Since the start of the tax filing season for Year of Assessment 2021 (YA 2021), one of the most frequent questions we’ve been getting is regarding the special lifestyle tax relief for the purchase of a personal computer, smartphone, or tablet. Specifically, if the item purchased is more than RM2,500, can you claim the excess balance under the regular lifestyle tax relief?

In short, yes.

To confirm this, we referred to the Explanatory Notes for YA 2021 tax filing provided by the Inland Revenue Board (IRB) for resident individuals who do not carry business. It is a comprehensive guide on the available tax reliefs and is updated before the start of the tax filing season of each assessment year. Since this comes straight from the source, its contents is as authoritative and reliable as it gets.

Under the special lifestyle tax relief, the IRB states that an individual can claim for the purchase of a personal computer, smartphone, or tablet for the use of self, spouse, or child as well as not for the purpose of own business, up to RM2,500 in tax relief. This relief was introduced in mid-2020, before being extended to YA 2021, and most recently it was confirmed that it will also be available in YA 2022.

What’s important to note is in the example provided by the IRB, and how the two lifestyle tax reliefs are treated:

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Mr Lim bought a smartphone for RM2,000 on 1 March 2021. He also bought a laptop for his son’s use for RM4,000 on 15 July 2021.

Tax Treatment: Purchase of a laptop on 15 July 2021 is allowed for claim under F9b limited to RM2,500. While another RM500 from the purchase of the laptop and the expense of buying a smartphone of RM2,000 (1 March 2021) can be claimed under F8(ii) limited to RM2,500.

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(Note: In the Explanatory Notes, Relief F9b refers to the special lifestyle relief for YA 2020 – YA 2022, while Relief F8(ii) refers to the regular lifestyle tax relief that is claimable every year)

From the example, it is confirmed that in the event the purchased item is more than the limit of the special tax relief, individuals can claim the remaining balance on the regular lifestyle tax relief. In Mr Lim’s case above, he could only claim RM5,000 even though the total purchases for both devices is RM6,000, as the combined limits of both lifestyle tax reliefs is RM5,000 (RM2,500 + RM2,500).

On a related note, it is also important to remember that the regular lifestyle tax relief covers other areas as well, including the purchase or subscription of books/journals/magazines/newspapers/other similar publications, the purchase of sports equipment (as defined under the Sports Development Act 1997) as well as the payment of gym memberships, and the payment of monthly internet subscription. What this means is that you may already be able to claim a significant portion of the RM2,500 limit from these other purchases.

Finally, there is another bit of good news: for the special lifestyle tax relief, there are no restrictions in terms of the number of times you can claim for it in consecutive years. In other words, you can purchase a personal computer, smartphone, or tablet in 2020, 2021, and 2022 and be able to claim up to RM2,500 under the special lifestyle tax relief in each year of assessment. (Of course, you shouldn’t purchase them just for the sake of the tax relief – especially if you don’t need it!)

In the past, before the lifestyle tax relief was introduced, an individual can only claim for the purchase of a personal computer once every three years. But for this special lifestyle tax relief (which of course also covers the purchase of smartphones and tablets), there is no wording that limits how often you can claim it. The IRB always makes it clear when there is one – for example, for the tax deduction on the purchase of breastfeeding equipment for own use for a child aged 2 and below, the Explanatory Notes explicitly states that “(t)his deduction is only allowed ONCE in every two (2) years of assessment”.

• TAGS:
• Inland Revenue Board
• Lembaga Hasil Dalam Negeri
• Lifestyle Tax Relief
• Special Lifestyle Tax Relief