10th March 2022 - 16 min read
Editor’s note: this guide is for YA 2021. Visit our latest YA 2022 guide here.
With the income tax season having arrived once more, taxpayers will no doubt strive (yet again) to get the maximum tax refund possible. After all, no one wants to pay more tax than they absolutely must, do they?
And as we’re sure most of you are aware, maximising tax refunds means tapping into as many tax deductions, tax reliefs, and tax rebates that you are eligible for. This way, you’ll be able to reduce your aggregate income, chargeable income, and amount of tax charged, respectively – and in turn, ensure that you pay less tax.
Here, we’ve prepared an infographic to give you a quick view of all the tax reliefs, deductions, and rebates that you can claim for YA 2021. You should be familiar with most of them, but there may be some newer incentives that you may not be aware of.
For specific details about each tax relief, deduction, and rebates, go ahead and scroll past the infographic to read on.
Now that you’ve seen the full list of items that you can tap into to help you with your tax refunds, this section offers a closer look at the details and fine prints for each tax relief, deduction, and rebate that you’re eligible for:
Briefly, tax reliefs allow you to reduce your chargeable income (your income that will determine what tax rate you are charged with). Here are the full details of all the tax reliefs that you can claim for YA 2021:
1) Individual and dependent relatives
Granted automatically to an individual for themselves and their dependents.
2) Medical treatment, special needs, and carer expenses for parents
Claim: Up to RM8,000
Includes care and treatment by a nursing home, and non-cosmetic dental treatment. Must be evidenced by a registered medical practitioner or written certification of a qualified carer. Parents must reside and treatment must be provided in Malaysia.
Note that the amount has been increased from RM5,000 back in YA 2020. The Inland Revenue Board (LHDN) has also done away with a “sub-category” of this tax relief that previously allowed individuals to claim RM1,500 for each parent (RM3,000 for mother and father) if they did not make a claim for medical treatment for their parents.
Claim: Up to RM4,000
You’re entitled to this relief only if your spouse has no source or income, or if he/she elects for a joint assessment in your name. You cannot claim this if your spouse has a gross income exceeding RM4,000 derived from sources outside of Malaysia.
For husbands paying alimony to a former wife, the deduction is allowed for the amount of alimony paid or up to a limit of RM4,000. Meanwhile, the total deduction for a wife and alimony payments to a former wife is restricted to RM4,000. Only formal alimony agreements qualify for this tax relief.
4) Education fees (self)
Claim: Up to RM7,000
You can claim for fees spent on a course of study undertaken in a recognised institution or professional body in Malaysia (as listed by the Ministry of Higher Education Malaysia). For those who are doing their Masters or Doctorate degrees, any course of study undertaken is eligible. For others, any course of study up to tertiary level undertaken for law, accounting, Islamic financing, technical, vocational, industrial, scientific, or technical skills or qualifications will be eligible.
For YA 2021, the government has also extended this tax relief for individuals who take up any course of study undertaken for the purpose of upskilling or enhancing their skills – although it is limited to only RM1,000. These courses must be recognised by the Director General of the Department of Skills Development under the National Skills Development Act 2006.
5) Medical expenses
Claim: Up to RM8,000 (in total)
|Medical expenses on serious diseases for self, spouse, or child||Up to RM8,000 in total (inclusive of medical expenses for fertility treatment, vaccination expenses, and complete medical examination)||Includes treatment of AIDS, Parkinson’s disease, cancer, renal failure, leukemia, heart attack, pulmonary hypertension, chronic liver disease, fulminant viral hepatitis, head trauma with neurological deficit, tumour in brain or vascular malformation, major burns, major organ transplant, and major amputation of limbs|
|Medical expenses for fertility treatment for self or spouse||Up to RM8,000 in total (inclusive of medical expenses on serious diseases, vaccination expenses, and complete medical examination)||– Includes intrauterine insemination (IUI) treatment, in vitro fertilization (IVF), or any other fertility treatments on yourself or your spouse, including consultation fees and medicines. |
– Only married individuals are eligible for this tax relief
|Vaccination expenses for self, spouse, or child||Up to RM1,000 (included in the overall RM8,000 tax relief allowed under this category)||Includes vaccination for pneumococcal, human papillomavirus (HPV), influenza, rotavirus, varicella, meningococcal, tetanus-diphtheria-acellular-pertussis (TDAP combination), and coronavirus disease 2019 (Covid-19)|
|Complete medical examination for self, spouse, or child||Up to RM1,000 (included in the overall RM8,000 tax relief allowed under this category)||– Refers to a thorough examination as defined by the Malaysian Medical Council (MMC) |
– Also includes Covid-19 detection tests (e.g. PCR and RTK tests) and vaccination expenses
Make sure to retain the receipts of your treatments, along with a certification of the registered medical practitioner for future reference – especially for expenses spent on serious diseases and fertility treatment.
6) Lifestyle purchases for self, spouse, or child
Claim: Up to RM2,500
You are entitled to claim this tax relief for the purchase of:
7) [Special] Purchase of personal computer, smartphones, or tablet for self, spouse, or child
Claim: Up to RM2,500
This is an additional lifestyle relief (on top of the general lifestyle relief mentioned above) that was first introduced during YA 2020, which allows you to claim up to another RM2,500 in relief for the purchase of a personal computer, smartphone, or tablet. Originally allowed for the purchase of such electronics between 1 June to 31 December 2020, it was subsequently extended until 31 December 2021 under the Permai stimulus package.
To illustrate how it works, say you’ve purchased a smartphone worth RM2,000 in March and a laptop worth RM4,000 in July, you can claim up to the maximum amount offered under these two tax reliefs. Under the additional tax relief, you can claim up to RM2,500 for the purchase of the laptop. And under the general lifestyle tax relief, you can claim RM2,000 for the smartphone and another RM500 from the purchase of the laptop.
Also, note that this relief can only be claimed if you buy the device for non-business purposes, and it does not extend to additional charges for warranty.
8) [Special] Tourist accommodation or attractions
Claim: Up to RM1,000
This is another additional relief that was introduced during YA 2020 to help the country’s tourism and travel industry to recover from the economic repercussions brought on by Covid-19 – and was subsequently extended to YA 2021. You can claim this relief for expenses spent on tourist accommodation charges and entrance fees to tourist attractions for individuals, applicable to payments made until 31 December 2021. The scope of this tax relief has also been expanded to include the purchase of travel packages from 1 January 2021 onwards.
Take care, though, to check that your selected accommodation premises are registered with the Commissioner of Tourism. The travel agencies whom you buy your travel packages from should also be approved by the Ministry of Tourism, Arts, and Culture (MOTAC).
9) Expenses related to sports activity for self
Claim: Up to RM500
A third additional lifestyle tax relief that is allocated specifically for sports-related expenses, including:
This tax relief is also on top of the general lifestyle tax relief mentioned earlier.
10) Breastfeeding equipment
Claim: Up to RM1,000 per mother
You are entitled to this relief if you are a breastfeeding mother and have purchased breastfeeding equipment for your own use to breastfeed your own child aged 2 years and below. Breastfeeding equipment that qualifies include:
Note that you’re only allowed to claim this once every two years.
11) Childcare fees
Claim: Up to RM3,000
This tax relief is allowed for childcare fees for a child aged 6 years and below, paid to a registered childcare centre or kindergarten. The maximum claim is restricted to RM3,000 even if you have more than one child who is eligible for this care. If a married couple is assessed separately, this relief can only be claimed by either the husband or the wife who makes the expenditure. Meanwhile, divorced husband and wife can both claim the tax deduction, provided they made payment for the childcare fees of different children.
The maximum limit for this relief used to be set at RM1,000, but has since been increased to RM3,000 as part of a Covid-19 pandemic aid.
12) Net deposit in SSPN
Claim: Up to RM8,000 per individual with children
Parents who have savings in the National Education Savings Scheme (SSPN) for their children’s higher education can claim tax relief for the net deposit in SSPN up to the claim limitation. Net deposit is essentially the amount of savings that remain after deducting any withdrawals that you have made during the year. To make things easier for taxpayers, the SSPN will generate a tax document that shows you the net deposit you can claim for tax relief.
13) Ordinary child relief (under age of 18)
Claim: RM2,000 per child
A deduction is allowed for every child who is unmarried and is below the age of 18 years at any time during the year of assessment.
14) Child (18+) in full-time education
Claim: RM2,000 per child or RM8,000 per child
Individuals are allowed to tap into a deduction of RM2,000 for each child who is unmarried, 18 years of age and above, and receiving full-time education.
Meanwhile, you can claim RM8,000 if you have children who are unmarried, 18 years of age and above, and meet any of the following criteria:
15) Life insurance and EPF
Claim: Up to RM7,000 (allocation differs for public and non-public employees)
Payments of your or your spouse’s life insurance premiums (but not child) are deductible under this relief, as are contributions to approved schemes, such as the Employees Provident Fund (EPF). Private retirement scheme contributions, however, do not fall under this category.
Note that the treatment of this relief differs depending on whether you are a pensionable public servant or someone who works in the private sector. The EPF relief allocation does not apply to pensionable public servants, who have opted for pensionable retirement and do not contribute to any approved schemes other than private retirement schemes. As such, they are allowed to claim up to the full RM7,000 relief under life insurance premium payments and takaful contributions.
Meanwhile, those who are not public servants – who are also EPF contributors – will be restricted to a limit of RM3,000 for life insurance premium payments and takaful contributions, and RM4,000 for EPF or other approved schemes.
16) Private retirement scheme (PRS) and deferred annuity
Claim: Up to RM3,000
The total deduction under this relief is restricted to RM3,000 for an individual and RM3,000 for a spouse who has a source of income. If you elect for joint assessment of income tax with your spouse, the deduction allowed is also restricted to RM3,000.
17) Education and medical insurance
Claim: Up to RM3,000
This claim is allowed for insurance premiums that are related to education or medical benefits for yourself, spouse, or child. The total deduction under this relief is restricted to RM3,000 for an individual, and RM3,000 for a spouse who has a source of income. Again, couples who elect for joint assessment will be restricted to a deduction limit of RM3,000.
Claim: Up to RM250
Your contributions to the Social Security Organisation (SOCSO) can be claimed as relief during the year of assessment.
19) Equipment for disabled self, spouse, child, and parent
Claim: Up to RM6,000
You can claim the amount spent on purchasing any necessary basic supporting equipment for yourself, spouse, child, or parent – as long as the individual is disabled and is registered with the Department of Social Welfare. Basic supporting equipment includes haemodialysis machine, wheelchair, artificial leg, and hearing aids. Spectacles and optical lenses are excluded.
20) Disabled individual
Disabled individuals who have been certified in writing by the Department of Social Welfare as a disabled person are eligible for a further deduction under this relief.
21) Disabled husband/wife
Those who have a disabled spouse are entitled to a further deduction under this relief. Previously, the relief allowed was set at RM3,500, but it was increased to RM5,000 under Budget 2021.
22) Disabled child
If you have a disabled child who is unmarried, you are entitled to a deduction under this relief.
23) Additional relief for disabled child (18+) in higher education
You are also entitled to this additional relief (on top of the RM6,000 relief for disabled child mentioned above) if you have a disabled child who is unmarried (aged 18 years and above), and is enrolled in any of the following:
Unlike tax reliefs, tax deductions reduce the amount of your aggregate income – which is the sum of your total income for the year put together. You are allowed to tap into the following deductions for YA 2021, but make sure to be aware of the fine prints:
1) Donations to charities, sports bodies, and other approved projects/funds
Deduction: Up to 10% of aggregate income
Donations that fall under the following categories are restricted to 10% of your aggregate income:
Any donations and contributions that were made by individual taxpayers to help fight against the Covid-19 pandemic also fall under this category. This includes donation made to the Covid-19 Fund that was set up by the government in 2020 to help those affected by the pandemic. Do make sure that you are able to provide supporting documents to verify your donations, such as official receipts and bank slips.
2) Other donations, gifts, and contributions
Deduction: Up to value of gift unless otherwise stated
Donations under these categories have varying limits and restrictions with regard to the deductions allowed:
3) Membership subscription for professional bodies
Deduction: Membership subscription paid
The membership subscription paid to professional bodies for one’s profession, like medical or legal professional fees, can be claimed as a deduction.
Finally, tax rebates are calculated at the end section of your BE form, after you’ve determined the amount of tax charged on your chargeable income. It directly affects your amount of tax charged.
1) Tax rebate for self
If your chargeable income (after tax relief and deductions) do not exceed RM35,000, you will be granted a rebate of RM400 from your tax charged.
2) Tax rebate for spouse
If your chargeable income (after tax relief and deductions) do not exceed RM35,000, and you have been allowed the tax relief of RM4,000 for your spouse, you are entitled to this rebate. To reiterate, the RM4,000 tax relief for spouse is provided if your spouse has no source of income, or elects for joint assessment in your name.
3) Departure levy rebate for umrah or religious travel
Rebate: Amount of departure levy paid
This rebate is granted to anyone who leaves Malaysia by air to perform umrah or other kinds of religious pilgrimage, but not for the purpose of performing hajj. You will need to provide supporting documents in order to claim this rebate:
Note that you can only claim up to two trips per lifetime for this tax rebate.
Rebate: Zakat/fitrah paid
The rebate is applied to the payment of obligatory zakat and fitrah during the basis of the assessment year.
Now that you know the various tax reliefs, deductions, and rebates that you can tap into for YA 2021, make sure to scrutinise your expenditure throughout last year so that you can maximise your tax refund. It may take a while, but it’ll be well-worth the effort!
We will also be coming out with our exclusive Income Tax Guide YA 2021 soon to help you navigate your way through all the nitty-gritty details of filing your taxes, so keep an eye out for it! Do also check out our other income tax articles for in-depth information, such as how to file your taxes for the first time or if you’ve changed or lost your job in the year of assessment.
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