27th December 2021 - 6 min read
With the end of 2021 just around the corner, financially savvy Malaysians will know that it’s time to review their assets and accounts for any remaining tax reliefs that they can tap into to further reduce their taxable income. After all, isn’t this the reason why we carefully stow away our receipts throughout the year?
With that in mind, let me share a concise checklist that you can quickly refer to for some last-minute tax reliefs that you can still claim before 2021 bows out for 2022; it’s a legitimate list that we licensed financial planners often share with our clients as a reminder at the end of every year. With some days more to go, it’s not too late yet to carry out the some purchases or transactions that will let you save a bit more money.
Here we go.
Private Retirement Schemes (PRS) are a voluntary long-term savings and investment scheme designed to help you save more for your retirement, on top of the mandatory Employees Provident Fund (EPF) contributions. If you’ve invested in PRS any time before the end of 2021, you’ll be entitled to a tax relief of up to RM3,000 when you file your taxes next year.
If you’re a pensionable public servant, then you’re allowed to claim up to RM7,000 for life insurance, but you do not qualify for EPF contribution reliefs. Meanwhile, private sector employees and public servants with no pension are eligible for a tax relief of up to RM3,000 for life insurance (along with a tax relief of up to RM4,000 allocated for EPF).
Note that this tax relief applies for insurance premiums paid for your own life and your spouse only.
On top of life insurance, you can also claim up to RM3,000 in tax relief on premiums paid for education insurance plans and medical insurance. This is applicable for yourself, as well as your spouse and child.
Another popular tax relief that you can easily take advantage of is the lifestyle category. For YA2021, you are allowed to claim up to RM5,000 in tax relief under this category (instead of the usual RM2,500 allocated in previous years), but there are conditions to it.
The first RM2,500 of the amount is claimable for purchases of lifestyle equipment for personal use by you and your family, including:
The remaining RM2,500, meanwhile, can only be claimed for the purchase of tech gadgets like laptops, smartphones, and tablets that are made between 1 June to 31 December 2021. This special tax relief was first introduced in the middle of 2020 under the PENJANA economic recovery plan to facilitate the implementation of a work-from-home policy in the government’s fight against Covid-19. It was then extended to 31 December 2021 under the Permai stimulus package (and until 31 December 2022 under Budget 2022).
There is also a tax relief for local tourism, which the government has given to help stimulate the domestic tourism sector. You can claim up to RM 1,000 for domestic travel expenses if you stay at a registered accommodation or purchase entrance fees to registered tourist attractions. This scheme was rolled out under the Economic Stimulus Package 2020 and has since been extended until 31 December 2021 as well. (Under Budget 2022, this special tax relief has also been further extended for YA2022, but that’s a concern for another day!)
Keep in mind, this tax relief is only applicable for accommodations that are officially registered with the Ministry of Tourism, Arts, and Culture Malaysia – which you can check via the ministry’s website here.
You can claim up to RM7,000 as tax relief if you pay for your own further education courses in a recognised higher learning institution – but do also make sure to read the fine print. If you’re taking a Masters or Doctorate degree, then any course of study is eligible for this tax relief. Otherwise, any course of study up to tertiary level in law, accounting, Islamic finance, technical, vocational, industrial, as well as scientific or technology can be used to claim this tax relief.
For YA2021, the government has also allowed Malaysians to claim this tax relief for any course of studies undertaken to upskill or enhance themselves, as long as they are recognised by the Director-General of Skills Development under the National Skills Development Act 2006.
Overall, you can claim a tax relief of up to RM8,000 for medical expenses that you’ve spent on yourself, spouse, and child. Again, however, there are some criteria that you need to take note of. Firstly, the amount is applicable to medical expenses for selected serious diseases for yourself, spouse, or child, as well as medical costs for fertility treatment for yourself or spouse.
Aside from that, you can also tap into it for a complete medical examination of yourself, spouse and child – but this is only restricted to a sub-limit of RM1,000. This sub-limit is also inclusive of Covid-19 detection tests, permitted under the Permai stimulus package announced back in January. And finally, this sub-limit has also been expanded to cover vaccination expenses for yourself, spouse, and child – also including Covid-19 shots.
If you have a child, you can get up to RM 8,000 tax relief on your net deposit in Skim Simpanan Pendidikan Nasional (SSPN). The SSPN is a government-backed savings plan that encourages parents to invest in their children’s higher education. Parents who have contributed can get a relief of up to RM 8,000 for their annual net deposits. So far, the dividend or return rate in the last few years has been recorded at about 4%.
And there we have it. But before I leave off, I’d like to emphasise that tax reliefs should not be treated as a license to spend. For instance, if you’re investing RM3,000 in PRS because it has always been your intention to do so, then good on you! But if you’re only investing just to get the tax relief, and as a result, suffer from cash flow difficulties – then that’s a problem. Your decisions should be based on your needs and financial capability, not spending for the sake of maximising the tax reliefs.
Ultimately, my point is this: don’t simply spend just because you can, or you may end up buying something you don’t need or overspend in general. You can catch my full discussion on this topic here:
This article was contributed by Roshan Kanesan, a licensed financial planner with RinggitPlus Financial Planner, a 1-to-1 financial planning service. RinggitPlus Financial Planner covers your everything from tax efficiency all the way down to wealth planning and retirement savings.
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Very informative & valuable information.
Hi I’m giving Rm300 a month to my sister which take care of my sick mom. Can I claim it as tax relief ?
how can you justify that though, its tough