12th March 2021 - 14 min read
Editor’s note: this guide is for YA 2020. Visit our latest YA 2021 guide here.
When filing our taxes each year, we all usually have a common objective in mind – getting a bigger tax refund. In order to do this, you will need to depend on the tax deductions, tax reliefs, and tax rebates that you can claim in order to reduce your aggregate income, chargeable income, and amount of tax charged respectively.
To help make filing your taxes easier for you, we’ve gathered in one place all the tax reliefs, deductions, and rebates that you can claim for YA 2020 to maximise your tax refund. Some of these will be familiar to you, while you will notice that some tax reliefs have been newly introduced for the year. So make sure to get yourself familiarised and don’t miss out on claiming for any eligible tax incentives this year!
Do you have further questions about the tax reliefs available and what are the conditions attached to them? Here’s a closer look at the fine print behind the income tax reliefs for YA 2020 that you should know about when filing your taxes in 2021.
Granted automatically to an individual for themselves and their dependents.
Claim allowed: RM9,000
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.
Claim allowed: Up to RM 5,000
Those who did not make a claim for medical treatment for parents are entitled to this relief. Parents must be legitimate or legally adoptive parents (stepparents not included), aged 60 years and above, and each parent’s annual income from all sources must not exceed RM24,000 for that year of assessment. The allowable relief is RM1,500 for one mother and RM1,500 for one father; if more than one individual claims for this deduction, the amount has to be equally divided according to number of individuals claiming for that same parent.
Claim allowed: RM1,500 per parent (only allowed if no claims made under medical expenses for parents)
You can claim this relief of RM4,000 if your spouse has no source of income OR elects for joint assessment in your name. This deduction is not allowed if your spouse has a gross income exceeding RM4,000 derived from sources outside 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. 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.
Claim allowed: Up to RM4,000
You can claim for fees expended on a course of study undertaken in a recognised institution or professional body in Malaysia; you can refer to the recognised list on the Ministry of Higher Education Malaysia’s website. For 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 finance, technical, vocational, industrial, scientific or technological skills or qualifications will be eligible.
Claim allowed: Up to RM7,000
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. Receipt of the treatment and a certification by a registered medical practitioner must be kept for future reference.
Claim allowed: Up to RM6,000 in total for self, spouse, or child; the RM6,000 limit is inclusive of any claims made under fertility treatment and complete medical examination below.
Includes Intrauterine Insemination (IUI) treatment, In vitro fertilization (IVF), or any other fertility treatments on yourself or your spouse, including consultation fees and medicines. The claim must be evidenced by a receipt and certification issued by a registered medical practitioner and is only eligible to married individuals.
Claim allowed: Up to RM6,000 in total for self or spouse; the RM6,000 limit is inclusive of any claims made under medical expenses on serious diseases and complete medical examination.
Refers to a thorough examination as defined by the Malaysian Medical Council (MMC).
Claim allowed: Up to RM500 for self, spouse, or child, but the total deduction allowable for this relief as well as the reliefs for medical expenses on serious diseases and fertility treatment above is RM6,000.
You can claim for the purchase of:
Claim allowed: Up to RM2,500 for all lifestyle purchases for self, spouse, or child.
This is an additional lifestyle relief introduced for YA 2020 where you can claim up to another RM2,500 in relief for the purchase of a personal computer, smartphone, or tablet made between 1 June 2020 and 31 December 2020. This is on top of the existing RM2,500 general lifestyle relief offered above.
For example, if you bought 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.
The relief cannot be claimed if you buy the device for business purposes and the relief does not extend to additional charges for warranty.
Claim allowed: Up to RM2,500 for self, spouse, or child.
You can claim for expenses spent on tourist accommodation charges and entrance fees to tourist attractions for individuals. The payments must be made between 1 March 2020 and 31 December 2020 to qualify for tax relief in YA 2020. Moreover, the accommodation premises must be registered with the Commissioner of Tourism to be eligible for the relief. This is a new tax relief introduced as part of the response to the Covid-19 pandemic.
Claim allowed: Up to RM1,000
You can make use of 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. Qualified breastfeeding equipment are: breast pump kit and ice pack; breast milk collection and storage equipment; and cooler set or cooler bag.
Claim allowed: Up to RM1,000 per mother, allowed once every 2 years.
This tax relief is allowed for childcare fees for a child aged 6 years and below, paid to a registered child care centre or kindergarten. The maximum claim for this relief is restricted to RM3,000 even if the number of children who are eligible for this care exceeds one. If a married couple are assessed separately, this relief can only be claimed by either the husband or the wife who makes the expenditure. Previously, the maximum limit for childcare relief was set at RM1,000, but it was increased to RM3,000 as part of a Covid-19 pandemic aid.
Claim allowed: Up to RM3,000 by husband or wife even if there is more than one child
The Skim Simpanan Pendidikan Nasional (SSPN) or the National Educations Savings Scheme is a savings plan introduced by PTPTN to enable parents to invest for their children’s higher education. You can claim tax relief for the net deposit in SSPN up to the claim limitation if your total deposit for the year 2020 is higher than your total withdrawal.
Claim allowed: Up to RM8,000 per individual with children
A deduction is allowed for every child who is unmarried and who is below the age of 18 years at any time during the year of assessment.
Claim allowed: RM2,000 per child
For those with children who are unmarried, 18 years of age and above, and receiving full-time education, a deduction of RM2,000 is allowed.
For those with children who are unmarried, 18 years of age and above, and satisfy any one of the following conditions, a claim of RM8,000 is allowed:
Claim allowed: RM2,000 per child or RM8,000 per child
Paying life insurance premiums on your own life or your spouse (but not child) is deductible under this relief, as are contributions to approved schemes such as the Employees Provident Fund (EPF). Private retirement scheme contributions do not count under this relief.
While this relief covers contributions to both life insurance premiums and EPF, pensionable public servants who have opted for pensionable retirement and did not contribute to any approved schemes other than private retirement schemes will find that the EPF relief allocation does not apply to them here. Therefore, the claim limits for pensionable public servants and those who are not public servants differ accordingly.
Claim allowed: Up to RM7,000 for life insurance for pensionable public servants; Up to RM3,000 for life insurance and up to RM4,000 for EPF for non-public servants
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, the deduction allowed is restricted to RM3,000. You can consider investing in a PRS or deferred annuity for your long-term goals to get this relief, which you wouldn’t be eligible for if you opted for a unit trust or mutual fund for example.
Claim allowed: 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. If you elect for joint assessment, the deduction allowed is restricted to RM3,000.
Claim allowed: Up to RM3,000 for self, spouse, or child
Your contributions to the Social Security Organisation (SOCSO) can be claimed as relief during the year of assessment.
Claim allowed: Up to RM250
You can claim for expenses incurred for the purchase of any necessary basic supporting equipment for the use of yourself, spouse, child, or parent, if the individual concerned is disabled. This person must be registered with the Department of Social Welfare as a disabled person for the expenditure to qualify. Basic supporting equipment includes haemodialysis machine, wheelchair, artificial leg, and hearing aids, excluding spectacles and optical lenses.
Claim allowed: Up to RM6,000 for self, spouse, child, or parent
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.
Claim allowed: RM6,000
Those who have a disabled spouse are entitled to a further deduction under this relief.
Claim allowed: RM3,500
If you have a disabled child who is unmarried, you are entitled to a deduction under this relief.
Claim allowed: RM6,000
This is an additional relief that you can claim if you have a disabled child who is unmarried, 18 years of age and above, and in higher education under one of the following conditions:
Claim allowed: RM8,000
A tax deduction reduces the amount of your aggregate income – which is the sum of your total income for the year put together. For income tax filing in the year 2021 (YA 2020), you can deduct the following contributions from your aggregate income.
Donations that fall under these categories are restricted to 10% of your aggregate income:
Deduction allowed: Up to 10% of aggregate income
Donations under these categories are not restricted to the 10% limit:
Deduction allowed: Up to value of gift unless otherwise stated
The membership subscription paid to professional bodies for one’s profession, like medical or legal professional fees, can be claimed as a deduction.
Deduction allowed: Membership subscription paid
An income tax rebate is calculated at the end section of your BE form – after you’ve determined the amount of tax charged on your chargeable income. A tax rebate directly reduced your amount of tax charged and there are currently four types of tax rebates for income tax Malaysia YA 2020.
If your chargeable income (after tax reliefs and deductions) does not exceed RM35,000, you will be granted a rebate of RM400 from your tax charged.
Rebate amount: RM400
If your chargeable income (after tax reliefs and deductions) does not exceed RM35,000, and you have been allowed the tax relief of RM4,000 for your spouse, you can claim this rebate. To refresh your memory, the conditions for the tax relief for spouse are that your spouse has no source of income or elects for joint assessment in your name.
Rebate amount: RM400
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. To claim this rebate, the evidence required is a copy of the visa issued by Saudi Arabia for the umrah and a written verification by a recognised religious body for any other religious pilgrimage.
Rebate amount: The amount of departure levy paid, limited to 2 trips per lifetime
The rebate is applied to the payment of obligatory zakat and fitrah during the basis of the assessment year.
Rebate amount: Zakat/fitrah paid
Remember, claiming for tax incentives is the key to maximising your tax refund for the year, thus reducing how much you have to give up in taxes on your income. Now that you know about all the income tax reliefs, rebates, and deductions that you can claim for Malaysia personal income tax 2021 (YA 2020), it’s time to get your tax filing in order and get that tax refund!
For more advice on filing your income tax this year, make sure to check our other income tax articles for YA 2020. And if you would like a handy step-by-step guide to take you through the whole process of filing your taxes, head on over to our Income Tax Guide YA2020 here!
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