The income tax deadline for last year's assessment is almost here. For those who have yet to file and would like yet another tip on how to cut down on the chargeable amount, you may just have something going with your recent acts of charity or donations.
Yes, they are tax deductible and if you haven't made any, you may want to consider doing some ahead of this year's assessment year instead. Why not let the goodness of your heart double up as relief for your taxes when the time to file comes next year.
Brief Guide to Making a Tax Deductible Donation
If you would like to enjoy tax deductions from charity donations, it is important for you to ensure that your type of donation falls within the list of categories recognised by LHDN. Knowing what type of donation can be accounted for as tax deduction is the first thing you need to establish before anything else.
On top of that, there are restrictions to the limit that is tax deductible. In general, the tax deductible amount is limited to 7% of your aggregate income. Anything more than that will not be tax deductible and will only go down as an extra in your act of generosity.
The other important factor to ensure before you start donating is to cross check if the recipients of this donation are indeed legitimate foundations and are recognised by LHDN. Donations toward any other organizations or charity not in the list, will not allow you any form of tax deductions.
Most organizations give you the option of making monthly deductions via your savings account, cash, cheque or credit card. You could also choose to do a one-off donation as and when you find the cause is something that needs contribution. These types of one-off donations typically take place in times of crisis such as floods, earthquakes and other types of natural disasters. Whatever the cause you seek to contribute to, ensure you have receipts as proof to make the necessary tax claims.
Donate and Save!
In the interest of humanity, we are not suggesting that you stop doing charity for organisations you have been supporting all this time just because they are not on the LHDN list. After all, the more you help out, the more you will receive in return. Probably not in tax deductions, but very likely in blessings.
Do share with us your thoughts or questions in the comments below – we'd love to hear from you!