Tax season is here! Get your receipts and claims ready, and we’ll walk you through some money-saving tips to make the most out of your ringgit.
Starting from 2015, any Malaysian individual with an annual income of RM34,000 (after Employee Provident Fund deductions) is required to register with the Internal Revenue Board (IRB), and is eligible for tax deductions, reliefs, rebates, and exemptions.
Who should file their income tax?
- Individuals with a minimum annual income of RM34,000 (after EPF deductions)
- Any individual earning an income from a business
- Any company that starts a new business
- Any employee that falls under the Schedular Tax Deduction scheme
Because there is still a misconception that the IRB will end up taking a larger chunk of your income once you’ve declared it, many people simply opt not to. We won’t delve into the legal repercussions of not filing your taxes if you fall under any of the categories mentioned above, but we can safely say that, if filed correctly, you can get a refund from the government. It only takes a few minutes to register as a taxpayer, which you can do at any IRB branch.
The IRB makes regular updates to its claims, rebates, reliefs, and exemptions, so it’s a good idea to check on their website before filing your taxes. Here’s the latest table for the 2018 assessment year: http://www.hasil.gov.my/bt_goindex.php?bt_kump=5&bt_skum=1&bt_posi=3&bt_unit=1&bt_sequ=1&bt_lgv=2
Now for the tips that can help you save money, while benefiting you in the long-term.
1. Invest in your retirement.
If you invest in the Private Retirement Scheme (PRS), you are entitled to a tax relief of up to RM3,000.
For example, if your taxable income is RM70,000 a year, and you put RM3,000 into the PRS, your total taxable income is reduced to RM67,000. Effectively, you save RM420 (14% of RM3,000), reducing your total tax paid to RM9,380.
2. Open an SSPN account.
You can invest in Skim Simpanan Pendidikan Nasional (SSPN). The tax relief available is up to RM 6,000.
For an income of RM70,000 a year, that means an immediate reduction of taxable income to RM64,000. You’ll reduce your tax payments to RM8,960, from RM9,800. Easy, right?
3. Increase your insurance coverage
There’s no harm in increasing insurance coverage if you haven’t maxed out your relief of RM6,000 for EPF and life insurance, and RM3,000 for medical coverage.
Talk to us and we’ll show you how you can get the most out of your insurance coverage and
4. Work out. Get some books.
Your new year’s resolutions to keep fit and read more can help you save on taxes.
Up to RM2,500 can be claimed under ‘Lifestyle’ expenses. These include
- Purchase of books journals, magazines, printed newspaper and other similar publications (except banned reading materials) for self, spouse or child;
- Purchase of a personal computer, smartphone or tablet for self, spouse or child;
- Purchase of sports equipment for any sports activity as defined under the Sports Development Act 1997 (excluding motorized two-wheel bicycles) and gym memberships for self, spouse or child; and
- Payment of monthly bill for internet subscription
Remember to always keep your receipts for any of the purchases you wish to make a claim for. There are apps that will help you scan and file your receipts for permanent and convenient storage.
Give us a call, and we will walk you through the tax filing process and help you save.
With EASI, we make every ringgit count.