Sunday, April 13, 2008

Tax Saving Tips for Malaysian (Individuals)

As you may know, the dead line for tax filing is end of this April. I think this year they enforce you to file through the e-filing system. What you need to do is login to and follow the rest of the instructions there. I personally find it is very convenient as compared to the hardcopy filing which I hate it.

It maybe too late for me to tell you the saving tips on tax filing. :D However, some of these tips can be implemented immediately while others can be carried out throughout the years. I’m going to share some tax saving tips for employee (none business owners). Some of them, you may or may not have already known. Some of them I do not aware of it as well and I label it as (New to Me).

1. Save For Your Child Under National Education Saving Scheme (New to Me)

Any amount that is deposited into a saving account for your child under the National Education Saving Scheme allows you to claim for tax deduction. The limit is RM3K per individual. So together with your spouse, it can bring tax relief of RM6K.

2. File Separate Tax Returns

Usually file separately for couples will fall into lower tax bracket unless one party does not earn much but has a parent’s medical bill that reduces the chargeable income for both. Anyway, the safest way is to try it out to compare them yourself.

3. Increase Your EPF contribution (New to Me)

You may not aware that you could actually ask your employer to reduce your monthly salary but increase or EPF contribution by the same amount. The deductible amount from your taxable income is dependent on the arrangement between you and your employer. RM1000 EPF deduction can save up to e.g. RM2,880 (RM12K X 24%). Cool, huh?

4. Continue Your Master or P.h.d.

A total relief of RM5K per year can be claimed for any course of study at the master’s or doctorate level. This is especially suitable for those who are working and studying at the same time.

5. Read more Books and Magazines!!!

I think previously you’re only allowed to claim up to RM500 but starting from 2007, you can claim up to RM1K for any purchase of books, journals, magazines ad other publication.

6. Get Sporty (New to Me)

You can claim up to RM 300 each year to purchase of any sports or exercise equipments for any sports activity. Another cool thing for me.

7. Buy Life Insurance

This maximum tax relief is RM6K a year for premiums paid to an insurance company for life insurance. This is kind of useless if your EPF contribution is more than RM6K because this limit is shared with the EPF contribution. So, this is only applicable to those EPF’s contribution less than RM6K.

8. Buy Medical or Education Insurance

You can claim deductions up to RM3K a year for education and medical insurance (combined limit for both). If you buy 36 critical illness life policy, you may claim up to 60% of total premium paid. Check out my latest post - Tax Relief for Critical Illness Life Insurance.

9. Pay Your Parents’ Medical Bills

You are able to claim up to RM5K for payments towards your parent’s medical bills. However, this does not include payment for your spouse's parents. Remember to keep the receipts, which should be made out to you, together with details of treatment received.

10. Pay Your Own Medical Expenses

You can claim a deduction of up to RM500 per year for a full medical examination and RM5K for medical expenses for yourself, your spouse or your child for serious diseases. A separate tax deduction up to RM5K is given for necessary basic supporting equipment for disabilities suffered by yourself, your spouse, children or parents.

11. Buy a Personal Computer

You can claim up to RM3K once every 3 years. You can claim it for the purchase of printers and bundled software as well.

12. Buy Property Below RM250K

There is 50% stamp duty exemption for the purchase of house that less than RM 250K and the maximum limit that can be claimed is RM 2K. This exemption is only given for one house per individual and applies to sale and purchase agreement (S&P) signed between September 2007 and December 2010.

13. Invest In REITS (New to Me)

REITS stand for real estate investment trust. There are 11 REITs listed on the main board which their dividends are taxed at 15%. If your tax brackets exceeding 15%, you would enjoy some tax savings by investing in REITs.

Well, I hope this is something useful to you. Are those “New to Me” tips also “New to You” too? Happy tax filing to all of you! :)

Source: Personal Money


Anonymous said...

That's great.. I didn't know that we can claim for sports equipment. But too bad I lost the receipt already. If not, I can let my dad claim for it. Not a big amount actually. =D

Mt. said...

in e-filing you do not need receipts so you can actually go ahead and claim the relief, however be prepare that you will need to prove your records should you be investigated, ie. go back to the store and ask to reissue receipt etc. or proof of purchase ...

Apple said...

Ah..I didn't know all these. Thanks. Have to add this in my bookmark. Thanks for sharing.

Mariuca said...

Hola Champ dog! How are u today, so happy to see u have an entrecard widget here woo hoo! Happy Monday! :)

ChampDog said...

Ya, I just knew that too. Since this is new I think equipment that you use outside the sporting such as clothes and shoes are still subjective.

Yes, you don't need the receipts but by the time they spot check you, I afraid you may not able to dig it out. If not mistaken, you're required to keep the proof for t least 7 years. Oh my goodness...

Thanks for the bookmark. Have you start working yet? Maybe you will do one day.

Happy to you see here and miss you too. I'm doing good. Just recently need some luck because waiting for some news. Hopefully the good news will come to be soon. :D

Anonymous said...

very very useful piece of information.

for books, anyone who wanna buy books from amazon or in other countries, i think u still can claim provided u keep the credit card bill (for FOREX thingy) and the receipts from the seller.

footiam said...

It's useful, thanks. You always know where to pinch money!

Anonymous said...

Nice blog. It's good to know that you have actually tried those tips out.

Empowering Youth

Anonymous said...

I did mine online liao.. this post really good tips for us..

ChampDog said...

Yes I claim that I bought from Amazon before too. Hmm… thinking of it I think I forgot to keep the credit card bill. Opss…

You’re welcome! :)

Thanks. I didn’t try all these tips but just some of them. At least I think this is something that we should aware of (except that you haven’t start working yet).

I did mine too last weekend.

Peky said...

Weird. I just filed my tax. I think i missed out on the sports equipment! Dang! Could have added my dumb-bells in :( hehe..not that it's a lot of mooniess..

ChampDog said...

I forgot about that too. So I think I need to buy some sporty things this years. :)

Anonymous said...

Another way of how I think could save us from paying too much taxes.

Buying properties through a company. Then you can claim more deductions.

What do you guys think?

ChampDog said...

When you have a company, a lot of tax saving you can do. Don't you think so? :)

As for buying the property from a company, I think the property has to be used for business purpose. No?

Nadlique said...

In a way, yup, you need to use the property for business purposes.

If you're in the property investing business, then you are in fact using the property for business purposes. It all depends on what is in your Memorandum & Articles of Association.

I am actually using this method with my property investing efforts. Just bought a property a few months ago. Still need to settle payment.

The only problem with this method, as far as I know, is the fact that it'll be hard for me to refinance this property, and to use that money to purchase another one.

ChampDog said...

Thanks for the tips. How many properties you have bought so far?

A quick question. If you're an employee and you open up a company at the same time. Can you take your salary and make it as part of the earning of the company? I doubt we can do that, can we?

Anonymous said...

Hi. I stumbled across your site today. The information is good and very helpful. Keep up the good work!


ChampDog said...

Thank you, Alisa.

Afiq Rohimi said...

I just found out about your blog and oh my god, its amazing. Especially the tax reduction part.

I'm a university undergrad and will be graduating soon and I have a question to ask.

Is this the best way to reduce you tax?

Total up your monthly income(salary+locum+sidebusiness) and calculate how much you have to pay tax. From that, start to see which aspect can I reduce my tax amount. Example, if my total income is RM100000 per annum and before any deduction or relief, I calculated I'm supposed to pay RM1000 for tax. After that, I search through the available tax relieves and find which one is deductible up to RM1000. Lets say I get a life insurance. Thus, I end up paying 0 to income tax and earn RM1000 worth of life insurance.

Is this method viable? Do give your review.

ChampDog said...

The deduction is before the tax and it is not after the tax. For example you earn RM 100K per annum, then you deduct anything that is non-taxable (i.e. RM 1K) to come out a taxable income which is RM 99K in this case.

You still need to pay the tax no matter what. Unless your income fall below certain value (I forgot how much already), then your income is not taxable at all.

Hope it helps.

Anonymous said...

This is good.
New since 2012 is Malaysia Private Pension Scheme (PRS) where RM3000 is deductable/

ChampDog said...

Yupe, save up to RM780. :)

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