Malaysian Personal Income Tax Guide 2016. This series of guides will provide you an explanation of the basics and set you up on the journey of filing your taxes.

1. Personal Income Tax
2016 Guide
PART 3

2. What Is A Tax Deduction?
 After deducting tax reliefs from your annual income, you can
still reduce your chargeable income with tax deductions.
 In Malaysia, a tax deduction is similar to a tax relief, where it
reduces your chargeable income. Tax deductions are a result of
Gifts and Donations.
 Donations are only tax deductible if the donations are made to
Government approved charitable organisation or directly to the
Government, and you must keep the receipt of the donation.

3. For income tax 2016, if your chargeable income is RM55,000,
and you’ve donated RM2,500 to an approved charitable
organisation, you are allowed to deduct 7% of your aggregate
income to reduce your chargeable income.
Total chargeable income after tax deduction
= RM55,000 – (RM55,000 x 7%)
= RM55,000 – RM3,850
= RM51,150

4. Here is the list of contributions under Donations & Gifts:
• Gift of money to the Government, State Government or Local
Authorities.
• Gift of money to Approved Institutions or Organisations. (Amount is
limited to 7% of aggregate income)
• Gift of money or cost of contribution in kind for any Approved Sports
Activity or Sports Body. (Amount is limited to 7% of aggregate income)
• Gift of money or cost of contribution in kind for any Approved Project
of National Interest Approved by Ministry of Finance. (Amount is
limited to 7% of aggregate income)
• Gift of artifacts, manuscripts or paintings.

5. Here is the list of contributions under Donations & Gifts:
• Gift of money for provision of Library Facilities or to Libraries.
• Gift of money or contribution in kind for the provision of facilities in
Public Places for the benefit of disabled persons.
• Gift of money or medical equipment to any healthcare facility
approved by the Ministry of Health.
• Gift of paintings to the National Art Gallery or any State Art Gallery.
Of course, you’re not limited to just one deduction. If you’ve
donated to multiples of the above you can deduct for them all
accordingly.

6. Thank You…
SOURCE : WWW.IMONEY.MY/ARTICLES/INCOME-TAX-2016/WHAT-
IS-A-TAX-DEDUCTION
PART 4 COMING SOON