Income tax season is just around the corner! As people continue to collect the necessary documents for tax reliefs, there are some questions on whether certain items are tax deductible.
In this article, we will be clearing some confusion on which items that may seem tax deductible but in reality are not.
Last year, LHDN introduced the lifestyle section which provides tax reliefs for items like newspapers, journals and magazine (both print and electronics) as well as personal computers, tablets and smartphones. However, one of the few items that are not tax deductible is the hybrid computer/laptop.
Hybrid computers in this regard refer to devices that possess attributes of a personal computer and a tablet with the use of a convertible / detachable keyboard and touchscreen. Some examples of these hybrid computers include Microsoft Surface, Windows 8 Hybrid Laptop etc.
Taxpayers cannot claim tax reliefs for hybrid computers by placing it under personal computers as LHDN considers hybrid computers as a separate categories of devices.
Another electronic device that is not tax deductible is the electronic dictionary, an electronic device that primarily functions as a dictionary. Like the aforementioned hybrid computer, electronic dictionaries are considered as a separate category of devices.
Thus, if you’re looking to maximise your tax reliefs and you’re still deciding whether to buy an electronic dictionary or one of its alternatives, it is advisable to go with the latter (dictionary apps, online dictionaries or a physical dictionary).
This part has been a point of confusion and contention when it comes to claiming tax relief for sports equipment. LHDN states in the Income Tax Act that the tax relief for sports equipment is only eligible for those used in sporting activities defined in the Sports Development Act 1997.
This means equipment like footballs, shuttlecocks, nets, rackets, martial arts weapons, fencing swords, electronic scoreboards etc. can be considered as sports equipment. Whereas jerseys and football boots are considered as sports attires and sports shoes, therefore, cannot be tax deductible.
Non-Vocational Bachelor’s Degrees
Here is a much more recent point of confusion when it comes to education tax incentives. LHDN has elaborated on the education tax relief by stating the kinds of undergraduate diplomas, and degrees that qualify for tax reliefs. These categories are Law, Accounting, Islamic Financing, Technical, Vocational, Industrial, Scientific, and Technology.
This elaboration means that courses like Anthropology, English Literature, Indonesian Studies, and Philosophy etc. are not eligible for education tax relief should the taxpayers decide to pursue diplomas and degrees out of the listings. These courses are only eligible if the taxpayer decided to pursue them at the Master’s level or Doctorate level.
Both Parental Medical Relief and Care Relief Together
Please hear us on this part. It is true that there is a tax relief for either parental medical expense or parental care. However, the keyword to note for this segment is “or”. LHDN has stated in the Income Tax Act that one criteria to claim parental care tax relief is that the taxpayer must not claim expenses related to medical treatment and care for the parents.
As such, taxpayers who take care of their parents must decide which tax relief they wish to apply for. If you decided to apply for the medical expenses relief for your parents, then you are limited to only medical expense relief and vice versa. For more information on parental care tax reliefs, visit KPMG’s official website.
This part is for the parents with infants or children under the age of six years old. LHDN recently introduced a tax relief for childcare fees from child care centre and kindergartens at the maximum rate of RM1,000. However, this clause is not applicable for private nannies or caretakers. It should also be noted that only one parent can claim the tax relief for childcare fees.
With regards to this matter, it is in your best interest that you search for registered child care centres and kindergartens from the directory on the Department of Social Welfare’s website and request for the invoice/receipts for tax relief application.
Some Serious Illnesses
It is true that LHDN has stated the tax rebates/relief for any medical expense, including complete medical examination for the taxpayers and their family with serious illness.
However, LHDN has also provided a list of illnesses, major surgeries, and amputations that are considered eligible for this tax relief. As such, we recommend you consult your doctor on the serious illness you have and cross-reference that with the list from LHDN to see if medical expenses for such illness are eligible for tax rebates or deductions.
As mentioned earlier, it is important to note that some of these items are subjected to changes at the discretion of the government and their budget for each year. However, there are a few things you can do to clarify these matters.
1) Collect the necessary receipts and documentations for tax reliefs.
2) Contact the nearest LHDN branch for more information and clarity.
With that, we hope that you can get the most out of the tax reliefs when filing your taxes this year. Want to know more about tax reliefs? You can read some of our previous articles here. Have anything to add to this article? Share your thoughts and ideas in the comments section down below!