14 Ways To Slash Taxes


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14 Ways To Slash Taxes

  1. 1. 14 Tax-Saving Moves They are legal and permitted by Inland Revenue Board ( IRB )
  2. 2. 1) Save for your Child’s Education <ul><li>Since 2007 , any amount that is deposited into a savings account for your child under national Education Savings Scheme ( Skim Simpanan Pendidikan Nasional ) allows you to claim tax deductions. </li></ul><ul><li>Thers is a limit of RM 3000 for this deduction but spouse who file separate tax returns can each claim this amount . </li></ul><ul><li>Tax Deduction : RM 3000 per individual </li></ul><ul><li>For Mr A : As he falls in the 24% tax bracket , this deduction translates to a tax saving of RM 720 ( RM 3000@24%) </li></ul>
  3. 3. 2 ) File Separate tax returns <ul><li>A separate assessment allow each spouse to claim personal tax relief of RM 8000 while a joint tax return allows one spouse to claim a wife or husband relief of RM 3000 </li></ul><ul><li>Tax Deduction : </li></ul><ul><li>Each spouse earning Taxable income can claim personal tax relief of RM 8000 by filling separate tax returns. </li></ul>
  4. 4. 3) Ask your employer to increase your EPF contributions <ul><li>Contributions to the employees Provident Fund (EPF) by employers are tax-exempt for the employees. </li></ul><ul><li>To reduce your taxable income , ask your employer to reduce your EPF monthly salary but increase your EPF contributions by the same amount. </li></ul><ul><li>Tax Deduction : </li></ul><ul><li>The deductible amount from your taxable income is dependent on the arrangement between you and your employer. </li></ul><ul><li>For Mr A : Mr A agrees to take monthly pay cut of RM 1000 for an equivalent increase in his EPF contributions by his employer.At the end of the year , he receives an additional RM 12000 in his pension fund but his taxable income is reduced by the same amount. </li></ul><ul><li>The tax saving that he makes is RM 2880 ( RM12000@24%) </li></ul>
  5. 5. 4) Change your cash remuneration to cash reimbursement <ul><li>Fixed allowances given by your employer each month for entertainment and housing or parking fees are taxable at your tax bracket. </li></ul><ul><li>Change this to a “ reimbursement “ based on receipt and you are not taxed on the amount received. </li></ul><ul><li>Tax Deduction : </li></ul><ul><li>The deductible amount from your taxable income is dependent on the arrangement between you and your employer </li></ul><ul><li>For Mr A : By Changing a yearly fixed allowance of RM 6000 to a reimbursement of the same amount and supported by receipts , Mr A makes a tax saving of RM1440 ( RM 6000@24%) </li></ul>
  6. 6. 5) Make charitable contributions <ul><li>A gift of money to an approved charitable organisation entitles you to a tax deduction for the amount given. </li></ul><ul><li>From 2008 onward , this amount cannot exceed 7% of your aggregate income. </li></ul><ul><li>However Charitable donations that were made in 2007 are not subject to this limit. </li></ul><ul><li>Tax deduction : </li></ul><ul><li>Up to 7% of your aggregate taxable income can be reduced with this deduction. </li></ul><ul><li>For Mr A : With his taxable income of RM 90000 , Mr A can make a donation of RM 6300 .This deduction results in a saving of RM 1512 ( RM 6300@24%) </li></ul>
  7. 7. 6) Take Up postgraduate studies <ul><li>A relief of RM 5000 per year for any course of study at the Master’s or doctorate level , the government announced in 2007 Budget the widening of the scope to all postgraduate studies. </li></ul><ul><li>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 or approved by Minister of Finance </li></ul><ul><li>Tax Deduction : </li></ul><ul><li>RM 5000 per individual </li></ul><ul><li>For Mr A : As he completes his master’s degree . Mr A can enjoy tax saving RM 1200 from his taxable income ( RM 5000@24%) </li></ul>
  8. 8. 7) Read , Read , Read <ul><li>Starting from YA 2007 , taxpayers can claim a personal tax deduction to RM 1000 for purchase of books, journals , magazines and other publications. </li></ul><ul><li>To maximise this generous deduction , consider giving books as gifts. </li></ul><ul><li>Tax Deduction : RM 1000 per individual </li></ul><ul><li>For Mr A : With book purchases of RM 1000 Mr A saves RM 240 ( RM 1000@24%) </li></ul>
  9. 9. 8) Get Sporty <ul><li>You will get a deduction of RM 300 for each year of assessment for the purchase of sports and exercise equipment for any sports activities defined under the Sport Development Act 1997 “ </li></ul><ul><li>Tax Deduction : RM 300 per individual </li></ul><ul><li>For Mr A : By buying RM 300 worth of sports equipment , Mr A makes a saving of RM 71 ( RM 300@24%) </li></ul>
  10. 10. 9) Buy Life Insurance <ul><li>The maximum tax relief is RM 6000 a year for premiums paid to an insurance company for life Insurance or deferred annuity plans. </li></ul><ul><li>This Limit is shared with your contributions to the EPF, other employer schemes and contributions under any written law relating to widows or orphan pensions </li></ul><ul><li>Tax deduction : RM 6000 per individual ( shared with your EPF contributions ) </li></ul>
  11. 11. 10) Take out a Medical or Education policy <ul><li>You can claim deductions of up to RM 3000 a year for education and medical insurance ( combined limit for both ) </li></ul><ul><li>This includes medical coverage that is part of life insurance policy( the limit for life insurance is in move 10 ) </li></ul><ul><li>A policy of this kind can be written for you , your spouse or your child. </li></ul><ul><li>Tax deduction : </li></ul><ul><li>RM 3000 per individual </li></ul><ul><li>For Mr A :After acquiring an education policy for his children , Mr A makes a saving of RM 720 ( RM 3000@ 24%) </li></ul>
  12. 12. 11) Pay your parents’ medical bills <ul><li>You are able to claim up to RM 5000 for payments towards your parents’ medical bills. </li></ul><ul><li>Tax deduction : </li></ul><ul><li>RM 5000 per individual </li></ul><ul><li>For Mr A : By paying his parents’ medical bills , Mr A makes a saving of RM 1200 ( RM5000@ 24%) </li></ul>
  13. 13. 12) Medical <ul><li>Claim a deduction of up to RM 500 per tax year for a full medical examination and RM 5000 for medical expenses for yourself, spouse or child for serious disease. </li></ul><ul><li>If you have also spent money on full medical in the same year, your claim will be reduce the RM5000 available for serious disease. </li></ul><ul><li>A separate tax reduction of up to RM5000 a year is given for necessary basic supporting equipment for disabilities suffered by yourself ,spouse, children or parent </li></ul><ul><li>Tax Deduction : </li></ul><ul><li>RM 500 per individual for full medical check-up. </li></ul><ul><li>RM5000 for serious diseases or basic supporting equipment </li></ul><ul><li>For Mr A : He claimed for a full medical check-up .The deduction give him of RM 120 ( RM 500@24%) </li></ul>
  14. 14. 13) Pay Zakat <ul><li>If you are a muslim ,paying any amount in zakat , fitrah or other obligation Islamic dues will entitle you to a tax rebate. </li></ul><ul><li>Tax deduction : </li></ul><ul><li>The Amount of zakat that you pay </li></ul>
  15. 15. 14) Buy a Computer <ul><li>A deduction of up to RM 3000 can be claimed once every three years for the purchase of computers , printers and bundled software . </li></ul><ul><li>The similar incentive given previously in the form of a tax rebate was withdrawn with effect from 2007 </li></ul><ul><li>Tax deduction : RM 3000 once every three years. </li></ul><ul><li>For Mr A : Getting a computer for RM3000 gives him a saving of RM 720 ( RM 3000@24%) </li></ul>