Income tax is the largest component of Malaysia’s revenue. It contributes around 50 to 55 per cent annually. Therefore, it is an integral component in funding the nation’s development policy as well as the continuity of the people’s well-being.
For individuals NOT running a business, the deadline for filing their income tax is April 30. For individuals who DO run a business, the due date is June 30.
All individuals should be prepared to be audited by Lembaga Hasil Dalam Negeri (LHDN – the Inland Revenue Board). Therefore, by preparing early, you will not need to scramble around to find receipts and documents by the time April (or June) arrives.
These documents are particularly important when you want to maximise your income tax reliefs. But what are tax reliefs? These are used by a taxpayer to deduct certain amounts for money expended in that assessment year. These reliefs are used to encourage certain spendings (such as books and sports equipment) or to lighten certain financial loads (such as the medical expenses of parents).
The full list of 2020 Income Tax Reliefs (year of assessment 2019) is as the following:
1. Individual and dependent relatives
This refers to how many relatives are financially dependent on you. Total relief is RM9,000
2. For your parents
Medical treatment, special needs and carer expenses for parents. Maximum relief is RM5,000
OR
Care of parent. Maximum relief of RM1,500 each for one mother and one father. Maximum relief is RM3,000
3. Disabled individual
Those who fall under this category are entitled to a relief of RM6,000.
4. Disabled spouse
Total relief of RM3,500
5. Disabled child
Total relief of RM6000. Additional exemption of RM8,000 disable child age 18 years old and above, not married and pursuing diplomas or above qualification in Malaysia or a Bachelor Degree or above outside Malaysia in a program and in Higher Education Institute that is accredited by related Government authorities
6. Equipment for disabled
The basic supporting equipment for disabled self, spouse, child, or parent. Maximum relief is RM6,000.
7. Education fees (self)
Maximum relief of RM7,000 is given if any of the following applies:
- Other than a Degree at masters or doctorate level – Course of study in law, accounting, Islamic financing, technical, vocational, industrial, scientific, or technology
- Degree at masters or doctorate level – Any course of study
8. Medical expenses
Maximum relief of RM6,000 for medical expenses for serious diseases for self, spouse, or child. This amount includes a maximum of RM500 for complete medical examinations.
9. Lifestyle
Maximum relief of RM2,500 for the expenses for the use or benefit of self, spouse, or child in respect of:
- purchase of books/journals/magazines/printed newspapers other similar publications
- purchase of personal computer, smartphone or tablet (Not for business use)
- purchase of sports equipment for sports activity defined under the Sports Development Act 1997 and payment of gym membership
- payment of a monthly bill for internet subscription (Under own name)
10. Motherhood
Maximum relief of RM1,000 for purchase of breastfeeding equipment for own use for a child aged 2 years and below (Deduction allowed once in every 2 years of assessment)
11. Parenthood
Maximum relief of RM1,000 for child care fees to a registered child care centre/kindergarten for a child aged 6 years and below.
12. Skim Simpanan Pendidikan Nasional
Maximum relief of RM8,000 for a net deposit
13. Alimony
Maximum relief of RM4,000
14. Underaged children
Relief of RM2,000 for each unmarried child and under the age of 18 years old.
15. Child’s education
Relief of RM2,000 for each unmarried child of 18 years and above who is receiving full-time education (“A-Level”, certificate, matriculation or preparatory courses).
Relief of RM8,000 for each unmarried child of 18 years and above that is:
- receiving further education in Malaysia in respect of an award of a Diploma or higher (excluding matriculation/preparatory courses)
- receiving further education outside Malaysia in respect of an award of a Degree or its equivalent (including a Master or Doctorate)
The instruction and educational establishment shall be approved by the relevant government authority.
16. Life insurance and EPF
Maximum of RM7,000 including those not through salary deduction.
17. Education and medical insurance
Maximum relief of RM3,000 including those not through salary deduction.
18. Deferred Annuity and Private Retirement Scheme (PRS)
Maximum relief of RM3,000 with effect from year assessment 2012 until year assessment 2021.
19. Contribution to the Social Security Organization (SOCSO)
Maximum relief of RM250.