It’s already October which means the tax year is almost at and end and it wouldn’t be too long before we are filling out the dreaded tax forms again. However, on the bright side, as it is now year end it a great time to start consolidating your tax returns and preparing your tax estimates to see how best you can save on your taxes when you fill out your tax forms next year. Read below for tips for saving on your tax returns.
The best way to reduce your taxable income and subsequently your taxes is to maximise your tax deductions which are a component in the calculation of your taxable income.
Make Full Use Of Perquisites
The 2009 Malaysian budget provided tax exemptions for employees on allowances, perquisites and benefits-in-kind provided by their employers. The tax exempted items include petrol card or petrol allowance for travel between home and work place of up to RM2,400 a year, petrol allowance and toll card for official duties up to RM6,000 a year, allowance or fees for parking, meal allowance, and subsidies for childcare of up to RM2,400 a year. Best of all, these exemptions are allowed with immediate effect so do ensure you take note of this when filling out your YA 2008 tax forms.
Separate Assessments, Please
If you are married, always opt to be separately assessed. The personal relief allowed for individuals are RM8,000 which equals to a total of RM16,000 tax reliefs when you file separate income tax submissions. However, if you choose to assessed together, you only get spouse relief of RM3,000 which equates to a total of RM11,000 and a loss of RM5,000 relief.
Separate assessment is also advised if both partners are working as filing it jointly might push you into a higher tax bracket than you would have been in an individual submission.
Inculcate Reading Habits
Taxpayers are given tax deductions of up to RM1,000 for purchase of books, magazines and other publications. Hence, consider giving books are gifts. They not only make great gifts for the recipient but also help you with your annual tax filing. Just remember to file those book receipts!
Life insurance contributes to another hefty part of your income tax deduction with a maximum of RM6,000 shared with your annual EPF contributions. Medical and education insurance contributes an additional RM3,000 deduction to your overall taxable income. With your EPF, a taxpayer can look forward to an additional RM9,000 in deductions. Just ensure that the insurance company you purchase your insurance policies from is a legitimate and reliable insurance company.
Consider Post-Graduate Studies
To encourage life-long learning, the Government has further provided a deduction of up to RM5,000 for any course of study for a Masters or Doctorate’s degree. It may even be done part time and the only caveat is that it has to be in an institution or professional body in Malaysia which is recognised by the Government or approved by the Minister of Finance.
Pay Your Parents Bills
Tax payers can further claim up to RM5,000 for their parents’ medical bills. There are no limitations on this so bills from private hospitals or government hospitals as well as any prescribed medicine from these hospitals are fully claimable up to RM5,000.
These are some of the big-ticket tax deductions Malaysian tax payers can look forward to in their tax assessment forms and should take advantage of. With the 2008 year coming to a close, start to assess your deductions and try to maximise them so you may reduce your taxes when filling out your assessment form next April.
Stay tuned for more tips coming your way!