10 ways to reduce your tax bill

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Tax Matters

10 ways to reduce your tax bill

By David Hor

It is the time of the year again to prepare and to file in your tax returns for the year 2007. Do that some time to look into your tax affairs now as the deadline is drawing near. Last minute rush may lead to careless mathematical mistakes and sometimes, overpayment of taxes!! This year, like every other year, the deadline to file your tax returns is on 30 April 2008 while taxpayers with business income have the privilege to file their returns by 30 June 2008.

Here are some tips to reduce your tax bill. Make sure you have claimed for the following deductions:

1. Purchase of books and magazines: A maximum deduction of RM1,000 for books and magazines purchased in 2007.

2. Purchase of personal computer: RM3,000 relief claim for personal computer purchased 2007. You entitled to this relief claim once every three years.

3. Life, and employee’s EPF contributions: A maximum of RM6,000 relief claim life insurance premium paid in 2007 and employee’s Employees’ Provident Fund contribution

4.   Medical and Education insurance premium paid: A maximum claim of RM3,000 for medical and education insurance premium paid in 2007.

5.  Parents’ medical expenses: A maximum of RM5,000 in respect of medical expenses expended by the individual for his parents will be allowed.

6. Medical expenses for serious disease: A maximum of RM5,000 in respect of medical expenses expended by the taxpayer or his spouse or child suffering from serious disease such as AIDS, Parkinson’s disease, cancer, renal failure, leukaemia and other similar disease. This includes expenses for a complete medical examination for the taxpayer, his spouse and his children for an amount not exceeding RM500 per annum.

7.  Supporting equipment for the disabled: A maximum amount of RM6,000 is allowed as deduction for the  purchase medical supporting equipment for his own use (if disabled) or for the use of his / her spouse, child or parent who is disabled.

8.   Further education course fee: A maximum of RM5,000 on fees expended by an individual for any course of study in any institution in Malaysia recognised by the Government undertaken for the purpose of acquiring technical, vocational and industrial skills, and information and communication technology (ICT); and the relief also covers courses up to post graduate level. From year of assessment 2006, this relief is extended to professional courses, accountancy and law undertaken at recognised institutions of higher learning in the country. The eligible professional fields are to be approved by the Ministry of Finance.

9.  Gifts and donations: Maximum deduction of 7% of aggregate income for cash donations to approved charity organization or cash contribution to the Government, a State Government or a local authority.

 The following gifts are deductible:

Gift of Artifact, Manuscript or Painting made to Government or State Government

Amount to be determined by Department of Museum or Archives (Include Painting).

Gift in cash or in-kind for the provisions of facilities in public places for the benefits of disabled person.

Amount to be determined by local authority.

Gift of medical equipment for health care facility

Maximum deduction of RM 20,000.

Gift of Painting to the National Art Gallery or any State Art Gallery

Amount to be determined by National Art Gallery or any State Art Gallery.

Gift of money for the provision of library facilities which are accessible to the public and contributions to public libraries, libraries of school and institutions of higher education. If no deduction if already allowed as a deduction to arrive at adjusted income

Maximum deduction of RM20,000.

10.   Other expenses:

a.       Travelling expenses incurred by the individual in the course of exercising his duties as an employee.

b.       Annual subscriptions paid to professional bodies where membership to such bodies is relevant to the performance of duties.

c.       Entertainment expenses incurred by the individual in entertaining employer’s existing clients. Claim iis, however, limited to the amount of entertainment allowance paid by the employer.

All claims must be evidenced by official receipts. If you have missed out any of the above claims last year, start collecting your receipt this year.



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