15 Tax Deductions You Should Know – E-Filing Guidance

Again to prevent frustration of not being able to access e-filing system due to heavy internet traffic itrsquos advisable not to wait till lastminute to perform your duty as a good and obedient citizen (grin) But if you donrsquot mind a fine of between RM200 (min) toRM2000 (max) or spend some time squatting in prison (not exceeding 6 months) then by all means ignore the submission

And if yoursquore thinking of understating your income itrsquos better not to submit at all because the fine for such offence is much more

serious ndash fine of between RM1000 to RM10000 plus 200 of tax undercharged No matter how you look at it you canrsquot runaway from a hungry and deep-in-debt government Actually you should look forward to this tax season as this is perhaps the only

time you can demand money from the government ndash excess in tax paid

Since employers normally pay more in the employeesrsquo monthly tax deduction to the government (in most cases) government owesemployees money In fact government should pay you the excess in tax paid plus ldquointerestrdquo which you could otherwise earn if

you put the money to work in a bank Thatrsquos why itrsquos always a lose-lose situation for employees

Unless yoursquore doing your own business chances are yoursquore paying huge amount of hard earned money to the Inland Revenue

Department in this case Lembaga Hasil Dalam Negeri As an employee what you can do is to maximize whatever allowable itemswithin the ldquoPart F Deductionsrdquo section when you file your tax return The BE Form is quite similar to the e-filing interface upon

login so itrsquos advisable to put those figures on the form before you enter it to the e-filing system

After successfully login to e-filing you will land on ldquoe-BE Year of Assessmentrdquo page Basically therersquore four (4) parts or pages in e-

filing website namely

Page-1 ldquoParticulars of Individualrdquo

Page-2 ldquoStatutory Income and Income of Preceding Years Not Declaredrdquo

Page-3 ldquoDeduction Rebate Tax Deduction Tax Reliefrdquo Page-4 ldquoTax Summaryrdquo

Page-1 of e-filing (e-BE Year Assessment)

Wersquore not going into details about Part A (Particulars of Individual) Part C (Particulars of Husband Wife) Part D (Other

Particulars ndash contact and banking information) or Part E (Income of Preceding Years Not Declared) simply because those

information do not change much unless you enjoy remarry shifting home and changing banking accounts every year Anyway belowis how e-filing looks like upon logging to the first screen

When yoursquore in first page of e-filing the only thing you may need to change is ldquoType of Assessmentrdquo ndash whether to choose ldquoJoint

with Spouserdquo or ldquoSeparaterdquo Obviously if your spouse is not working then you choose ldquojointrdquo but if both are working itrsquos morebeneficial to declare separately That would leave us with Part B and Part F Take note that by now you should have received your

EA form from your company

Page-2 of e-filing (e-BE Year Assessment)

The interesting part starts with ldquoPart B Statutory Income and Total Incomerdquo whereby you declare all your incomes The item

ldquoB1 ndash income from employmentrdquo is the most important as this is your annual income the main part which government uses to taxyou monthly You can get this figure from your EA form which is your total income for the whole year of last year

If you invest in stock or shares unit trust and paid dividends during the assessment period then yoursquove to declare it at item ldquoB2 ndash

income from dividendsrdquo Click on the button ldquoHK3Prime (another screen will appear) and fill in those information about your dividends

earned in last year Most donrsquot really care about this minor item but do you know that some of your dividends paid may be the

amount after ldquoIncome Tax at 25ldquo

[ Click to Enlarge ] Income Tax e-filing ndash Dividends

This simply means the government already taxed the max of 25 on your gross dividend and what you had gotten was a deducted

net dividend In short you ldquomustrdquo claim back your money here provided your tax bracket is lower than 25 Although a new

rule says all listed companies must pay your tax some stubborn companies have yet to comply But if all your dividend vouchers

stated ldquoZerordquo in income tax column you can ignore this part

What if you invest in foreign stock market such as the US New York Stock Exchange or Nasdaq Do you need to pay tax from

your overseas capital gains This statement perhaps will clear the air - ldquoWith effect from the year of assessment 2004 incomederived from outside Malaysia and received in Malaysia by resident individual is exempted from taxrdquo In short you donrsquot

have to pay any tax due to double taxation treaties (grin)

Next if you earn income from rentals from houses shophouses land plant machines furniture and your hamsters yoursquove to declare

it in ldquoB2 ndash income from rentsrdquo Note that both ldquoB2 ndash income from dividendsrdquo and ldquoB2 ndash income from rentsrdquo are presented as asingle item in 2013 BE Form (B2 ndash income from dividends and rents) though Again most people donrsquot declare this extra rentals

income for obvious reason

Who in their right mind would be so honest (or rather dumb) to pay extra to the government only to be used to buy radars that

couldnrsquot detect UFOs (tongue-in-cheek) right Well as long as you donrsquot get caught I supposed rentals declaration is a debatable

and could be hard to trace Besides yoursquore paying your property assessment to ldquodewan bandarayardquo (city hall) every half-yearly

already

Item B3 is concerning interest royalties part-time jobs and whatnot Interest earned from FD (fixed deposit) or banking

deposit is exempted Royalties above certain amounts as a result from copyrights earning are taxableThe same goes to part-time

lecturing writing etc But seriously who would declare such part-time jobsrsquo income right As long as the figure is not ldquosubstantialrdquo

enough this is a ldquoblind-spotrdquo

Unless yoursquore one of governmentrsquos cronies and need to suck up to them you normally donrsquot give away money artefacts and your

van Gogh paintings to the them But still if yoursquore charitable enough you can declare any donations to ldquoapprovedrdquo institutions such

as old-folk homes foundations associations temples churches mosque and whatnot in Part B item B5 of which you can get tax

relief The list of such institutions under Section 44(6) ITA 1967 can be found here

Your total income will be calculated automatically in item B6 The amount of monthly tax deductions paid for the whole of last year

should be appeared automatically in item B18 the moment you come to this second page of e-filing The figure in item B18 should

be the same as shown in your EA Form If this figure does not appear in B18 then something is wrong with your monthly taxcontribution

Page-3 of e-filing (e-BE Year Assessment)

Part F is the most important part because it determines your taxable amount This part equals to deductable expenses and

you will be surprise on how much you had previously overpaid (to government) due to ignorance As a starting point every

individual is given a RM9000 default relief Letrsquos go to each of them shall we

F2 ndash Medical treatment special needs and carer expenses for parents The scope includes medical care and treatmentprovided by a nursing home and even dental treatment limited to tooth extraction filling scaling and cleaning However you

canrsquot claim if you plan to impress babes by crowning your tooth with gold though The limit is RM5000 so therersquos huge room

to spend

F3 ndash Basic supporting equipment for disabled self spouse child or parents Basic supporting equipment includes

haemodialysis machine wheel chair artificial leg and hearing aids but exclude optical lenses and spectacles Maximum

claimable amount is RM5000

F4 ndash Nobody likes this but if yoursquore a disabled individual you are allowed an additional RM6000 in personal relief

F5 ndash Education Fees (self) ndash should you further your study for ldquoany course of studyrdquo at Masters or Doctorate level

then you should declare this item for a deduction of up to RM5000 max Unfortunately this is not applicable for diploma

higher diploma or Bachelor degree unless itrsquos for the purpose of acquiring ldquolaw accounting Islamic financing technical

vocational industrial scientific or technological skills or qualificationsrdquo

F6 ndash Medical expenses on serious diseases for self spouse or child which include AIDS cancer Parkinsonrsquos disease

leukaemia heart attack major burns and even hypertension Maximum amount deductable is RM5000

F7 ndash Complete medical examination for self spouse or child You should use up the RM500 limit on this item example

yearly medical checkup or comprehensive blood-check from Pathlab or BP Healthcare Take note that the total deduction for

above F6 and F7 is limited to RM5000 Thus if you used up F7primes RM500 you can only claim RM4500 for item F6 above

F8 ndash Purchase of booksmagazinesjournalssimilar publications (except newspapers and banned reading materials) for

self spouse or child ndash another splendid area where you should spend to the limit (if possible) of RM1000 Some of the

magazines you can consider includes investment automobile business smartphone finance related and whatnot Also you can

buy tons of books (either printed or electronic from Amazon or Apple Incrsquos (Nasdaq AAPL stock) AppStore for yourself

spouse of kids So remember to insists on receipts the next time you buy these materials

F9 ndash Purchase of personal computer for individual (deduction allowed once in every 3 years limited to RM3000) Perhaps

too many people realized that tablet such as iPad was not such a bad purchase after all as it was tax deductible UnfortunatelyIRD plugged the loophole and beginning Year Assessment 2013 tablets such as iPad is no longer qualified for such

relief The definition of computers are now confined to desktop computer laptop notebook and ultrabook (sigh) Isupposed early bird catches the worm

F11 ndash Purchase of sports equipment for any sports activity restricted to RM300 Sports equipment includes equipment

with short lifespan such as golf balls and even shuttlecocks but excluding sports attire such as swimsuits and sports shoes Youmay scream till foam at mouth ndash how the heck do you expect a person to swim without swimsuits or run without a pair ofrunning shoes Perhaps the government thougt it would be better to swim naked or running barefoot like a chicken (grin)

Broadband Tax Relief ndash Previously you can claim tax relief on broadband usage be it land-line TM Streamyx orWireless Internet broadband packages offered by Maxis Celcom or DIGI ndash up to a maximum RM500 However this goodies

was only applicable for year assessment 2010 to 2012 Hence this item has been removed from e-filing and BE Formaltogether ndash this popular tax relief is ldquoGONErdquo

F12 ndash Interest on housing loan ndash An amount limited to a maximum of RM10000 is deductible for each basis year for aperiod of three consecutive years of assessment beginning from the date in which the interest is first expended However theSale and Purchase (SampP) Agreement must be executed between 10 March 2009 to 31 December 2010

F13 ndash Payment of alimony ndash Divorce is quite common nowadays so if yoursquove been paying your former wife last year

remember to deduct on this item up to RM3000 Itrsquos true you might have paid more than this amount but itrsquos better thannone

F15 ndash If you have children donrsquot forget to claim tax relief on this part Of course if your kids have already married thenignore this lest you wish to test if IRD officers sleep on their job just like how those bunch of radar operators missed the flightMH370 Maintenance of a child below the age of 18 is allowed a relief of RM1000 Child of 18 years and above and

studying (diploma or higher) gets additional RM6000 relief each

F16 ndash Life insurance and provident fund limited to RM6000 You should not ignore this part due to the huge sum of taxrelief allowed This part consists of both (monthly) EPF contribution and life insurance premium paid Some made the sillymistake thinking this is applicable to insurance premium only They have forgotten about their EPF contribution so they

totally ignored this cool RM6000 tax relief If yoursquore earning RM4550 monthly your annual EPF contribution would havealready used up the RM6000 tax relief alone

F17 ndash Private Retirement Scheme ndash effective from year assessment 2012 to 2021 anyone contributes to private retirementscheme approved by the Securities Commission is entitled to a maximum RM3000 in tax relief This is similar to EPF

contribution but primarily tailored for self-employed persons such as hawkers plumbers etc Of course you can opt for thisoption on top of EPF contribution but why lock yourself when you can freely invest your own money

F18 ndash Education and medical insurance A relief not exceeding RM3000 is available on insurance premiums paid in

respect of education or medical benefits for an individual husband wife or child With the escalating medical expensesnowadays most people would have some sort of medical plan already such as the infamous 36-critical illnesses insurancecoverage Therefore remember to include this for tax relief

The above 15 items are perhaps the most important deductions you should pay extra attention Sure not all deductions allowable in

ldquoPart Frdquo are relevant to you but itrsquos always worthwhile to spend some time on this section The objective is to pump a figure ashuge as possible into item ldquoF19 ndash Total Reliefrdquo (to be transferred to item B9 as per BE Form)

Page-4 of e-filing (e-BE Year Assessment)

The last part of e-filing ndash Tax Summary ndash is the most interesting part Itrsquos like those days when yoursquore waiting for your school

examinationrsquos results to be released This page shows your total income less total relief less special RM2000 relief and of coursethe ldquoChargable Incomerdquo This chargable income is used to calculate your actual tax chargable Remember your overpaid

dividends This is where you get back your money

After yoursquove creatively used up all the deductible reliefs to the max the next thing to do is to keep track of your banking account as

the government would be refunding tax paid in excess very soon This is only a small part you can do to squeeze back money thatgovernment had taxed you There are other ways to put more money into your own pocket As long as your income doesnrsquot appears

in your EA Form as income yoursquore taking 100 of the money

As a start discuss with your boss if your take-home income can be arranged in such a way that non-taxable allowance be increasedinstead of basic salary For example up to RM2400 travelling allowance is tax free Meal allowance parking allowance childcare

allowance are some allowances that you can toy around to reduce your income tax Having said that please keep all your receipts forat least 7-years Happy Tax Season

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Comments

Pingback by Tax Season ndash 11 Critical Deductions You Should Know on March 22 2014 at 721 pm

[] Update We have an updated article published on 22-Mar-2014 in preparation for Year of Assessment 2013 titled 15 Tax

Deductions You Should Know ndash e-Filing Guidance []

Comment by Choi Kok Seng on March 23 2014 at 329 pm

For assessment year of 2013 monthly of RM4000or lower is tax exempted Do I need to submit the income (RM400000 monthly)for assessment online as previously did

Comment by financetwitter on March 24 2014 at 109 am

Hello Choi Kok Seng

If you had submitted it previous year means you already have an income-tax file Regardless whether yoursquore taxable or otherwise

Panic again $700billion is insufficientto treat disease

Credit Card SafetyTips That You MayHave Missed

2014 ndash Beware OfThe Wooden Horse

Missing Jet ndashResults of EndlessCorruptionIncompetenceExtremism

Missing Jet ndashMalaysia CrisisManagement inChaos

Kajang by-Election ndashUMNOrsquos Grand PlanBackfires

9009 people like this Be the f irst of your friendsLike

More ShareShareShareShare

you still need to declare it hellip

BTW are you sure your RM4000 monthly income is not taxable

If yoursquore referring to Budget 2014 the 1-3 tax reduction was meant to offset GST which kicks in only 2015 not now hellip

Which means it starts from Year Assessment 2015 hellip so only when you declare your tax early 2016 would those with incomeRM4000 not taxable hellip

Cheers hellip

Comment by kampunginvestor on March 24 2014 at 1141 am

Thanks for the comprehensive update I will use your 15 ways guide to get tax exempt as much as possible The more tax we paythe more it will end up to certain pplrsquos pocket

Pay less is better lulx

Comment by Nik Abdullah on March 24 2014 at 1141 am

Please contact me My email is as aboved

Comment by JENNIFER CHEAH on March 24 2014 at 1153 am

Q1) In the year of 2013 my godmother (she took care of me since I was a baby) went through an operation at the private hospital

and the bill was paid by me Can this bill be claimed under F2

Q2) After the operation my godmother needs proper nursing care and I have placed her in a nursing home which monthly I have topay for to the nursing home Is this claimable

Please advice

Thank you

Comment by financetwitter on March 24 2014 at 117 pm

Hello Jennifer

F2 is for parents only not even mother-in-law or father-in-law qualifies for F2 hellip

However as provided by S46(1)(c) Income Tax Act 1967 it does not ldquoproperlyrdquo define who the lsquoparentrsquo is In general lsquoparentrsquocould include foster parent of an adopted child hellip

You may wish to pay a visit or make a call to IRD for clarification on your situation hellip

Cheers hellip

Comment by Sim Chui Hong on March 24 2014 at 256 pm

Pls send my income tax form for declaration of year 2013

Comment by Ivy Ting on March 24 2014 at 346 pm

HelloI would like to understand more why u said rental income is not easily detected by IRB I checked with officer before they

also said we can choose not to declare it But I dont get the logic behind Mind to share more ThanksBut once I declared I should continue to declare it if not it will look weird if they compared the figures with last year right

Comment by Stevenson Yip on March 24 2014 at 716 pm

Hi if i m eligible for interest on housing loan deduction and the loan is under joint name ndash my wife and me and we both opt for ind

tax declatation would like to know whether can I declare the total interest under my name (as my tax blacket is higher) or it must

divide by 2

Comment by Faizal Lee on March 24 2014 at 810 pm

I always ignore dividend earned from unit trust I thought that small amount doesnrsquot contribute much when I do my e-filing every year

Thank you very much for your article and it has helped me understand better

Comment by ryan on March 25 2014 at 805 am

For the B1 if I got fixed allowance from my company and it showed on my EA form Do I deduct my allowance from my totalincome before entering the value at B1 Example total income monthly RM 2000 + allowance RM200 = RM2200 12 x 2200 =

26400 12 x 200 = 2400 26400 ndash 2400 = 24000 B1 I enter 24000

Comment by ryan on March 25 2014 at 842 am

Also for 2013 tax those that earn below RM8000 will get additional rm2000 deduction I heard Mean I deduct it from my B1

Comment by mazli on March 25 2014 at 1132 am

pengecualian cukai Max RM500000

Yuran pendidikan (sendiri)

(i) peringkat selain Sarjana dan Doktor Falsafah ndash bidang undang-undang perakaunan kewangan islam

teknikal vokasional industri saintifik atau teknologi

(ii) peringkat Sarjana dan Doktor Falsafah ndash sebarang bidang atau kursus pengajian

Comment by Senad on March 25 2014 at 743 pm

Hi are foreigners eligible for these deductions Thank you

Comment by financetwitter on March 25 2014 at 1021 pm

Hello Stevenson Yip

If the property is under a joint name (eg husband and wife) then each of the owners can claim up to 50 of the interest paid Ifthere are 3 names then each of them has a 33 entitlement hellip

So in this case your entitlement is only 50 of RM10000 which is RM5000 hellip

Cheers hellip

Comment by financetwitter on March 25 2014 at 1030 pm

Hello Ryan

Take a look at your EA form hellip Non-taxable allowance will be shown at Category ldquoGrdquo which says

- Total Tax Exempt Allowances Perquisites Gifts Benefits (in English)- Jumlah Elaun Perkuisit Pemberian Manfaat Yang Dikecualikan Cukai (in Bahasa)

If you allowances were stated in Category ldquoBrdquo of EA Form those are ldquoTaxablerdquo unfortunately hellip

That was the reason we wrote in this article towards the end for you to negotiate with your boss to ldquorelocaterdquo your taxable

allowance into non-taxable allowance They should know what to do

Yoursquore right ndash special relief of RM2000 will be given to tax payers earning income of up to RM8000 per month (Aggregate income

of up to RM96000 annually) This relief is only applicable for Year Assessment 2013 Yoursquoll notice this ldquoSpecial Reliefrdquo on the