Before 2024 ends, let’s see if you can reduce your income tax for this year. This article is about YA2024 income tax for individual resident. In this article, I will only touch on certain tax reliefs. For a full list of available tax reliefs, you may refer to this page from PwC Malaysia (Link).
Tax reliefs to be utilised
Contributions into Employee Provident Fund (EPF) – Up to RM 7,000.
The RM 7,000 limit is together with life insurance premiums.
The combination with life insurance premiums is limited to RM 3,000 and only applies to voluntary contributions to EPF (click here for more information). If your life insurance premium is already RM 3,000, the maximum contribution to EPF that can be claimed as tax relief is RM 4,000.
This RM 4,000 tax relief includes both obligatory and voluntary contributions to EPF. So, if your annual compulsory contribution to EPF is already more than RM 4,000, you are only entitled to the RM 3,000 relief above (remember it only applies to voluntary contributions, thus any excess from your obligatory contributions is not eligible), provided you do not have life insurance.
The return (click here for its historical return) from EPF is not bad, so do take advantage of this tax relief if you are eligible.
Contributions to private retirement scheme (PRS) or annuity scheme – up to RM 3,000
You can contribute up to RM 3,000 to PRS (click here for more information) or annuity scheme. I think there is no point contributing more than this amount as you can invest the extra in other more accessible avenues.
The return from PRS varies and it is not guaranteed to be positive. Nonetheless, given the long time horizon, the probability of getting a positive return is quite high.
Complete medical examination, Covid-19 detection test and mental health examinations or consultations – up to RM 1,000
This relief is applicable to medical fees incurred by self, spouse or child. You may make use of this tax relief to get a full medical check up before the year ends.
Dental examination and treatment – up to RM 1,000
This relief is applicable to dental fees incurred by self, spouse or child. You may make use of this tax relief to get a dental examination before the year ends.
Lifestyle relief – up to RM 2,500
This is the normal lifestyle relief that includes purchase of books, journals, magazines, newspaper and other similar publications, personal computer, smartphone or tablet, and internet subscription. If you plan to change your phone/computer/tablet, perhaps it is a good time to buy a new one. Nonetheless, there is no point to buy a new item just for the tax relief.
In YA2024, fees for any upskilling or self-enhancement courses are eligible under this tax relief. Thus, if you have any skill that you would like to learn, take a course before the year ends.
Deposit into Skim Simpanan Pendidikan Nasional account – up to RM 8,000
If you have child, Skim Simpanan Pendidikan Nasional account is also a good place to put your extra cash. Its dividend rate (click here for its historical return) is normally slightly higher than fixed deposits.
Sports equipment and activities relief – up to RM 1000
This is another relief that you can utilise. It includes cost of purchasing sports equipment, entry / rental fees for sports facilities and registration fees for sports competition; gym membership fees (separated from lifestyle relief in YA2024); and sports training fees charged by registered sports clubs / societies / companies. However, do check whether the sports equipment that you are buying is eligible for this tax relief.
This relief is applicable to payments incurred by self, spouse or child.
Take action before it is too late
These are some reliefs that you can make use of to reduce your income tax payable. If you are paying the tax monthly, these reliefs might help you to claim back some money from the tax authority when you file the tax return in 2025. However, the clock is ticking and you need to take action now before 2025 arrives. Do keep all the receipts/evidence for at least seven years in case you are called in for a tax audit.
How can a financial planner help you?
I will inform you about the available tax reliefs and help you to plan to utilise the reliefs throughout the year, provided you engage me in the beginning of the year. Rather than waiting till the end of the year and need to come up with a lump sum to utilise the reliefs, it is easier to spend the money bit by bit throughout the year. Otherwise, you might not have the resources to take advantage of all the available tax reliefs, thus unable to reduce your tax payable. Furthermore, I may also advise on whether it is worthwhile to buy an item just for the tax relief.
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Disclaimer: This post is for informational purpose only. Do confirm with the tax authority for the eligibility of the tax reliefs.
