By Ravindran Duraisamy
The writer is a qualified tax agent, chartered accountant and a member of the Malaysian Institute of Accountants (MIA), Chartered Tax Institute of Malaysia(CTIM) and The Association of Chartered Certified Accountants UK (ACCA).
Many will think twice when comes to opening the mail from the Inland Revenue Department (LHDN) fearing that they will be asked to pay more taxes.
Once my client gave to me a sealed envelope he received from LHDN and told me to open it but not to inform him of its contents until he came back from his short overseas holiday.
Knowing that he has been a good taxpayer I opened it and read that LHDN wanted to inform him that he had overpaid and the excess amount would be banked into his account.
Then why the phobia over the tax authorities? Taxpayers have no reason to worry if they know their rights and the relief given to them.
It is important that the taxpayers read thoroughly the form B or BE if they want to complete the forms on their own or get the advise of the chartered accountants and tax agents in the country. The particulars of tax agents can be obtained from the LHDN offices or by visiting the website of LHDN at hasil@gov.net.my
The knowledge of the availability of the various personal relief to taxpayers will boost the confidence of taxpayers and will help in their tax planning.
So what are the tax relief available to an individual for the year 2011 when they file in their tax returns form or through e-filing in 2012?
PERSONAL RELIEF – SELF
The taxpayer can claim RM9,000 for himself and previously, until 2009 this relief was only RM8,000 and the new figure is maintained for the year 2012.
A relief of RM5,000 for medical expenses, for taxpayer, spouse, children on serious diseases is also available to those who suffer from such serious diseases like cancer, heart problems, kidney dialysis needs etc.
As for a disabled taxpayer, spouse, children or parents who need support equipment a maximum of RM5,000 is given to purchase such equipment to assist them in their daily chores like wheel chairs.
Since 2005 a disabled taxpayer is given an additional relief of RM6,000 compared with RM5000 before that while a disabled spouse is given an additional relief of RM3,500 (before 2005 the relief was RM2,500).
If the taxpayer's spouse does not have a source of income or if they choose for combined assessment an additional relief of RM3,000 is given.
PERSONAL RELIEF – MEDICAL EXPENSES OF PARENTS
Taxpayers can also claim a maximum of RM5,000 towards their parents' medical expenses. They can claim the benefit with the original payment receipts from the relevant medical centre or clinics.
As for example, if the total medical bill for the parents is RM8,500 then the taxpayer can claim only a maximum of RM5,000. However, on the other hand if the taxpayer's family member pays half of the bill RM4,250, then both the taxpayer and the family member each can claim a relief of RM4,250.
So it is important the taxpayer knows how much personal tax relief is available to plan the tax amount. Based on the above example the taxpayer can ask a family member to pay the balance of the medical bill in excess of RM5,000 so that they other family member too could claim relief while carrying out fillial duties.
This relief of RM5,000 is also available for the year 2012 and with effect from 2011 it is extended to include expenses in caring for parents at nursing home and even day care centres.
However a medical practitioner has to certify that the medical condition of the parents requires outside care. This means the claim can only be made if the parents' condition warrants them to be in the care of others or in a nursing home. Children who just choose to send their parents to an old folks home will not be able to claim this incentive.
PERSONAL RELIEFS – CHILDREN
Taxpayers can claim relief for their children and they can choose the relief to be claimed by themselves or their spouse in whole or in percentages – a flexible arrangement by the government.
For a child aged below 18 a relief of RM1,000 is given irrespective of whether the child is studying or not.
For children above 18 and studying in universities, colleges or similar establishments (local or overseas) a relief or RM4,000 is given to the taxpayer.
For every unmarried disabled child a relief of RM5,000 is given.
For a disabled child pursuing tertiary education an additional relief or RM 4,000 is given from the year of assessment 2006.
PERSONAL RELIEF – OTHERS
Other reliefs include insurance and EPF contributions up to RM7,000. Insurance premiums paid for educational and medical benefits is given a relief of RM3,000.
Relief of RM5,000 is also given for educational fees paid by the taxpayer to acquire technical, vocational, industrial, scientific, technological, law, accounting, Islamic financing, skills or qualifications at tertiary level or any course of study at post graduate level (masters or PhD).
A taxpayer can also claim a relief of RM1,000 for the purchase of books, magazines and other publications for oneself, spouse or children. It is important he keeps the original receipts for verification by the tax authorities.
A relief of RM3,000 is given for the purchase of computer from the year of assessment 2007 provided the taxpayer claims this relief only once every 3 years.
For the purchase of sports equipment a relief of RM300 and for broadband subscription fees a relief of RM500 is given from the year 2008 and 2010 respectively.
Savings deposited into Skim Simpanan Pendidikan Nasional (SSPN) for the taxpayer's child a relief of RM3,000 is given.
Taxpayers who purchased a residential house, flat or condominium and signed the sale and purchase agreement between 10 March 2009 and 31 December 2010 can claim a maximum relief of RM10,000 a year for three consecutive years from the first year the interest is paid.
IMPORTANT MATTER TO NOTE
Taxpayers should read the tax guide and note the above points. They can also seek clarification from the chartered accountants and tax agents to make the best out of the personal tax relief available to them.
The information serves as a good lead to inform the taxpayers about the many relief available to them and it is best to make the best out of it and claim the maximum on time.
Failure to claim the relief will render the taxpayer paying more tax.
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