Personal Income Tax

It is the end of the year. Have you maximize your tax reliefs?
Below is a simple guide regarding the tax rates and tax reliefs for those who are eligible.

Tax residence status of individuals

An individual is regarded as a tax resident if he meets any of the following conditions, i.e. if he is:

• in Malaysia for at least 182 days in a calendar year;
• in Malaysia for a period of fewer than 182 days during the year (“shorter period”) but that period is linked to a period of the physical presence of 182 or more “consecutive” days in the following or preceding year (“longer period”). Temporary absences from Malaysia due to the following reasons are counted as part of the consecutive days, provided that the individual is in Malaysia before and after each temporary absence:

                               - business trips
                               - treatment for ill-health
                               - social visits not exceeding 14 days

• in Malaysia for 90 days or more during the year and, in any 3 of the 4 immediately preceding years, he was in Malaysia for at least 90 days or was resident in Malaysia; or
• resident for the year immediately following that year and for each of the 3 immediately preceding years.

Rates of tax

1. Resident individuals

• A qualified person (defined) who is a knowledge worker residing in Iskandar Malaysia is taxed at the rate of 15% on income from employment with a designated company engaged in a qualified activity in that specified region.
• An approved individual under the Returning Expert Programme who is a resident is taxed at the rate of 15% on income in respect of having or exercising employment with a person in Malaysia for 5 consecutive YAs.

Personal reliefs for resident individuals

Types of relief	YA 2020 (RM)
Self	9,000
Disabled individual - additional relief for self	6,000
Spouse	4,000
Disabled spouse - additional spouse relief	3,500
Child:
· per child (below 18 years old)	2,000
· per child (over 18 years old): receiving full-time instruction of higher education in respect of: - diploma level and above in Malaysia; or - degree level and above outside Malaysia OR serving under articles or indentures in a trade or profession in Malaysia	8,000
· per physically / mentally disabled child	6,000
· physically / mentally disabled child (over 18 years of age) receiving full-time instruction at institution of higher education in respect of: - diploma level and above in Malaysia; or - degree level and above outside Malaysia OR serving under articles or indentures in a trade or profession in Malaysia	14,000
Life insurance premiums (Note 1)	3,000*
EPF contributions (Note 1)	4,000*
Private Retirement Scheme contributions and Deferred annuity scheme premium (until YA 2021)	3,000*
Insurance premiums for education or medical benefits	3,000*
Expenses on medical treatment, special needs or carer expenses for parents (evidenced by medical certification)	5,000*
Parental care relief (until YA 2020): father mother	1,500 1,500
Employee’s contribution to Social Security Organisation (SOCSO)	250*
Medical expenses for self, spouse or child suffering from a serious disease (including fees of up to RM500 incurred by self, spouse or child for complete medical examination) or expenses incurred on fertility treatment (w.e.f YA 2020)	6,000*
Fee expended for any course of study up to tertiary level other than a degree at Masters or Doctorate level, undertaken for the purpose of acquiring law, accounting, Islamic financing, technical, vocational, industrial, scientific or technological skills or qualifications or any course of study for a degree at Masters or Doctorate level undertaken for the purpose of acquiring any skill or qualification	7,000*
Purchase of supporting equipment for self (if a disabled person) or for disabled spouse, child or parent	6,000*
Lifestyle relief consolidated with the following:       purchase of books, journals, magazines, printed newspaper and other similar publications for the purpose of enhancing knowledge       purchase of personal computer, smartphone or tablet       purchase of sports equipment and gym memberships, and internet subscription	2,500*
Purchase of breastfeeding equipment	1,000*
Fees paid to child care centre and kindergarten (Note 2)	2,000*
Deposit for child into the Skim Simpanan Pendidikan 1Malaysia account established under Perbadanan Tabung Pendidikan Tinggi Nasional Act 1997 (until YA 2020)	8,000*

Maximum relief
Note:
1. For public servants under the pension scheme, combined relief up to RM7,000 is given on Takaful contributions or payment for life insurance premium
2. Previously the relief was limited to RM1,000 in YA 2019

Tax rebates for resident individuals

Types of rebate	RM
Individual’s chargeable income does not exceed RM35,000	400
If husband and wife are separately assessed and each chargeable income does not exceed RM35,000	400 (each)
If husband and wife are jointly assessed and the joint chargeable income does not exceed RM35,000	800
Rebate for Zakat, Fitrah or other Islamic religious dues paid	Actual amount expended
Rebate for departure levy paid for performing umrah and pilgrimage to holy places (w.e.f YA 2019)	The actual amount expended (twice in a lifetime)

The above rebate granted is deducted from tax charged and any excess is not refundable.