Personal reliefs are given as deductions from the total income of an individual in arriving at their chargeable income. Personal reliefs are allowed only for taxpayers who are residents of Malaysia for the relevant year of assessment.
In the case of non-resident individuals who are Malaysian citizens, a relief known as non-resident relief would be allowed if certain conditions are met. Where total reliefs exceed total income, there would be no annual chargeable income. The excess reliefs cannot be carried forward to the following year of assessment. No refund or repayment of the relief will be given either. The entitlement conditions for each relief must be satisfied to minimise the income tax liability.
Below we break down the personal tax reliefs every taxable Malaysian should claim as stipulated in the Income Tax 1967 (“ITA”)
1. Personal Relief [Section 46(1)(a)]
A person who lives in Malaysia and a Hindu joint family each gets RM9,000 in personal relief. There is no need to file a claim on the tax return. As long as the person is taxed, they will automatically be entitled to this personal relief. Such relief is also given to a minor.
2. Medical Expenses on Parents [Section 46(1)(c)]
The relief for medical costs a person pays for their parents is limited to the lesser of the actual cost or RM8,000. Claims must be backed up by a doctor or other medical practitioner receipt that certifies the parents required medical treatment. When the costs are split between more than one child, each child gets to claim the amount of their contribution if they attach sufficient proof. This medical expenditure also includes nursing home charges.
The RM8,000 tax relief for parents’ medical expenses is now also given to parents with special needs or carers, as long as the medical care is delivered in Malaysia. The claim must also be backed up by a certificate from a medical practitioner registered under the Malaysian Medical Council saying that the parents’ health requires medical care or that they need the help of a carer.
3. Basic Supporting Equipment [Section 46(1)(d)]
An individual can receive up to RM6,000 in relief for the purchase of any necessary basic supporting equipment for:
- Their use if they are a disabled person; or
- For the use of their spouse, child, or parent who is a disabled person
Section 18 defines the term “disabled person” as an individual who has been certified in writing by the Department of Social Welfare as a disabled person. A wife who is taxed separately may be eligible for the deduction if she incurs such expenses for her or her parent’s usage. When the husband pays for his wife’s expenses, she is eligible for relief.
When a wife is taxed individually, she may claim a deduction for the cost of any essential basis-supporting equipment she purchases for herself or for any of her parents who is a disabled person. According to Section 45(2), only the husband can claim a deduction for purchasing equipment for his parents when the wife’s income is assessed in her husband’s name.
4. Disabled Person Relief [Section 46(1)(e)]
A disabled person is eligible for an additional relief of RM6,000 on top of the RM9,000 relief provided under Section 46(1)(a), as was previously mentioned. Thus, making them entitled to a maximum relief of RM15,000. A single woman who is disabled and subject to individual taxation is also eligible for this reduction.
5. Course Fees [Section 46(1)(f)]
As a relief for education fees, a person can claim a relief maximum of RM7,000 for:
- Any course of study in any institution in Malaysia recognised by the Government; and
- Undertaken to acquire technical, vocational, or industrial skills
Relief for further education has been expanded to include Law, Islamic finance and Accounting courses enrolled at recognised institutions of higher learning or professional bodies in Malaysia that are recognised by the Government and approved by the Ministry of Finance. Since the amount is on fees expended, an original receipt is needed to prove the claim. Only the course fees paid to institutions approved by the Ministry of Education would be considered for relief.
6. Serious Disease [Section 46(1)(g)]
An amount limited to RM8,000 is allowed as a relief in respect of medical expenses expended by an individual on himself, his wife or a child who is suffering from a severe disease. This includes complete medical treatment, fertility treatment for both husband and wife and approved vaccination limit restricted to RM1000. With effect from 2022, the scope of relief for medical examination is expanded to include Covid-19 detection tests and mental health examination or consultation.
7. Purchase of Books, Journals, Magazines, Etc [Section 46(1)(p)]
A relief of up to RM2,500 for the cost of buying books, journals, magazines and other similar publications for the purpose of enhancing knowledge, either for one’s use or for the benefit of his wife or child, as shown by receipts for the purchase
8. Purchase of Personal Computer [Section 46(1)(t)]
With effect from the year of assessment of 2020, the relief for purchasing a computer for up to RM2,500 is given. In the case of a separate evaluation, each spouse is eligible to claim the relief. If it is a combined assessment, such an expense is deemed incurred by the spouse who pays income tax.
9. Sports Equipment [Section 46(1)(u)]
From assessment 2020, an individual tax relief of up to a maximum of RM500 a year is given towards purchasing sports and exercise equipment. This also includes payment of rental or entrance fees to any sports facility and gym membership.
10. Deduction for Wife or Former Wife [Section 47]
Section 2 ITA defines a “wife” as a woman who (whether or not she has gone through any religious or other ceremonies) is regarded by any law or custom as the wife of a man or as one of his wives.
A resident individual with a wife living with him will be allowed a wife relief of RM4,000 (an additional RM5,000 if the wife is a disabled person) for that year of assessment.
Where an individual’s wife is assessed separately in her name for any year of assessment on her income, no deduction shall be made to him in respect of that wife. However, where the individual’s wife has no total income which can be aggregated with that of her husband for a year of assessment, the husband will be eligible for wife relief.
11. Child Relief [Section 48]
Residents who maintain a child are entitled to child relief under Section 48. The child need not be a resident of Malaysia. A wife can elect for the child relief to be given to her in respect of any child. This would occur when the husband is not working or his total income is insufficient to utilise the relief. This would mean a husband and wife can share the relief where they opt for separate assessments.
The term “child” is defined in Section 48 (9) ITA to mean:
- A legitimate child of the individual or his wife;
- A step-child of the individual or his wife; or
- An adopted child that has been adopted in accordance with the law
In general, a person can get child relief if the child:
- Be maintained (wholly or partly) by the individual;
- Is not married;
- Be under the age of 18;
- If they are over the age of 18, they should be receiving full-time education or working under articles or indentures; and
- Not have any total income that is more than the amount that can be deducted for the child.
The maximum relief for a child under 18 is RM2,000, whereas if the child is above 18 years of age and pursuing their studies in a higher learning institution, the maximum relief would be RM8,000.
While Section 46(1)(q) of ITA stipulates that a maximum claim of RM1000 for every two years will be given for the purchase of breastfeeding equipment to breastfeed a child of fewer than two years, the equipment includes a breast pump kit with an ice pack, a cooler set or cooler bags, and equipment for collecting and storing breast milk.
For married people who are taxed separately, one parent can enjoy the relief provided under Section 46(1)( r) for childcare fees paid for children under 6.
12. Relief for Insurance Premium and Contributions
Relief is given for:
- Insurance premium and contributions to an approved fund; and
- Payments for education and health insurance
A resident individual who has made the following payments will be entitled to relief under Section 49(1):
- Premiums for any life insurance policy;
- Contributions to an approved scheme or the Employee Provident Fund (EPF), whether as an employee or as a self-employed person;
- Contributions under any written law relating to widow’s and orphan’s pensions or any approved scheme for such pensions.
The amount of relief that will be given will be less than RM7,000, or the total amount of payments and contributions.
Section 49(1B) provides maximum relief of RM3,000 for education and medical insurance payments. Referring to insurance means that a person has bought insurance for himself, his wife, or his child, or if the person is a wife, she has bought insurance for herself, her husband and her child.
The most critical consideration is maximising your tax refund by minimising the amount of money you have to pay to the government in the form of taxes. To qualify for the aforementioned tax relief, you will need to preserve and present records of your purchases, including statements, invoices and receipts. This is important in case the authorities decide to audit you down the road. You are obligated by the tax rules to maintain the records that support your tax returns for up to seven years after filing your taxes. Get your paperwork in order and demand what is properly yours.