Do you know what time it is? It’s income tax season! Love it or dread it, you’ve got to do it. While most tax deductibles are somewhat standard through the years, there are slight changes that may be beneficial to you, especially during these tough financial times. To see what’s new or understand your deductible options, this guide is for you.
First, login or create your e-filing account with Lembaga Hasil Dalam Negeri (LHDN) on their website here. For new accounts, you would be required to submit your IC and wait a few days to receive your account number and verifications.
Let’s Get Started
To begin filing your income tax, you would need to input or double check all the information on the first part of the e-filing form. This would be your personal details, banking information and employee information. Under the income declaration section, copy the information provided in your EA form (obtained from your employer).
However, if you have multiple streams of income, don’t forget to add it up and declare that as well. This would include freelance jobs, side hustles, property rentals and other relevant income sources.
ProTip: If you have multiple full-time jobs in 2021, request for your EA forms from all the companies and add up the sum of income, tax deductions and other required information.
To ensure you file your taxes correctly, go through all the deductibles so you’re aware of what’s available and where to input your expenses. Here are the available items and their limits:
Self & Spouse
- Automated individual entitlement of RM9,000 – this is automatically provided in your online form
- Care for disabled spouse, RM5,000
- Alimony payment to ex-wife, RM4,000
- Medical treatment, caregiving or equipment for your parents, up to RM8,000
- Any supporting equipment for a disabled parent, spouse, child or self, up to RM6,000
- Medical expenses for self, spouse or child up to RM8,000. This includes:
- Treatment for serious illnesses
- Full medical check-ups
- Fertility treatments
- Vaccinations (limited to RM1,000)
- COVID-19 test inclusive of RTK home kits (limited to RM1,000)
Education for Self
If you have upskilled in 2021, you would be entitled to a total tax relief of up to RM7,000. This primarily focuses on Master’s, Degree and Doctorate certificates. However, there is a tax relief option for any course taken for the purpose of upskilling and self-enhancements, limited to RM1,000.
Lifestyle expenses are tax deductible up to RM2,500. This includes any of the following items:
- Books, journals, magazines or any digital subscriptions that offer reading material
- A personal computer or laptop
- Sports equipment or gym memberships
- Home internet bills – don’t forget, the bills need to be in your own name!
NEW: Additional Lifestyle Deductibles
- Sports equipment or gym membership up to RM500
- Tech equipment such as laptops, smartphone or tablet that’s not used for business, up to RM2,500
ProTip: Use the first lifestyle column to claim your internet bill and reading materials so you can save your sports and tech receipts to be claimed under their individual sections. Additionally, seeing that reading materials have a high limit, it’s a good excuse to pick up a book habit or subscribe to online news portals this year!
- Breastfeeding equipment for own use for child aged 2 and below, up to RM1,000
- Child care fees for registered daycare centers or kindergartens, up to RM3,000
- SSPN – parents who have invested in Skim Simpanan Pendidikan National (SSPN) are eligible for a tax relief of up to RM8,000
- Child, under 18, unmarried – Parents are eligible for a tax relief of up to RM2,000 for every child unmarried under the age of 18. Do note that if parents file their taxes separately, only one parent is allowed to claim the deductible per child.
- Child above 18, studying – Parents are eligible for a tax relief of up to RM2,000 for children in pre-university courses and RM8,000 for children undertaking their tertiary education such as a Diploma, Undergraduate, Masters or Doctoral Degree. This deductible is only valid if the course and institution is recognised by the Ministry of Education.
Finances – Insurance & Investments
- Life insurance has a tax relief of up to RM3,000 per annum. However, retired public workers have a limit of up to RM7,000 per annum but do not qualify for EPF deductions as per below.
- Your Employee’s Provident Fund (EPF) contributions has a relief of up to RM4,000
- Public Retirement Scheme (PRS) and deferred annuity contributions are eligible for a tax relief of up to RM3,000
- Education and medical insurance, up to RM3,000
- Contribution to SOCSO, up to RM250
NEW: Domestic Travel Expenses
Tax relief for domestic travels? Thank you, income tax! Claim up to RM1,000 for domestic travel costs. This includes entrance fees, tour packages or accommodation expenses. However, all receipts have to be from companies and establishments recognised by the Ministry of Tourism.
- Departure levy (taxes/fees) for umrah or other recognized religious pilgrimages, up to RM150 per trip, limited to 2 trips per lifetime.
- Total zakat or fitrah
When filing your taxes, don’t forget that you’re required to have proof of expenses, whether it’s a physical receipt or a digital copy. You are required to keep these receipts for up to 7 years, during which LDHN may have random audits and can request for proof of payments at any time.
ProTip: Just in case you missed it; if you’ve made a purchase online, don’t forget to download the receipts and add it to your claims. This includes receipts for RTK test kits, books, magazines or sports equipment for those home MCO workouts!
- e-Filing opens on 1st March 2022
- e-Filing closes on 30th April 2022
- e-Filing for sole proprietors closes
Final ProTip: File your taxes as soon as possible. The earlier you submit your form, the faster you get your returns. Besides, that last minute scramble to make the deadline just means you might miss out on a claim or two.
The information contained in this blog is provided for informational purposes only, and should not be construed as advice on any matter. Etiqa accepts no responsibility for loss which may arise from reliance on information contained in the article. This information is correct as of 8th March 2022