16 TAX-SAVING MOVES
While we are working so hard trying to accumulate our wealth, it becomes vital for us to minimise areas which will erode our cash reserves. Personal tax is one of the areas we have to look at.
I would like to share the following 16 tax-saving moves, which are legal and permitted by IRB:-
1) Save for your child’s education.
Any amount that is deposited into a savings account for your child under national Education Saving Scheme (Skim Simpanan Pendidikan Nasional) allows you to claim tax deduction. Tax deduction limited to RM3,000 per individual.
2) File separate tax returns
Separate assessment allow each spouse to claim personal tax relief of RM8,000 while a joint tax return allows one spouse to claim a wife or husband of RM3,000
3) Ask your employer to increase your EPF contributions
Contribution to the employees’ EPF by employers are tax-exempt to the employees. It is highly unlikely your employer will agree with that arrangement, so try to ask your employer to reduce your monthly salary but increase your EPF contribution by the same amount. For eg, if you reduce your salary by RM1,000 per month and have the same contributed into your EPF, you tax saving from your employment income would be the total reduction sum, ie. RM 12,000 X your tax rate.
4) Change your cash remuneration to cash reimbursement
Fixed allowances given by your employer each month for entertainment or housing are taxable at your tax bracket. Change this to a reimbursement based on receipt and your are not taxed on the amount received
5) Ask for a company car
A car given by your employer is regarded as a benefit in kind (BIK) and taxable. However, a company car is advantageous for tax payers because the present tax scale for cars is much lower than the actual cost of buying and maintaining a car
6) Make charitable contributions
Charitable contributions entitles you to a tax deduction for the amount given. Please take note that, from 2008 onward, this amount cannot exceed 7% of your aggregate income.
7) Take up postgraduate studies
A relief of RM5000 per year for any course of study at the master’s or doctorate level. The course does not have to be done full time, but must be in an institution or professional body in Malaysia recognised by the government.
8 ) Read more
You can claim up to RM1,000 for purchase of books, journals, magazines and other publications
9) Get sporty
You will get a deduction of RM300 for each year of assessment for the purchase of sports and exercise equipments
10) Buy life insurance
The maximum tax relief is RM6,000 a year for premiums paid to an insurance company for life or deferred annuity plans Please take note that this limit shared with your contributions to the EPF.
11) Take up a medical or education policy
You can claim deductions of up to RM3,000 a year for education and medical insurance
12) Pay your parents’ medical bills
You are able to claim up to RM5,000 for payments towards your parents’ medical bills
13) Medical
Claim a deduction up to RM500 per tax year for a full medical examination and RM5,000 for medical expenses for yourself, spouse or child for serious disease. A separate tax reduction of up to RM5,000 a year is given for necessary basic supporting equipment for disabilities suffered by yourself, spouse, children or parent
14) Pay Zakat
If you are a muslim, paying any amount in zakat, fitrah or other obligation Islamic dues will entitle you to a tax rebate for the amount that you pay.
15) Buy a computer
A deduction of up to RM3,000 can be claimed once every three years for the purchase of computers, printers and bundled software
16) Hire a Tax consultant
Consider hiring a tax consultant to explore ways your remuneration package can be structured to maximise your tax savings. I suppose this is justifiable only to those higher income earners.
If you diligently do your tax planning, you will be surprised how much you could save at the end of the day!
Talking about tax planning, I bought a property through a company to qualify for more deductions.
nadlique
April 22, 2008
Nadlique,
Thanks for dropping by.
You meant you bought a property through a company so that you could deduct the expenses incurred pertaining to the property. This is provided you are earning income from the property.
Did I get the right picture? If so, it is a great idea!
We just bought one house in Penang. Plan to hold it for long term. we are aiming one day Penang’s landed property prices will be like Singapore’s when the lands are getting scarce.
Jean
April 22, 2008
Nice job. I look forward to reading more of your thoughts and advice.
Gary
May 13, 2008
Its doesnt really matters to buy property under company or under individual name. For your information, Real Property Gains Tax has been abolished since 1st April 2007.
Andrew
July 9, 2008