Filing income tax and understanding the exemptions available can be a daunting task for many. The Malaysian government, through the Inland Revenue Board (LHDN), has provided numerous tax reliefs and incentives to help taxpayers reduce their tax liabilities. This comprehensive guide will walk you through the tax filing and exemption process in Malaysia for the year of assessment 2023 (YA2023), covering various aspects such as individual income tax reliefs, tax exemptions announced under Budget 2023, and more.
Remember that the deadline for income tax e-filing is 15 May 2023 and for the manual BE form is 30 April 2023. Make sure to file your taxes on time to avoid penalties and fines.
There are several individual income tax reliefs available for the year of assessment 2023. These reliefs help to reduce your taxable income, which in turn lowers your overall tax liability. Some of the key reliefs include:
Basic tax relief
Every individual taxpayer is entitled to basic tax relief of RM9,000. This amount is automatically deducted from your chargeable income when you file your taxes.
Relief for spouse and children
You can claim up to RM2,000 relief for each unmarried child who is under the age of 18 years old. Additionally, there is tax relief available for your spouse, depending on your marital status and income-sharing arrangement.
Relief for disabled individuals and dependents
Individuals with disabilities who are registered with the Department of Social Welfare (JKM) can claim an additional exemption of RM6,000. There are also separate exemptions available for those with a disabled spouse (RM5,000) and a disabled child (RM6,000 for each child).
The Malaysian government has announced several new tax exemptions and adjustments under Budget 2023, which will affect taxpayers in the YA2023 filings. Some of these changes include:
Income tax reduction
A reduction in taxable income has been announced for those in the RM35,000 to RM100,000 taxable income band. This move is expected to benefit 2.4 million taxpayers, mainly in the M40 income group, as they will incur tax savings of up to RM1,300. However, the rate for taxable income above RM100,000 will be raised between 0.5% to 2%.
Extension of income tax relief for childcare centre or kindergarten fees
The government has extended the RM3,000 relief for parents with children not older than 6 years old attending registered childcare centres or kindergartens until YA2024.
Increase in tax relief for medical treatment expenditure
The amount of tax relief for medical treatment expenditure has been increased from RM8,000 to RM10,000.
Tax reliefs for parents
Parents can benefit from several tax reliefs related to their children's education, medical treatments, and childcare. These include:
Medical treatments, special needs, and parental care
A maximum of RM8,000 in tax relief is available for medical treatments, carer expenses, or special needs equipment for your parents, subject to certain conditions and certifications.
Childcare fees
Parents can claim tax relief of up to RM3,000 for childcare fees for children aged up to 6 years old attending registered childcare centres or kindergartens.
Tax reliefs for self-study fees
Individuals pursuing higher education at their own expense can claim tax relief of up to RM7,000, subject to certain conditions and eligible courses. Additionally, tax relief of up to RM2,000 is claimable for upskilling or self-enhancement courses.
Tax reliefs for medical expenses and health checkups
Taxpayers can claim a maximum relief of RM8,000 for the treatment of serious or incurable diseases for themselves, their spouses, or their children. A maximum relief of RM1,000 is available for vaccination, full medical examination, COVID-19 detection tests, and mental health consultation for self, spouse, and child.
Lifestyle tax reliefs
A maximum relief of RM2,500 is available for the purchase of lifestyle-related items such as books, personal computers, smartphones, tablets, gym memberships, and sports equipment for yourself, your spouse, or your children.
Tax relief for Skim Simpanan Pendidikan Nasional (SSPN)
Parents or contributors to the SSPN savings plan can benefit from a tax relief of up to RM8,000 based on the net deposit in the SSPN-i or SSPN-i Plus account for the assessment year.
Tax relief for Private Retirement Scheme (PRS)
Individuals participating in the PRS can claim tax relief of up to RM3,000, while employers can enjoy tax deductions for contributions made on behalf of their employees.
Tax Relief for life insurance, EPF, or approved schemes
Tax relief is available for life insurance premiums, Employees Provident Fund (EPF) contributions, or contributions to approved schemes, depending on your employment status and contribution amounts.
Additional Sections
By understanding the various tax reliefs and exemptions available, you can effectively plan and manage your tax filing in Malaysia. Ensure that you file your taxes on time and take advantage of the reliefs to minimize your tax liability. If unsure, consider getting the help of a professional. The fee is very reasonable these days, and the savings they can potentially help you with will far exceed their fees. A simple search on Google, facebook or Linkedin would be a good starting point in having someone help you with your personal tax.