Personal Tax Relief for YA 2023 in Malaysia: An Employee’s Guide
As we move into the Year of Assessment (YA) 2023, understanding Malaysia’s personal tax relief measures becomes crucial for employees aiming to optimize their tax filings and reduce their tax burden. The Malaysian government has introduced various tax relief measures to support individuals and families, incentivize savings, and promote specific economic activities. This guide provides a detailed overview of the personal tax relief options available for YA 2023, offering employees a roadmap to navigate through their tax planning more effectively.
Overview of Malaysia’s Tax Relief System
Malaysia’s tax relief system is designed to reduce the taxable income of individuals, thereby lowering the amount of tax owed. These reliefs can be claimed for a wide array of expenditures and contributions, ranging from education and medical expenses to lifestyle purchases and retirement savings. By strategically planning and claiming these reliefs, employees can significantly enhance their financial wellbeing.
Eligibility for Tax Relief
Eligibility for tax relief in Malaysia generally depends on specific conditions set out by the Inland Revenue Board of Malaysia (IRBM). These conditions may relate to the taxpayer’s marital status, parental responsibilities, educational pursuits, and investments in retirement funds. It’s important for taxpayers to review the eligibility requirements for each type of relief carefully to ensure they claim everything they’re entitled to.
Key Personal Tax Relief Measures for YA 2023
The LHDN’s announcement includes specific amounts for each category of tax relief, enabling taxpayers to better estimate their eligible deductions. Here’s a detailed look at the key personal tax relief measures for YA 2023:
1. Individual and Dependent Relatives: RM9,000
Relief of RM9,000 for an individual in respect of himself and his dependent relatives is granted automatically. Paragraph 46(1)(a) of ITA 1967.
2. Medical Treatment, Special Needs, and Carer Expenses for Parents (Certified Medical Condition): RM8,000 (Restricted)
Medical treatment, special needs and carer expenses incurred on parents is allowed as a deduction up to RM8,000.
Parents refer to natural parents or foster parents where the individual is an adopted child.
Expenses on medical treatment for parents which qualify for deduction include:
(i) medical care and treatment provided by a nursing home; and
(ii) dental treatment limited to tooth extraction, filling, scaling and cleaning but excluding cosmetic dental treatment expenses such as teeth restoration and replacement involving crowning, root canal and dentures.
- Such claim must be evidenced by a medical practitioner registered with Malaysian Medical Council (MMC) certifying that the medical condition of parents requires medical treatment, special needs or a carer.
- Parents shall be individuals resident in Malaysia.
- The medical treatment and care services are provided in Malaysia.
In the case of carer, a receipt or written certification from carer, or work permit of the carer.
‘Carer’ shall not include that individual, his wife or her husband or the child of the individual concerned.
Paragraph 46(1)(c) of ITA 1967.
3. Purchase of Basic Supporting Equipment for Disabled Self, Spouse, Child, or Parent: RM6,000 (Restricted)
Expenditure incurred for the purchase of any necessary basic supporting equipment is allowed as a deduction up to RM6,000 for the use by:
(i) the individual, if he / she is a disabled person;
(ii) the spouse, if he / she is a disabled person;
(iii) his / her child, if the child is a disabled person; or
(iv) his / her parent, who is a disabled person.
This deduction will NOT be allowed if the disabled individual for whom the basic supporting equipment is purchased, is not registered with the Department of Social Welfare (DSW) as a disabled person.
Basic supporting equipment includes hemodialysis machine, wheel chair, artificial leg and hearing aids but excludes spectacles and optical lenses.
Paragraph 46(1)(d) of ITA 1967.
4. Disabled Individual: RM6,000
A further deduction of RM6,000 is allowed if the individual is disabled person. An individual is eligible to claim this deduction if he is certified in writing by the Department of Social Welfare (DSW) as a disabled person.
Paragraph 46(1)(e) of ITA 1967.
5. Education Fees (Self): RM7,000 (Restricted)
A deduction up to RM7,000 can be claimed on fees expended for any of the following courses of study: –
(i) Other than a degree at Masters or Doctorate level Any course of study up to tertiary level undertaken for the purpose of acquiring law, accounting, Islamic finance approved by Bank Negara Malaysia or Securities Commission, technical, vocational, industrial, scientific or technological skills or qualifications undertaken in any institution or professional body in Malaysia recognized by the Malaysian Government or approved by the Minister of Finance.
(ii) Degree at Masters or Doctorate level Any course of study undertaken for the purpose of acquiring any skill or qualification undertaken in any institution or professional body in Malaysia recognized by the Malaysian Government or approved by the Minister of Finance:
Refer to the list of recognized local institutions or approved professional bodies in Malaysia at the official portal of the Ministry of Higher Education Malaysia at https://www.mohe.gov.my for deduction of G5(i) and G5(ii)
(iii) Course of study undertaken for the purpose of up-skilling or self-enhancement A deduction up to RM2,000 can be claimed on any skill area recognized by Director General of Skills Development under National Skills Development Act 2006 [Act 652]. Deduction is allowed for year of assessment 2022 to 2023.
Paragraph 46(1)(f) of ITA 1967.
Note: Total Deduction for 6, 7 and 8 below are restricted to RM10,000
6. Medical Expenses on Serious Diseases, Fertility Treatment, Vaccination: RM10,000 (Restricted)
(a) Serious diseases for self, spouse or child
Medical expenses on serious diseases include the treatment of Acquired Immune Deficiency Syndrome (AIDS), Parkinson’s disease, cancer, renal failure, leukemia and other similar diseases. “Other Similar Diseases” in relation to serious diseases include heart attack, pulmonary hypertension, chronic liver disease, fulminant viral hepatitis, head trauma with neurological deficit, tumor in brain or vascular malformation, major burns, major organ transplant and major amputation of limbs.
Amount expended on own self, husband / wife or child is deductible up to a maximum of RM10,000.
Receipt of the treatment and a certification issued by a medical practitioner registered with the Malaysian Medical Council (MMC) must be kept for future reference and inspection, if required.
Paragraph 46(1)(g)(i) of ITA 1967.
(b) Fertility treatment for self or spouse
Expenses for fertility treatment include Intrauterine Insemination (IUI) treatment, In vitro fertilization (IVF) or any other fertility treatments including consultation fees and medicines on yourself or your spouse. Claim conditions are:
(i) the claim for medical expenses has to be evidenced by a receipt and certification issued by a medical practitioner registered with the Malaysian Medical Council (MMC) that the serious disease treatment was provided to that individual, spouse or child; or fertility treatment was provided to the individual or the spouse; and
(ii) married individual.
Deductions of up to RM10,000 are allowed on the amount expended or deemed to be expended on fertility treatment for yourself or your spouse.
Receipt of the treatment and a certification issued by a medical practitioner registered with the MMC must be kept for future reference and inspection, if required.
If the husband or wife chooses Joint Assessment, the allowable deduction for expenses incurred by the spouse will be deemed to be spent by the husband / wife whose assessment is raised in his name is limited to RM10,000.
Paragraph 46(1)(g)(ii) of ITA 1967.
(c) Vaccination for self, spouse and child
Vaccination expenses include the following:
(i) Pneumococcal;
(ii) Human papillomavirus (HPV);
(iii) Influenza;
(iv) Rotavirus;
(v) Varicella;
(vi) Meningococcal;
(vii) Combination of tetanus-diphtheria-acellular-pertussis (Tdap); and
(viii) Coronavirus Disease 2019 (COVID-19)
Deduction up to RM1,000 are allowed on the amount expended on vaccination for own self, spouse or child.
Paragraph 46(1)(g)(ii) of ITA 1967.
7. Complete Medical Examination, COVID-19 Tests, Mental Health Consultation: RM1,000 (Restricted)
(a) Complete medical examination for self, spouse or child
Complete medical examination refers to thorough examination as defined by the Malaysian Medical Council (MMC).
Paragraph 46(1)(h)(i) of ITA 1967.
(b) COVID-19 detection test including purchase of self-detection test kit for self, spouse or child
COVID-19 detection test expenses include the following expenses:
(i) Fees for a COVID-19 detection test conducted in clinic or hospital. Expenses must be evidenced by receipt issued by a hospital or clinic or medical practitioner registered with the Malaysian Medical Council (MMC).
(ii) Purchase of self-detection test kit evidenced by receipt.
Paragraph 46(1)(h)(ii) of ITA 1967.
(c) Mental health examination or consultation for himself, husband/wife or child
Mental health examination or consultation as evidenced by receipts issued by the following:
(i) Psychiatrist within the meaning of section 2 of Mental Health Act 2001 [Act 615];
(ii) Clinical psychologist registered with Malaysia Allied Health Professions Council under the Allied Health Professions Act 2016 [Act 774];
(iii) Counsellor registered with Board of Counsellors under the Counsellors Act 1998 [Act 580].
Paragraph 46(1)(h)(iii) ITA 1967.
8. Expenses for Child Aged 18 and Below (Intellectual Disability Diagnosis and Treatment): RM4,000 (Restricted)
Assessment for the purposes of diagnosis of learning disability and Early intervention programme or rehabilitation treatment for learning disability
The claim is evidenced by:
(i) Receipt issued by a medical practitioner registered with the Malaysian Medical Council (MPM) for initial examination for diagnosis purposes;
(ii) Receipts issued by allied health practitioners registered with the Malaysian Allied Health Professions Council under the Allied Health Professions Act 2016 for early intervention programs or rehabilitation treatment;
(iii) Expenses qualified as deductions for (i) and (ii) are for the following categories:
(a) Autism Spectrum Disorder;
(b) Attention Deficit Hyperactivity Disorder (ADHD);
(c) Global Developmental Delay (GDD);
(d) Intellectual Disability,
(e) Down Syndrome; and
(f) Specific Learning Disabilities.
(iv) Assessment for the purpose of diagnosis, early intervention programme and rehabilitation treatment should be carried out in Malaysia
Paragraph 46(1)(ha) ITA 1967.
9. Lifestyle Expenses (Books, Computers, Sports Equipment, Internet): RM2,500 (Restricted)
Lifestyle – Expenses for the use / benefit of self, spouse or child in respect of:
(i) Purchase or subscription of books / journals / magazines / newspapers / other similar publications Expenditure for the purchase or subscription of books, journals, magazines, newspapers and other similar publications (in the form of hardcopy or electronic but EXCLUDING banned reading materials such as morally offensive magazines) for the use by own self, spouse or child. Subparagraph 46(1)(p)(i) of ITA 1967.
(ii) Purchase of personal computer, smartphone or tablet Expenditure for the purchase of personal computer, smartphone or tablet [Does NOT include additional charge for warranty] for own use or for the use by own husband / wife or child, and NOT being used for the purpose of own business. Subparagraph 46(1)(p)(ii) of ITA 1967.
(iii) Purchase of sports equipment for sports activity defined under the Sports Development Act 1997 and payment of gym membership Expenditure for the use by own self, spouse or child in respect of the: (a) purchase of sports equipment for any sports activity as defined under the Sports Development Act 1997. Sports equipment includes equipment with short lifespan e.g. golf balls and shuttlecocks but EXCLUDING motorized bicycles; and (b) payment for gym membership (EXCLUDING club membership which provides gym facilities). Subparagraph 46(1)(p)(iii) of ITA 1967.
(iv) Payment of monthly bill for internet subscription Payment of monthly bill for internet personal use or for the use by own husband / wife or child, and NOT being used for the purpose of own business. Subparagraph 46(1)(p)(iv) of ITA 1967.
10. Additional Lifestyle Relief (Sports Activities): RM500 (Restricted)
Lifestyle – Additional expenses for the use / benefit of self, spouse or child in respect of:
(i) Purchase of sports equipment for sports activity defined under the Sports Development Act 1997 Expenditure for the purchase of sports equipment for any sports activity listed under the Sports Development Act 1997 (EXCLUDING motorized two-wheel bicycles) for the use by own self, spouse or child.
The amount of this deduction is in addition to the lifestyle relief under 9(iii).
Example: Mr Kevin bought sports equipment for the use of himself and his family members in 2023 worth RM3,000. The amount eligible to be claimed for expenses for the purchase of sports equipment under paragraph 46(1)(p) for YA 2023 is RM2,500 while the remaining expenditure of RM500 is eligible to be claimed as additional relief specifically for sports under paragraph 46(1)(u) for YA 2023
Paragraph 46(1)(p)(iii) and Subparagraph 46(1)(u)(i) of ITA 1967
(ii) Payment of rental or entrance fee to any sports facility Expenditure for rental or entrance fee to any sports facility for the use by own self, spouse or child.
The amount of this deduction is in addition to the lifestyle relief under 9(iii).
Paragraph 46(1)(p)(iii) and Subparagraph 46(1)(u)(ii) of ITA 1967
(iii) Payment of registration fee for any sports competition where the organizer is approved and licensed by the Commissioner of Sports under the Sport Development Act 1997 for the use by own self, spouse or child.
Subparagraph 46(1)(u)(iii) of ITA 1967
11. Breastfeeding Equipment: RM1,000 (Restricted, once every two years)
Purchase of breastfeeding equipment for own use for a child aged 2 years and below
(a) This deduction is allowed exclusively for women taxpayers, provided that the individual:
(i) is a breastfeeding mother;
(ii) has incurred expenditure for the purchase of breastfeeding equipment for her own use to breastfeed her own child aged 2 years and below; and
(iii) makes a claim that is evidenced by receipts issued in respect of the purchase.
(b) Breastfeeding equipment which qualifies are:
(i) breast pump kit and ice pack;
(ii) breast milk collection and storage equipment; and
(iii) cooler set or cooler bag.
(c) The amount of deduction is limited to RM1,000 although the individual has more than one child.
(d) This deduction is only allowed ONCE in every two (2) years of assessment.
(e) In the case of a Combined Assessment, this deduction is only allowed if the assessment is made in the name of the wife.
Example 1: Joint Assessment in the Wife’s Name Madam Arina has given birth to a child in the year 2023 and has purchased breastfeeding equipment at the cost of RM1,700. Her husband who is a non-resident Malaysian citizen has elected for joint assessment in the name of his wife. Madam Arina is entitled to claim this deduction but limited to RM1,000.
Example 2: Joint Assessment in the Husband’s Name Madam Sally has given birth to a child in the year 2023 and has purchased breastfeeding equipment at the cost of RM1,300. Madam Sally has elected for joint assessment in the name of her husband. The claim for this deduction is NOT allowed because the joint assessment is made in the name of Madam Sally’s husband.
Paragraph 46(1)(q) of ITA 1967.
12. Child Care Fees: RM3,000 (Restricted)
Child care fees to a registered child care centre / kindergarten for a child aged 6 years and below
This deduction is allowed in respect of child care fees for a child aged 6 years and below paid to a:
(i) child care centre registered with the Department of Social Welfare (DSW) pursuant to the Child Care Centre Act 1984 (Act 308) under the Ministry of Women, Family and Community Development; or
(ii) kindergarten registered with the Ministry of Education Malaysia pursuant to the Education Act 1996 (Act 550).
This deduction is restricted to RM3,000 even though the number of children who fulfills the mentioned conditions exceed one. If the amount of claim is less than RM3,000, the amount of deduction allowed is limited to the amount paid only.
Where a husband and a wife are assessed separately, the tax deduction under this paragraph can only be claimed either by the husband OR the wife who incurs the expenses.
Where a husband and wife are divorced, the tax deduction can be claimed by the former husband and the former wife provided that they both made payment for the fees of the child and that child is not the same child.
The claim for this deduction must be evidenced by the:
- birth document of the child (MyKid or birth certificate); and
- receipts for the monthly fees issued by the child care centre or kindergarten.
This relief takes effect until the Year of Assessment 2024.
Paragraph 46(1)(r) of ITA 1967.
Example 1: Husband and wife ( living together)
| Scenario | No. of Child | Expenditure on child (RM) | Type of assessment | Who is entitled to claim & amount (RM) | Notes | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| a | 1 | Husband Wife | 1,600 1,500 | Separate | Husband – 1,600 OR Wife – 1,500 | Only one person is entitled to claim (restricted to the amount expended) | ||||||||||||||||||
| b | 2 | Husband Wife | 3,200 (child no.1) 3,400 (child no.2) | Separate | Husband – 3,000 OR Wife – 3,000 | Only one person is entitled to claim (restricted to the amount RM3,000) | ||||||||||||||||||
| c | 2 | Husband | 3,500 (child no.1 & 2) | Separate | Husband – 3,000 | Restricted to the amount RM3,000 | ||||||||||||||||||
| d | 3 | Husband Wife | 5,200 (child no.1 & 2) 3,100 (child no. 3) | Separate | Husband – 3,000 OR Wife – 3,000 | Only one person is entitled to claim (restricted to the amount RM3,000) | ||||||||||||||||||
| e | 2 | Husband Wife | 1,900 (child no.1) 1,100 (child no.2) | Separate | Husband – 1,900 OR Wife – 1,100 | Only one person is entitled to claim based on the amount expended or restricted to the amount RM3,000 | ||||||||||||||||||
| f | 1 | Husband Wife | 1,200 1,200 | Joint | Husband – 2,400 OR Wife – 2,400 | Expenditure incurred by the spouse is deemed expended by the husband / wife in whose name the assessment is raised (restricted to the amount expended) | ||||||||||||||||||
| g | 2 | Husband Wife | 1,600 (child no.1) 1,500 (child no.2) | Joint | Husband – 3,000 OR Wife – 3,000 | Expenditure incurred by the spouse is deemed expended by the husband / wife in whose name the assessment is raised (restricted to the amount RM3,000) | ||||||||||||||||||
Example 2: Divorced husband and wife
| Scenario | No. of Child | Expenditure on child (RM) | Who is entitled to claim & amount (RM) | Notes | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| a | 1 | Former husband | 1,800 | Former husband – 1,800 | Only entitled to claim RM1,800 (restricted to the amount expended) | ||||||||||
| b | 1 | Former husband Former wife | 3,400 3,200 | Former husband – 3,000 OR Former wife – 3,000 | Only one person is entitled to claim (restricted to the amount RM3,000) | ||||||||||
| c | 2 | Former husband Former wife | 3,400 (child no. 1) 3,200 (child no. 2) | Former husband – 3,000 AND Former wife – 3,000 | -Former husband claims RM3,000 | ||||||||||
| d | 3 | Former husband Former wife | 3,200 (child no. 1) 1,800 (child no. 2) & 1,600 (child no. 3) | Former husband – 3,000 AND Former wife – 3,000 | -Former husband claims RM3,000 | ||||||||||
13. Net Deposit in SSPN: RM8,000 (Restricted)
Net deposit in Skim Simpanan Pendidikan Nasional (SSPN)
This relief takes effect for the Years of Assessment 2023 until 2024. Amount deposited in SSPN by an individual for his children’s education is deductible up to a maximum of RM8,000. The allowable deduction is limited to the net amount deposited in that basis year only.
Example: For the year 2023, Balance Brought Forward : RM4,500; Total Deposit : RM2,000; and Total Withdrawal : RM1,500.
Allowable deduction is RM500 (RM2,000 – RM1,500).
The Balance Brought Forward of RM4,500 is not taken into account.
Paragraph 46(1)(k) of ITA 1967.
14. Husband/Wife/Alimony: RM4,000 (Restricted)
(i) A deduction for husband of RM4,000 is given to the wife if the husband has no source of income / no total income or the husband has elected for joint assessment in the name of his wife. Only one wife is eligible to claim this deduction although the husband has more than one wife. Section 45A(1) of ITA 1967.
With effect from Year of Assessment 2017, the deduction for husband is NOT allowed if the husband (not a husband who is a disabled person) has gross income exceeding RM4,000 derived from sources outside Malaysia. Subsection 45A(2) of ITA 1967.
(ii) A deduction for wife of RM4,000 is given to the husband who has a wife living together with him in the basis year, and the wife has no source of income / no total income or the wife has elected for joint assessment in the name of her husband. Paragraph 47(1)(a) and subsection 47(5) of ITA 1967.
With effect from Year of Assessment 2017, the deduction for wife is NOT allowed if the wife (not a wife who is a disabled person) has gross income exceeding RM4,000 derived from sources outside Malaysia. Subsection 47(6) of ITA 1967.
(iii) Deduction for payment of alimony to a former wife is limited to RM4,000 or the actual amount paid if the amount of alimony paid is less than the allowable deduction. The total deduction for a wife living together and voluntary payments to the former wife is restricted to RM4,000. Voluntary alimony payments under a mutual agreement but without any formal agreement do not qualify for deduction. Subsection 47(2) and 47(3) of ITA 1967.
15. Disabled Husband/Wife: RM5,000
A further deduction of RM5,000 is given in respect of a disabled husband / wife. Section 45a and Paragraph 47(1)(b) of ITA 1967.
16. Unmarried Child Relief:
(a) Child – Under the age of 18 years
A deduction of RM2,000 per child is allowed if the child is unmarried and who at any time in the basis year is below the age 18 years. Paragraph 48(1)(a) and 48(2)(a) of ITA 1967.
(b) Child – 18 years and above and studying
(i) A deduction of RM2,000 per child is allowed if the child is unmarried, 18 years of age and above, and receiving full-time instruction. Paragraph 48(1)(b) & (c) and 48(2)(a) of ITA 1967 OR
(ii) A deduction of RM8,000 is allowed if the child is unmarried, 18 years of age and above, and satisfies the following conditions:
- receiving full-time instruction (excluding matriculation course / pre degree / A-Level) at a university, college or other similar educational establishment in Malaysia; or
- serving under articles or indentures with a view to qualify in a trade or profession in Malaysia; or
- receiving full-time instruction outside Malaysia in respect of a degree (including a degree at Master or Doctorate level) or the equivalent of a degree. Paragraph 48(3)(a) of ITA 1967.
(c) Child – Disabled child
(i) Relief allowed for a disabled child who is unmarried is RM6,000.
(ii) An additional relief of RM8,000 is allowed if the disabled child is unmarried, 18 years of age and above, and satisfies the following conditions:
- receiving full-time instruction (excluding matriculation course / pre degree / A-Level) at a university, college or other similar educational establishment in Malaysia; or
- serving under articles or indentures with a view to qualify in a trade or profession in Malaysia; or
- receiving full-time instruction outside Malaysia in respect of a degree (including a degree at Master or Doctorate level) or the equivalent of a degree. An individual is entitled to a child relief of RM14,000 if the above conditions are complied with. Paragraph 48(1)(d), 48(3)(a) and 48(2)(b) of ITA 1967.
Refer to Working Sheet HK-17.
100% Eligibility: This item is to be completed by an individual entitled to claim full child relief.
50% Eligibility: This item is only relevant where two or more individuals (not husband and wife living together) are each entitled to claim a deduction for payment made in respect of the same child, and each of those individuals is entitled to claim 50% of the allowable relief as a deduction. For example, when divorce occurs and there are two or more individuals entitled to claim a deduction on the same child.
For separate assessment, the individual and his spouse are required to select the relief in respect of each child on whom to claim respectively.
Example: Ali has five (5) children and elected for separate assessment. The number of children on whom relief may be claimed by Ali and his wife is:
| Ali | Wife | |
|---|---|---|
| (i) | 5 | 0 |
| (ii) | 4 | 1 |
| (iii) | 3 | 2 |
| (iv) | 2 | 3 |
| (v) | 1 | 4 |
| (vi) | 0 | 5 |
The deduction for child is not allowed if the child is in receipt of his own income whereby his total income exceeds the amount of deduction otherwise due.
However, the following receipts are not treated as income of a child:
- Amount received as scholarship, grant or allowance of a similar nature (paragraph 24 Schedule 6 of ITA 1967); and
- Payments received by a child who is serving an employer under articles or indentures.
Subsection 48(5) of ITA 1967.
17. EPF and Life Insurance: RM7,000 (Restricted)
Working sheet, HK-14 can be used for the purpose of computation and record.
(i) Payment of life insurance premiums or takaful contribution on life insurance policy contracted on the life of the individual husband or wife / wifes or additional voluntary contribution to EPF is deductible.
* Deduction is NOT allowed on premiums paid for life insurance policy contracted on the life of the child.
(ii) Contribution to an approved scheme or voluntary contribution to EPF (other than private retirement scheme) or contribution under any written law. Example of an approved scheme is the Employees Provident Fund (EPF).
(iii) Voluntary contribution that allowed for deductions are contribution to: (a) Self-employed under the definition of Employees Provident Fund Act 1991 (Act 452) (b) Pensionable officers under definition of section 2 of Pension Act 1980 (Act 227) (c) Employees other than (a) and (b) above.
(iv) Allowable deduction commencing from year of assessment 2023:
| No. | Type of Contribution | Total Relief |
|---|---|---|
| i. | Life insurance premium payments and takaful contributions or additional voluntary contribution to EPF [paragraph 49(1)(a)] | RM3,000 (Restricted) |
| ii. | Contribution to an approved scheme or voluntary contribution to EPF (NOT including private retirement scheme) or contribution under any written law [paragraph 49(1)(b)] | RM4,000 (Restricted) |
Total Relief: | RM7,000 (Restricted) |
Example 1:
Madam Sally is a public servant who has chosen a pension scheme. She has also contributed to the EPF voluntarily. In 2023 she has made contributions to the EPF and life insurance premium payments as follows:
| Description | Amount (RM) |
|---|---|
Voluntary contribution to EPF for self | 6,000 |
Life insurance premium payments for self | 1,200 |
Life insurance premium payment for children under the age of 18 years | 600 |
For Year of Assessment 2023, Madam Sally is eligible to claim relief for voluntary EPF contributions and insurance premium payments as follows:
| Description | Amount Contribution / Payment (RM) | Deduction Allowed (RM) |
|---|---|---|
Voluntary contribution to EPF [Paragraph 49(1)(b)] | 6,000 | 4,000 (restricted) |
Additional voluntary contribution to EPF [Paragraph 49(1)(a)] | 2,000 | 1,200 (restricted) or 2,000 |
Life insurance premium payments [Paragraph 49(1)(a)] | 1,800 | 1,800 or 1,000 (restricted) |
| Total | 9,800 | 7,000 (restricted) |
Example 2:
Mr. Manaf works with a private sector. In 2023, he made contributions to the EPF and family takaful contributions as follows:
| Description | Amount (RM) |
|---|---|
Compulsory contribution to EPF | 36,000 |
Voluntary contribution to EPF | 6,000 |
Family takaful contributions | 3,600 |
The allowable deduction for the year of assessment 2023 is as follows:
| Description | Amount Contribution / Payment (RM) | Deduction Allowed (RM) |
|---|---|---|
Compulsory contribution to EPF [Paragraph 49(1)(b)] | 36,000 | 4,000 (restricted) |
Family takaful contributions [Paragraph 49(1)(a)] | 6,000 | 3,000 (restricted) |
Voluntary contribution to EPF [Paragraph 49(1)(b)] | 3,600 | Not entitled |
| Total | 45,600 | 7,000 (restricted) |
Example 3:
Madam Charlene is an independent consultant who makes voluntary EPF contributions. For 2023, her total contribution is RM12,000. She did not make any life insurance premium payments. For the year of assessment 2023, Madam Charlene is eligible to claim RM7,000 for voluntary contributions to the EPF as provided as follows:
| Description | Amount Contribution / Payment (RM) | Deduction Allowed (RM) |
|---|---|---|
Voluntary contribution to EPF [Paragraph 49(1)(b)], | 12,000 | 4,000 (restricted) |
Additional voluntary contribution to EPF [Paragraph 49(1)(a)] | 3,000 (restricted) | |
| TOTAL: | 12,000 | 7,000 (restricted) |
Example 4:
Saiful is a public servant who has chosen a pension scheme. For 2023, he has made an insurance premium payment of RM10,000. He did not make any contribution to the EPF.
| Description | Amount Contribution / Payment (RM) | Deduction Allowed (RM) |
|---|---|---|
Contribution to EPF [Paragraph 49(1)(b)] | No contribution | No contribution |
Life insurance premium payments [Paragraph 49(1)(a)] | 10,000 | 3,000 (restricted)* |
| TOTAL: | 10,000 | 3,000 (restricted) |
*With the cancellation of paragraph 49(1A)(c) from the year of assessment 2023, pension scheme public servants are only eligible to claim tax relief of RM3,000 for life insurance premium payments or family takaful contributions under paragraph 49(1)(a).
18. Deferred Annuity and PRS: RM3,000 (Restricted)
19. Private retirement scheme and deferred annuity
(i) This deduction is effective from the Year of Assessment 2012 until 2025.
(ii) The deduction allowed shall not exceed RM3,000 in respect of contributions made to a Private Retirement Scheme (PRS) approved by the Securities Commission and paid premiums for deferred annuity.
(iii) The total deduction for PRS contributions and deferred annuity premiums is restricted to RM3,000 for an individual and RM3,000 for the spouse who has source of income. If the husband or wife elects for joint assessment, the deduction allowed for the aggregate amount of PRS contributions and deferred annuity premiums is restricted to RM3,000.
(iv) Refer to Working Sheet HK-14.
(v) Reference: Public Ruling No. 4/2014 (Deferred Annuity); and Public Ruling No. 9/2021 (Private Retirement Scheme).
Subsections 49(1D), 49(1E), 49(3), 50(2) and 50(3) of ITA 1967.
20. Education and Medical Insurance: RM3,000 (Restricted)
A deduction not exceeding RM3,000 is available on insurance premiums in respect of education or medical benefits for an individual, husband, wife, or child.
An education policy must satisfy the following criteria:
(i) the policy must be contracted by the individual for himself or herself, his or her spouse or child;
(ii) the beneficiary should be the child;
(iii) where the insured is the parent, the child must be the nominee;
(iv) where the child is the insured:
- it is compulsory that the life of the person paying the premium (parent) must be covered (payor benefit rider);
- the rider must also have the same duration as the basic policy;
- where the rider is packaged together with the basic policy in a single premium, the whole premium paid will qualify for deduction; and
- where the parent does not qualify for payor benefit rider, the premium paid for the basic policy will not qualify for deduction; (v) in respect of a takaful policy, the participant is the parent and proceeds of the policy must be made “hibah” (gift) to the child;
(vi) the maturity amount in respect of both conventional or takaful policy must be scheduled to be payable when the child is between the ages of 13 and 25.
A medical policy must satisfy the following criteria:
(i) the expenses should be related to the medical treatment resulting from a disease or an accident or a disability;
(ii) the policy coverage should be for a period of 12 months or more;
(iii) the policy can be a stand-alone policy or as a rider to a life insurance policy. If it is a rider, only the rider premium can qualify for deduction;
(iv) where a dreadful disease cover is attached to a basic policy, the whole amount of the rider premium paid is allowed as a deduction;
(v) where a dreadful disease cover is packaged together with a term life/personal accident cover, 60% of the package premium is allowed as a deduction;
(vi) group medical policy where the employee pays the premium for the medical benefit also qualifies for deduction; and
(vii) premium for waiver benefit rider and travel and medical expenses insurance are not allowable as a deduction.
The total deduction in respect of premiums paid for insurance on education and medical benefits is restricted to RM3,000 for an individual and RM3,000 for the wife who has source of income. If the husband or wife elects for joint assessment, the deduction allowed for the total of premiums paid for insurance on education and medical benefits is restricted to RM3,000.
Refer to Working Sheet HK-14.
Subsections 49(1b), 49(4) and 50(2) of ITA 1967.
21. SOCSO Contribution: RM350 (Restricted)
Contribution to the Social Security Organization (SOCSO) according to Employees Social Security Act 1969 or Employment Insurance System Act 2017
A deduction not exceeding RM350 is allowed in respect of contribution to the Social Security Organization (SOCSO) made or incurred by the individual in the basis year that contribution in accordance to the following act:
(i) Employees Social Security Act 1969
(ii) Employment Insurance System Act 2017 for Employment Insurance System (EIS)
Paragraph 46(1)(n) of ITA 1967.
22. Expenses on Charging Facilities for Electric Vehicle: RM2,500 (Restricted)
Payment of installation, rental, purchase including hire-purchase of equipment or subscription for use of electric vehicle charging facility for his own vehicle (Not for business use)
A deduction limited to a maximum of RM2,500 expended for the electric vehicle charging facility as follows:
(i) Cost of installation of electric vehicle charging;
(ii) Purchase including hire-purchase of electric vehicle charging;
(iii) Rental of electric vehicle charging; or
(iv) Subscription for use of electric vehicle charging facility
The allowable deduction is effective for the Year of Assessment 2022 and 2023.
Paragraph 46(1)(v) of the ITA 1967.
Reference:
Maximizing Your Tax Relief
To maximize the benefits from these reliefs, it’s essential to:
- Keep meticulous records of all eligible expenses and contributions.
- Plan your expenses, especially for medical treatments, education, and investments, within the tax year to ensure they qualify for relief.
- Review and understand the restrictions and conditions for each relief category.
Conclusion
The comprehensive list of tax reliefs for YA 2023 provides Malaysian employees with ample opportunities to reduce their taxable income through careful planning and understanding of the available deductions.
By strategically claiming these reliefs, employees can enhance their financial wellbeing while contributing to their personal and family goals. Always consult with a tax professional or refer to the LHDN’s guidelines to ensure compliance and to make the most of the tax relief measures available for the year.
