They are legal and permitted by Inland

Revenue Board ( IRB )

 Since 2007 , any amount that is deposited into a savings account
for your child under national Education Savinds Scheme ( Skim
Simpanan Pendidikan Nasional ) allows you to claim tax
deductions.

 Thers is a limit of RM 3000 for this deduction but spouse who file
separate tax returns can each claim this amount .

 Tax Deduction : RM 3000 per individual

 For Mr A : As he falls in the 24% tax bracket , this deduction

translates to a tax saving of RM 720 ( RM 3000@24%)
 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

 Tax Deduction :
Each spouse earning Taxable income can claim personal tax relief of RM
8000 by filling separate tax returns.
 Contributions to the employees Provident Fund (EPF) by employers are tax-
exempt for the employees.

 To reduce your taxable income , ask your employer to reduce your EPF monthly
salary but increase your EPF contributions by the same amount.

 Tax Deduction :
The deductible amount from your taxable income is dependent on the arrangement
between you and your employer.

 For Mr A : Mr A agrees to takle 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.

 The tax saving that he makes is RM 2880 ( RM12000@24%)

 Fixed allowances given by your employer each month for
entertainment and housing or parking fees are taxable at your tax
bracket.
 Change this to a “ reimbursement “ based on receipt and you are
not taxed on the amount received.

 Tax Deduction :
The deductible amount from your taxable income is dependent on
the arrangement between you and your employer

 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%)
 A car given by your employer is regarded as a benefit-in kind ( BIK ) and taxable.

 However , a company car is advantageous for taxpayers because the preset tax
scale for cars is much lower than the actual cost of buying and maintaining a car.

 According to the Public ruling for BIKs , the tax payer must pay RM 3600 in taxes
every year, for a car worth RM 75000

 If the employer pays for fuel , the tax payer is taxed an additional RM 1200 for this
BIK

 Tax deduction :
Whether you benefit from a company car depends on the value of the car and your
current tax bracket. Do the calculations to ascertain your tax deduction.
 A gift of money to an approved charitable organisation entitles you to a tax
deduction for the amount given.

 From 2008 onward , this amount cannot exceed 7% of your aggregate income.

 However Charitable donations that were made in 2007 are not subject to this limit.

 Tax deduction :
Up to 7% of your aggregate taxable income can be reduced with this deduction.

 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%)
 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.

 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

 Tax Deduction :
RM 5000 per individual

 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%)
 Starting from YA 2007 , taxpayers can claim a personal
tax deduction to RM 1000 for purchase of books,
journals , magazines and other publications.

 To maximise this generous deduction , consider giving

books as gifts.

 Tax Deduction : RM 1000 per individual

 For Mr A : With book purchases of RM 1000 Mr A

saves RM 240 ( RM 1000@24%)
 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 “

 Tax Deduction : RM 300 per individual

 For Mr A : By buying RM 300 worth of sports equipment , Mr A

makes a saving of RM 71 ( RM 300@24%)
 The maximum tax relief is RM 6000 a year for
premiums paid to an insurance company for life
Insurance or deferred annuity plans.

 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

 Tax deduction : RM 6000 per individual ( shared with

your EPF contributions )
 You can claim deductions of up to RM 3000 a year for education
and medical insurance ( combined limit for both )
 This includes medical coverage that is part of life insurance
policy( the limit for life insurance is in move 10 )
 A policy of this kind can be written for you , your spouse or your
child.

 Tax deduction :
RM 3000 per individual

 For Mr A :After acquiring an education policy for his children , Mr

A makes a saving of RM 720 ( RM 3000@ 24%)
 You are able to claim up to RM 5000 for payments
towards your parents’ medical bills.

 Tax deduction :
RM 5000 per individual

 For Mr A : By paying his parents’ medical bills , Mr A

makes a saving of RM 1200 ( RM5000@ 24%)
 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.

 If you have also spent money on full medical in the same year, your claim will be
reduce the RM5000 available for serious disease.

 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

 Tax Deduction :
RM 500 per individual for full medical check-up.
RM5000 for serious diseases or basic supporting equipment

 For Mr A : He claimed for a full medical check-up .The deduction give him of RM
120 ( RM 500@24%)
 If you are a muslim ,paying any amount in zakat ,
fitrah or other obligation Islamic dues will entitle you
to a tax rebate.

 Tax deduction :
The Amount of zakat that you pay
 A deduction of up to RM 3000 can be claimed once
every three years for the purchase of computers ,
printers and bundled software .
 The similar incentive given previously in the form of a
tax rebate was withdrawn with effect from 2007

 Tax deduction : RM 3000 once every three years.

 For Mr A : Getting a computer for RM3000 gives him a

saving of RM 720 ( RM 3000@24%)
 Consider hiring a tax consultant to explore ways your
remuneration package can be structured to maximise
your tax savings.

 Those who are earning at least RM5000 every month

should be able to justify the cost of hiring a tax adviser
with their tax savings

 Tax saving : this is dependent on your personal

circumstances and the deal that you negotiate with
your employer.
 You may be looking at some investment this year.

 There are savings to be made from certain investments

, from a tax point of view.

 However , some moves may be advantageous if you

fall into a higher tax bracket .

 Besides looking for tax-exempt investment , here are

four investment moves to explore
 Stamp duty must be paid on all property transactions that involve
a change of legal ownership.

 Last year’s budget ( 2008 ) announced a 50% stamp duty

exemption for the purchase of houses that do not exceed
RM250000

 The maximum tax savings that can be found here is RM2000 ( for a
house worth RM250000 )

 This exemption is only given for one house per individual and
applies to sale and purchase agreement signed between
September 2007 and December 2010
 Similar property can be grouped together for income tax purposes.

 The IRB has indentified categories such as residential , commercial and vacant
land.

 If you own two property in the same category , you can reduce the taxable
profit made from one property with the loss, if any incurred from the other.

 Property investors are also exempt from real property gains tax for all
disposals on on or after 1st April 2007.

 However , taxpayers who are trading property – buying and selling in order
to generate income – are liable to income tax.

 “ This exemption is meant for taxpayers who invest in property for a passive
income”

 Tax deduction :
Taxable income received from renting out a property in a particular grouping
such as residential can be reduced if a loss was incurred by another property
in the same group.
Invest in dividend-yielding shares if your tax bracket is above
26%.

A new single-tier system was established under the national

Budget for dividends received by shareholders.

Companies pay tax of 26% (YA2008) and shareholders receive a

net dividend that is exempt from tax and does not need to be filed
with the IRB “Shareholders who fall into higher tax brackets [higher
than 26%] are essentially [getting a] saving on the difference.

“The single-tier dividends is intended to simplify the tax filing

process for individuals,” says Chua Tia Guan, executive director and
head of tax and financial planning at Great Vision Wealth
Management Sdn Bhd.

 “In the past, refunds had been slow. From now on, there is no
need to declare or apply for a refund. And as corporate taxes are
falling, companies will be able to pass on more profits to their
shareholders [in the form of dividends],” he says.
 However, not all companies will go under the single-tier system
immediately as some of them might have imputation tax credits left,
which they can use till 2013.

 Shareholders who receive dividends from companies using the

imputation system will have to report the amount received and claim a
tax refund if his personal tax rate is lower than the company’s tax rate
(27% in YA2007, 26% in YA2006).

 Shareholders can identify the system used by the company as it is stated

in the dividend vouchers.

 Tax Deduction
Your tax saving is the difference between your tax bracket and 26% (the
corporate tax rate). This is only applicable to dividends given out by
companies using the single-tier system.
 You can go into real estate investment trusts ( REITS )if your tax bracket
above 15%.

 There are 11 REITs listed on the Main Board.

 The tax on dividends given out by these property-related investments are

taxed at 15% as compared to tax on dividend at 26% ( under the new single –
tier dividend system )

 Only tax brackets exceeding 15% would enjoy some tax savings by investing
in REITs

 Since the distributions received by individual taxpayers have been subject to

that 15% , the taxpayers are not required to declare the amount in their tax
return.

 Tax deduction:
Your tax saving is the difference between your personal tax bracket and 15%
 The first rule that small-business owners
should implement with regards to their taxes is
to take it seriously.
 Spend some time strategising for your business
activities to save hundreds or thousands
ringgit.
 Here are six
 Keep separate bank accounts for personal and business transactions and
establish a basic accounting system.

 The inland Revenue Board recognises business income on an accrual basis .

 This means that as long as a transaction is completed, either a sale of goods or

a provision of service , its value is immediately treated as business income
and is taxable.

 However , unpaid transaction can be reduced your taxable income.

 Any expenses made fro the business can be deducted from the business
income.

 The General rule is that expenses can be deducted if it is wholly and

exclusively incurred in earning your business income.

 So Keep the receipts for all supplies that you buy for your business

 However there is no deduction for capital expenditure although some assets

will qualify for tax relief by way of capital allowances
 Capital allowances are permitted for certain business assets such as
equipment , machinery , vehicles computers and software.

 The amount of allowances permitted each year depends on the

category that asset falls into .( refer to Public Ruling No 2/2001 for
the deductible rate of your assets.

 The first capital allowance is given for the accounting year in which
the asset was purchased and used by the business.

 If you are contemplating a purchase , try to do it before the end of the

accounting year, instead of just after , to claim the capital allowance
against your business income.

 If you are buying the asset with a hire-purchase loan, allowance can
only be claimed as and when repayments are made to the lender.
 If you are a sole trader or a partner in a business, any car or vehicle that is
used for business purposes can bring about tax deductions.

 “The business income is reduced by the car’s financing cost if you buy the car
on hire-purchase.

 You are also deduct a certain amount for capital allowances every year,

 Before implementing this tax-saving technique, business owners must

identify a percentage of the car’s use that is for private activities.

 As there is no definite ruling on how to determine this proportion for private

use, business owners must apply a fair and reasonable figure that can
withstand scrutiny.

 “Estimating private mileage is an exercise that must be undertaken in

accordance to the facts on your actual usage.

 And remember to record all running expenses to make these deductions,”
says Thornton.
 An effective tax-saving strategy is to hire a spouse or family member.

 “For example, a husband who is a business owner can hire his wife. The
wife’s salary is tax deductible but you must be able to show that she is doing
something to earn it,

 In this situation, you would have to contribute to your wife’s Employees

Provident Fund (EPF) savings and that amount entitles her to tax relief.

 Another option is to make your spouse or family member a partner in your
business.

 This allows you to divide the income made by the business between the both
of you.

 As a partnership has no tax liability, both partners are liable for tax for the
respective portion of business income that each earns.

 “By opting for separate tax assessments, a husband and wife who are partners
in a business can each claim individual tax relief.
 Unfortunately, small business owners can complete a sale or service but might not
receive payment, in full or in part.

 At the end of an accounting year, a debt, which is estimated to be wholly or partly
irrecoverable, can be deducted from your business income and this lowers your tax
bill.

 “Tax authorities tend to look closely at bad-debt write-offs and provisions (for
debts that are expected to be partly recoverable).

 So put in some effort to recover the debt before deeming it irrecoverable and you
must evaluate each debt separately.

 The process that you put in place to recover your unpaid debts should be
documented and any conclusion that you make should be supported with
documentation as well.

 For example, you must show why it is not cost effective to take legal action against
a customer.

 However, if you eventually recover bad debts that have been written off or
partially written off, you must include this amount in your taxable income for the
year that you received payment.
 Working in your own house can result in tax deductions for the costs related to your
“home office”.

 This includes electricity, telephone bills, quit rent and service charges of apartments.

 The best way to claim for these deductions is to dedicate a room or place as the working
environment.
 “A dedicated area helps to identify expenses that are specifically for business purposes
and can be claimed in full.

 Items that are used by the business as well as personal use, such as electricity, must be
apportioned.

 One way to do so is on the basis of floor area.

 If the business owner pays rent for the working area, this expense can be deducted from
the business income.

 This applies to rent that is paid to a spouse who owns the home but is not involved in the
business.

 However, this is strategy is only effective if the spouse who is not involved in the
business is taxed at a low tax rate as rental received must be declared as taxable income.

 If this is an appropriate strategy for the business owner, A tenancy agreement that
specifies rental for a specific part of the house at the prevailing market rate.