The following compulsory and optional deductions are deducted from your taxable income to arrive at your chargeable income, on which the amount of tax payable will be calculated. Employees can claim optional deductions by submitting TP1 Form to the employer.
Amount limited to (RM)
Deduction of RM 9,000 for an individual in respect of himself and his dependent relatives is granted automatically.
Deduction of RM 4,000 is given in respect of a spouse living together in the basis year on condition that the spouse has no source of income/total income or has elected for joint assessment.
See here for more details and additional deductions in relation to children.
Contribution to EPF or Other Approved Scheme and Life Insurance
Total deduction for the payment of contributions to the EPF or any other
approved scheme and life insurance premiums is limited to RM 6,000
Additional deduction given to disabled person.
Additional deduction given to an individual living with a disabled spouse.
Optional Tax Deductions
Amount limited to (RM)
Medical Treatment, Special Needs or Carer Expenses of Parents
Medical treatment, special needs and carer for parents are limited to RM 5,000 in a basis year. Medical expenses which qualify for deductions include:
The claim must be supported by a certified medical practitioner registered with the Malaysian Medical Council that the medical conditions of the parents require medical treatment or special needs or carer.
The parents shall be resident in Malaysia. The medical treatment and care services are provided in Malaysia.
In the case of carer, shall be proved by a written certification, receipt or copy of carer’s work permit. “Carer” shall not include that individual, husband, wife or the child of that individual.
New personal deduction of RM 1,500 for each parent is given to a resident
taxpayer subject to the following conditions:
3,000 total (1,500 for each parent)
Basic Supporting Equipment
The purchase of any supporting equipment for one’s own use, if he/she is a disabled person or for the use of his/her spouse, child or parent, who is a disabled person may be claimed but limited to a maximum of RM 6,000 in a basis year. Basic supporting equipment includes haemodialysis machine, wheelchair, artificial leg and hearing aid but exclude optical lenses and spectacles
Higher Education Fees (Self)
Payment of annual fee limited to RM 7,000 is allowed as a deduction for any course of study in an institution or professional body in Malaysia recognized by the Government of Malaysia or approved by the Minister of Finance for the purpose of enhancing any skill or qualification:
Medical Expenses on Serious Diseases
Medical expenses on serious diseases include the treatment of acquired immune deficiency syndrome (AIDS), Parkinson’s disease, cancer, renal failure, leukaemia and other similar diseases.
‘Other similar diseases’ such as heart attack, pulmonary hypertension, chronic liver disease, fulminant viral hepatitis, head trauma with neurological deficit, brain tumour or vascular malformation, major burns, major organ transplant or major amputation of limbs. Amount expended on own self, husband/wife or child is deductible up to a maximum of RM 6,000.
Complete Medical Examination
Amount expended on own self, husband/wife or child for complete medical examination is deductible up to a maximum of RM 500. The total deduction for medical expenses on serious diseases and complete medical examination is limited to a maximum of RM 6,000.00 a year.
Example: Person claims is RM 5,900 for treatment for Parkinson’s. Therefore, he can only claim a deduction of RM 100 for medical examinations.
Purchase of Books/Magazines/Journals/Similar Publications
Purchase of books/magazines/journals/other similar publications (in the form of hard copy or electronic but exclude newspapers or banned reading materials) for the individual, husband/wife or child. Total deduction is limited to a maximum of RM 1,000 per year.
Purchase of Personal Computer
An amount limited to a maximum of RM 3,000 is deductible in respect of the purchase of personal computer. No deduction will be granted if the computer is used for business purpose. This deduction is allowed once in three (3) years.
Net Deposit in Skim Simpanan Pendidikan Nasional (SSPN)
Amount deposited in SSPN by an individual for his children’s education is deductible up to a maximum of RM 6,000 per year. The deduction is limited to the net amount deposited in that basis year only (deposits less withdrawals for the year).
This deduction has effect for the years of assessment 2012 until 2017.
Purchase of Sports Equipment
An amount limited to a maximum of RM 300 is deductible in respect of purchase of sports equipment in the basis year by that individual for any sports activity as defined under the Sports Development Act 1997.
Payment of Alimony to Former Wife
Payment of alimony to a former wife is deductible provided that the total deduction for wife (in paragraph 4.4.1 (b)) and alimony payment is limited to RM 4,000 per year. Voluntary alimony payment to a former wife under a mutual agreement but without any formal agreement does not qualify as a deduction.
Note: Payment of alimony to former wife is not allowed in the case where the employee claimed deduction for wife.
Total deduction for the payment of life insurance premiums and contributions to the EPF or any other Approved Scheme is limited to RM 6,000 per year.
Contribution to a Private Retirement Scheme and Payment of Deferred Annuity
Deduction on contribution to Private Retirement Scheme approved by the Securities Commission under The Capital Markets and Services Act 2007 or payment of deferred annuity premium or both limited to RM 3,000 per year (for 10 years from year assessment 2012 until year assessment 2021).
Education and Medical Insurance
A deduction not exceeding RM 3,000 per year for insurance premiums in respect of education or medical benefits for an individual, husband, wife or child.
Interest on Housing Loan
A deduction not exceeding RM 10,000 per year is given on housing loan interest for house purchased from developer or third party subject to the following conditions:
The tax deduction is given for 3 consecutive years from the first year the housing loan interest is paid.
A deduction not exceeding RM 250 per year for payments to the Social Security
Unlike tax deductions which are reductions in your chargeable income, tax rebates are further reductions in the amount of tax you pay after you have calculated your tax for the year.
Rebate on Zakat
Zakat can be deducted from the employee’s remuneration (in which case the amount of zakat should appear on the payslip and EA Form), or claimed through TP1 form.
Rebates for Individuals with Chargeable Income less than RM35,000
A rebate of RM 400 is available to individuals with a chargeable income less than RM 35,000. Where the spouse does not receive an income or is jointly assessed, a further RM 400 rebate can be claimed.