Despite of the unattractive return of PRS, it is still a smart move to invest into it for tax relief of RM 3,000. If your chargeable income is RM 60,000, you get to save RM 480 (16% of RM 3,000). This means you are actually already gaining 16% for your PRS. The higher your chargeable income is, the more % you earn from this!
#2 Boost your insurance coverage up to the maximum bracket of RM 6,000 for EPF & Life Insurance and RM 3,000 for Education and Medical Insurance.
#3 If you have a child, an alternate option of PRS would be to save in Skim Simpanan Pendidikan Nasional (SSPN) as you are entitled for a RM 6,000 tax relief. Both husband and wife are allowed to open 2 separate SSPN accounts for the same child. On top of that, you can also claim deduction for your child’s care centre or kindergarten fees up to RM 1,000. Do remember to request for a receipt!
#4 Do keep ALL receipts related to purchase of sports equipment, computer, smartphones, books & journals (hardcopy or electronic) and even printed newspapers. Hence, do buy more books whether they are for yourself or as gifts! Gym memberships and monthly internet subscription are also tax deductible, so don’t forget to keep your receipts. You can get up to a total of RM 2,500 relief in this category. *Take note that sports attire and sports shoes are not entitled for relief.
#5 To promote health awareness, you are also able to get tax relief of RM 500 for a complete medical examination for self, spouse and child, as well as a RM 1,000 relief on breastfeeding equipment. If you are paying for your parents’ medical expenses, you can also claim up to RM 5,000. Hence, do take note and you can start collecting receipts from now! *Take note that the complete examination must be approved by certain hospitals or clinic. Normal blood test at Pathlab or Gribbles does not qualify.
#6 If both husband and wife are high income earners, do opt for individual assessment for higher tax deduction. It is also better to claim child relief under the spouse with higher income. On the other hand, if one of you is either earning little or not working, it is better to opt for joint assessment, so you can leverage an additional spouse relief of RM 3,000. Also, if one of the spouse is an entrepreneur but experiencing business losses, joint assessment can help you to maximize the business losses relief.
Below is the complete list of tax reliefs you are entitled for tax deduction:
Budget 2018 New Changes
The government decides to reduce your income tax bracket by 2% for income earner between RM 20,001 to RM 70,000. For income higher than that, the tax rates remain the same. Also, there will be a 50% income tax exemption on rental income, effective from YA 2018 to 2020. This is great news!
In addition, to encourage women to return to the workforce, there will be individual tax exemption on their employment for 12 months for women who decides to work after a career break of 2 or more years. This exemption is also effective from YA 2018 to 2020.
Here are the tax rates for YA 2018 after a slight reduction: