As you prepare for your 2025 tax filing, it’s important to be aware of the different ways you can reduce your chargeable income. In addition to tax relief, tax deductions play a crucial role in lowering your taxable income, potentially reducing your overall tax liability. 

Tax deductions work by reducing your chargeable income, and this can apply to both individuals and businesses. For businesses, there are specific categories of expenses that can be claimed as deductions, which may help ease your tax burden. One of the key areas where taxpayers can claim deductions is through donations and gifts. 

The Inland Revenue Board (LHDN) has outlined 9 categories of donations, gifts, and contributions that are eligible for tax deductions in the 2024 assessment year.

Contribution

Gift of money to the Government, State Government or Local Authorities.

Gift of money to Approved Institutions or Organisations.(Amount is limited to 10% of aggregate income)

Gift of money or cost of contribution in kind for any Approved Sports Activity or Sports Body.(Amount is limited to 10% of aggregate income)

Gift of money or cost of contribution in kind for any Approved Project of National Interest Approved by the Ministry of Finance.(Amount is limited to 10% of aggregate income)

Gift of artifacts, manuscripts or paintings.

Gift of money for provision of Library Facilities or to Libraries.

Gift of money or contribution in kind for the provision of facilities in Public Places for the benefit of disabled persons.

Gift of money or medical equipment to any healthcare facility approved by the Ministry of Health.

Gift of paintings to the National Art Gallery or any State Art Gallery.

Source: LHDN

How Much Can You Deduct? 
It’s important to note that donations are generally subject to limits based on your total taxable income. For instance, gifts to certain categories of organisations may be capped at 10% of your aggregate income. Be sure to verify the limits for each donation category to ensure compliance with LHDN regulations. 

Documentation Requirements 
To claim your tax deduction, you must maintain proper documentation. This includes receipts or acknowledgment letters from the recipient organisations, which should include their LHDN registration number, the amount donated, and the date. Without these documents, your donation may not be accepted for tax deductions. 

Checking Recognised Institutions 
To determine if the institutions, organisations, or bodies you are donating to are recognised by LHDN, you can visit their official website for a comprehensive list. Keep in mind that donations made to organisations or charity bodies that are not listed by LHDN will not be eligible for tax deductions. For businesses, donations made to registered organisations can also help reduce taxable income, so it’s important to keep detailed records of all charitable contributions.

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Claiming tax deductions for donations and gifts is a valuable opportunity to reduce your chargeable income and potentially lower your overall tax liability. By staying informed about the eligible categories, ensuring your donations are made to recognised institutions, and keeping the necessary documentation, you can maximise your deductions and file your taxes with confidence. 

For more helpful tips and insights on managing your taxes, be sure to explore our other articles on tax income.

• TAGS:
• Claiming For Income Tax
• Claiming Tax Reliefs
• Donations
• Filing Income Tax
• Gift Tax Deductions
• Income Tax
• Income Tax 2025
• Income Tax YA 2024
• Inland Revenue Board
• Lembaga Hasil Dalam Negeri
• LHDN
• Personal Income Tax Guide