphones, tablets, books, journals, magazines for yourself, spouse, or child is claimable up to RM2,500.

A relief up to RM500 is provided for purchase of sports equipment for any sports activity, gym membership, or registration fee for any sports competition organised by approved and licensed organisers.

For those owning an Electric Vehicle (EV), you may also claim a tax relief on the purchase of EV charging facilities for private use for up to RM2,500.

No
Types of Relief
Amount (RM)
11
Medical expenses on:
1. Serious diseases for self, spouse or child
2. Fertility treatment for self or spouse
3. Vaccination for self, spouse and child (Restricted to RM1,000)
10,000
12
Expenses (Restricted to RM1,000) on:
1. Complete medical examination for self, spouse or child
2. COVID-19 test including purchase of self-detection test kit for self, spouse or child
3. Mental health examination or consultation for self, spouse or child
13
Expenses (Restricted to RM4,000) for child aged 18 and below:
1. Assessment of intellectual disability diagnosis
2. Early intervention programme / intellectual disability rehabilitation treatment
14
Medical treatment, special needs and carer expenses for parents (Medical condition certified by medical practitioner)
8,000
15
Purchase of basic supporting equipment for disabled self, spouse, child or parent
6,000
16
Lifestyle – Expenses for the use / benefit of self, spouse or child in respect of:
1. Purchase or subscription of books / journals / magazines / newspapers / other similar publications (Not banned reading materials)
2. Purchase of personal computer, smartphone or tablet (Not for business use)
3. Purchase of sports equipment for sports activity defined under the Sports Development Act 1997 and payment of gym membership
4. Payment of monthly bill for internet subscription (Under own name)
2,500
17
Lifestyle – Additional relief for the use / benefit of self, spouse or child in respect of:
1. Purchase of sports equipment for any sports activity as defined under the Sports Development Act 1997
2. Payment of rental or entrance fee to any sports facility
3. Payment of registration fee for any sports competition where the organiser is approved and licensed by the Commissioner of Sports under the Sports Development Act 1997
500
18
Purchase of breastfeeding equipment for own use for a child aged 2 years and below (Claimable once every 2 years)
1,000
19
Expenses on charging facilities for Electric Vehicle (Not for business use)
2,500

D. Child Reliefs

Expenses on children often constitute a huge part of the cost for average parents, therefore there is also a category focussing on children.

For a start, fees on registered child care centres or kindergarten for kids aged 6 and below is given a relief up to RM3,000.

Expenses on children often constitute a huge part of the cost for average parents, therefore there is also a category focussing on children.

For a start, fees on registered child care centres or kindergarten for kids aged 6 and below is given a relief up to RM3,000.

Every underaged, unmarried child the taxpayers have is entitled to an annual relief of RM2,000.

Also, every child under 18 years old who are further studying locally from diploma programme onwards is entitled to a relief of RM8,000. Whereas those further studying overseas for A-Level and above are entitled to a relief of RM2,000.

Furthermore, for every disabled child, there is an additional RM6,000. If they are attending further study (Diploma and above in Malaysia, or Bachelor’s Degree and above overseas), they are entitled to a further relief of RM8,000.

No
Types of Relief
Amount (RM)
20
Child care fees to a registered child care centre / kindergarten for a child aged 6 years and below
3,000
21a
Each unmarried child and under the age of 18 years old
2,000
21b
Each unmarried child of 18 years and above who is receiving full-time education ("A-Level", certificate, matriculation or preparatory courses).
2,000
Each unmarried child of 18 years and above that:
1. receiving further education in Malaysia in respect of an award of diploma or higher (excluding matriculation/ preparatory courses).
2. receiving further education overseas in respect of an award of degree or its equivalent (including Master’s or Doctorate).
3. the educational establishment shall be approved by the relevant government authority.
8,000
21c
Disabled child
6,000
Additional exemption for each unmarried disabled child age 18 years old and above, pursuing:

1. Diplomas qualification or above in Malaysia, or
2. Bachelor’s Degree or above outside Malaysia

in a programme in Higher Education Institute that is accredited by the relevant Government authorities
8,000

Deadline and Penalty for Late Submission

For taxpayers without business income, the deadline for manual Income Tax Filing (submission of BE Form) is 30 April every year, whereas for those submitting online through the e-Filing system (submission of e-BE Form), the deadline is 15 May.

What happens if you fail to meet the deadline for income tax filing?

Late submissions of e-filing incur penalties imposed by LHDN. The penalty amount varies, depending on the duration of lateness and whether any extension was granted:

– Up to 12 months late: A 15% penalty is levied on the tax amount based on your taxable income for the relevant year of assessment.

– Between 12 months and 24 months late: A 30% penalty is imposed on the tax amount based on your taxable income.

– More than 24 months late: A 45% penalty is applied to the tax amount based on your taxable income.

Be A Smart Taxpayer and Avoid the Penalties

How can you avoid penalties for late tax filing?

Meet the deadline: Submit your tax return by the specified deadline, typically by 30 April (manual submission) or 15 May (e-Filing) of the following year for individuals without business income. Set reminders to ensure you don’t miss the deadline.

Try to apply for an extension: If unforeseen circumstances prevent you from filing on time, you have no choice but to request for an extension from the LHDN. However, do note that there is no guarantee that your request will be granted.

Go for e-Filing: Opt for the e-Filing system in the MyTax Portal of LHDN for faster and more convenient filing compared to traditional paper submissions.

Remember, timely tax filing not only saves you money but also time and unnecessary stress. Prioritise meeting the deadline and consider utilising e-Filing for a smoother tax season experience.

Source:
Tax Reliefs – Inland Revenue Board of Malaysia (LHDN)

https://www.hasil.gov.my/en/individual/individual-life-cycle/how-to-declare-income/tax-reliefs/