Masters of Financial Planning Associate Professor Dr. GholamReza Zandi Taxation Planning PERSONAL RELIEFS AND REBATES By: Associate Professor Dr. GholamReza Zandi zandi@segi.edu.my

Personal Reliefs Personal reliefs are deducted from total income of an individual to arrive at chargeable income Reliefs are only given to resident individuals. Some reliefs are available only under joint assessment (Example: spouse relief and disabled spouse relief). A married woman may also claim these reliefs unless she elects for joint assessment with her husband.

Relief for Self Resident individual given RM9,000 personal relief automatically. Also given to a wife who is assessed separately. Full personal relief of RM9,000 given to a deceased individual in the year of death i.e. the relief is not apportioned on a time basis.

Spouse Relief Available to husband when wife has no total income or when wife elects for joint assessment. Wife can also claim for husband relief if he has no source of income or elects for joint relief Maximum RM3,000 for spouse. Additional RM3,500 available if spouse is disabled. The relief is given either in full or nil. No apportionment of the relief.

Child Relief Relief RM1,000 for each child (below 18 years of age) RM5,000 for handicapped child (unmarried) RM4,000 for child 18 years or above and receiving fulltime education at a university or college Wife who is living together with husband and assessed separately may elect to claim for child relief. If wife claimed child relief in respect of a child, husband cannot claim on the same child. However, divorced couple can share child relief based upon formula: Child relief: 50 : 50.

Medical Expenses for Parents Maximum of RM5,000 expended by taxpayer for his parents (Sec 46(1)(c)). Covers both normal medical expenses and expenses to maintain parents in nursing home. [From YA 2011 - includes ‘carer’ expenses provided by registered foreign maid but not by spouse and or children)] Certified official receipt needed. Endorsement from a registered medical practitioners to confirm that medical payment was made by children. When the wife elects for joint assessment, the husband can obtain a deduction for medical expenses incurred for “his” parents only.

Insurance Premium and Contributions Maximum RM6,000 for insurance premiums and contributions to approved schemes. Insurance premium must be paid to qualify for relief. Only individual’s obligatory contribution to Employment Provident Fund and approved schemes qualify for relief. From YA 2012, contributions to Deferred Annuity Premium and/or Private Retirement Schemes will be entitled to a maximum of RM3,000 relief.

Other Reliefs Basic supporting equipment restricted to RM 5,000 for himself ,wife, child or parent who is disabled. Disabled relief (additional) of RM 6,000 if taxpayer is disabled. Course fees up to RM5,000 for pursuing any course of study at Undergraduate/Masters/Doctoral level in a Malaysian institution recognized by the Government.

Other Reliefs (Cont’d) Serious disease relief up to RM5,000 for taxpayer, his wife or child suffering a serious disease such as AIDS and Leukemia. Up to RM1,000 (with receipt) allowed for purchase of books, magazines, etc. for own use, spouse or child. Taxpayer is given a relief of RM3,000 for a YA in respect of a purchase (with receipt) of a personal computer in that YA. Relief allowed once in 3 years. Each taxpayer i.e. the husband or wife can claim the relief in separate assessments (the computer purchased must be for private and not business use). RM3000 for insurance scheme premiums for education or medical benefits.

Other Reliefs (Cont’d) Up to RM300 given each year for purchase with receipt of any sports equipment. Relief on Broadband Subscription fees up to RM500 p.a. Relief for deposits made to the National Education Savings Scheme is increased from RM3,000 to RM6,000 with effect from YA 2012 to 2017

Rebates A rebate is given as a deduction from the tax charged to arrive at the tax payable. An individual who is resident in Malaysia is given the following rebates for a YA, where the chargeable income does not exceed RM35,000: RM400 for an individual. Further RM400 if he has a wife living with him and she is not separately assessed or if he is separated or divorced and maintaining a wife. RM400 to a wife who is separately assessed, provided her chargeable income does not exceed RM35,000.

Other Rebates Zakat, Fitrah or other Islamic dues to the appropriate religious authority [sec 60A(3)]. Claims must be supported by official receipts. Where the rebate exceeds the income tax payable for a YA, the excess cannot be returned as a tax refunded nor is it available to be carried forward as a credit to set off any future tax payable. The rebate is deducted before any sec 110 set off is given. Any excess tax credit in terms of tax set off under dividend imputation would be refunded to taxpayer.

The End End of Chapter 1.