26 Tax-Saving Tips in Malaysia

Friday, February 25th, 2011 | In Knowledge | Tags:

1. Save for your Child’s Education
Since 2007, any amount that is deposited into a savings account for your child under national Education Savings Scheme (Skim Simpanan Pendidikan Nasional) allows you to claim tax deductions.

2. File Separate tax returns
A separate assessment allow each spouse to claim personal tax relief of RM8000 while a joint tax return allows one spouse to claim a wife or husband relief of RM3000.

3. Ask your employer to increase your EPF contributions
Contributions to the employees Provident Fund (EPF) by employers are tax-exempt for the employees.

4. Change your cash remuneration to cash reimbursement
Fixed allowances given by your employer each month for entertainment and housing or parking fees are taxable at your tax bracket. Change these to a “reimbursement” based on receipt and you are not taxed on the amount received.

5. Ask for a company car
A car given by your employer is regarded as a benefit-in kind (BIK) and taxable. However, a company car is advantageous for taxpayers because the preset tax scale for cars is much lower than the actual cost of buying and maintaining a car.

6. Make charitable contributions
A gift of money to an approved charitable organization entitles you to a tax deduction for the amount given.

7. Take Up postgraduate studies
A relief of RM5000 per year for any course of study at the Master’s or doctorate level, the government announced in 2007 Budget the widening of the scope to all postgraduate studies.

8. Buy books, magazines
Starting from Year 2007, taxpayers can claim a personal tax deduction to RM1000 for purchase of books, journals, magazines and other publications.

9. Buy Sport Equipments
You will get a deduction of RM300 for each year of assessment for the purchase of sports and exercise equipments for any sports activities defined under the Sport Development Act 1997.

10. Buy Life Insurance
The maximum tax relief is RM6000 a year for premiums paid to an insurance company for life Insurance or deferred annuity plans.

11. Take out a Medical or Education policy
You can claim deductions of up to RM3000 a year for education and medical insurance (combined limit for both).

12. Pay your parents’ medical bills
You are able to claim up to RM5000 for payments towards your parents’ medical bills.

13. Medical
Claim a deduction of up to RM500 per tax year for a full medical examination and RM5000 for medical expenses for yourself, spouse or child for serious disease.

14. Pay Zakat
If you are a Muslim, paying any amount in zakat, fitrah or other obligation Islamic dues will entitle you to a tax rebate.

15. Buy a Computer
A deduction of up to RM3000 can be claimed once every three years for the purchase of computers, printers and bundled software.

16. Hire a Tax Consultant
Consider hiring a tax consultant to explore ways your remuneration package can be structured to maximize your tax savings.

17. Buy property valued below or at RM250000
Stamp duty must be paid on all property transactions that involve a change of legal ownership. The maximum tax savings that can be found here is RM2000 (for a house worth RM250000).

18. Buy Similar property
Similar property can be grouped together for income tax purposes.

19. Buy shares
Invest in dividend-yielding shares if your tax bracket is above 26%.

20. Invest in REITs
You can go into real estate investment trusts (REITS) if your tax bracket above 15%.

21. Maintain books and records from Day one
Keep separate bank accounts for personal and business transactions and establish a basic accounting system. Any expenses made from the business can be deducted from the business income.

22. Time the purchase and use of your fixed assets
Capital allowances are permitted for certain business assets such as equipment, machinery, vehicles computers and software.

23. Buys a company car
If you are a sole trader or a partner in a business, any car or vehicle that is used for business purposes can bring about tax deductions.

24. Hire your spouse or family member
An effective tax-saving strategy is to hire a spouse or family member.

25. Implement a process to ‘chase after’ unpaid debts
Small business owners can complete a sale or service but might not receive payment, in full or in part. At the end of an accounting year, a debt, which is estimated to be wholly or partly irrecoverable, can be deducted from your business income and this lowers your tax bill.

26. Dedicate a space in your home office
Working in your own house can result in tax deductions for the costs related to your “home office”.

Money you earn is not your money yet, However money you save is absolutely your money.
* For detailed information, please download the power slide below.

[download id=”5″ format=”1″]


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