Tax Strategy

In income tax planning, the tax strategy is to pay the taxes and plan the income to minimize
the tax payable. An individual has several ways to reduce their tax bill which include relief
and tax rebates. A relief is a deduction from the total income, reducing chargeable income,
and a tax rebate is a deduction of tax payable.

1. Donation

No. Contribution Notes

1 Gift of money to the Subsection 44(6)
Government, State
Government or Local
Authorities.
2 Gift of money to Approved Subsection 44(6)
Institutions or
Organisations.
(Amount is limited to 7% of
aggregate income)
3 Gift of money or cost of Subsection 44(11B)
contribution in kind for any
Approved Sports Activity or
Sports Body.
(Amount is limited to 7% of
aggregate income)
4 Gift of money or cost of Subsection 44(11C)
contribution in kind for any
Approved Project of
National Interest Approved
by Ministry of Finance.
(Amount is limited to 7% of
aggregate income)
5 Gift of artifacts, Subsection 44(6A)
manuscripts or paintings.
6 Gift of money for provision Subsection 44(8)
of Library Facilities or to
Libraries.
7 Gift of money or Subsection 44(9)
contribution in kind for the
provision of facilities in
Public Places for the
benefit of disabled persons.
8 Gift of money or medical Subsection 44(10)
equipment to any
healthcare facility approved
by the Ministry of Health.
9 Gift of paintings to the Subsection 44(11)
National Art Gallery or any
State Art Gallery.
2. Tax Relief

Year 2016

No. Individual Relief Types Amount (RM)

1 Self and Dependent 9,000

2 Medical expenses for parents 5,000 (Limited)

OR OR
Parent
Limited 1,500 for only one mother 3000 (Limited)
Limited 1,500 for only one father

3 Basic supporting equipment 6,000 (Limited)

4 Disabled Individual 6,000

5 Education Fees (Individual) 7,000 (Limited)

6 Medical expenses for serious diseases 6,000 (Limited)

7 Complete medical examination 500 (Limited)

8 Purchase of books, journals, magazines and publications 1,000 (Limited)

9 Purchase of personal computer (once in every 3 years) 3,000 (Limited)

10 Net saving in SSPN's scheme (with effect from year 6,000 (Limited)
assessment 2012 until year assessment 2017)
11 Purchase of sport equipment for sport activities 300 (Limited)

12 Interest expended to finance purchase of residential property. 10,000

Relief of up to RM10, 000 a year for three consecutive years (Limited)
from the first year the interest is paid.
Subject to the following conditions:
(i) The taxpayer is a Malaysian citizen and a resident;
(ii) limited to one residential unit;
(iii) the sale and purchase agreement is signed between 10th
March 2009
and 31st December 2010; and
(iv) the residential property is not rented out.
Where:
(a) 2 or more individuals are eligible to claim relief for the same
property ; and
(b) total interest expended by those individuals exceeds the
allowable amount for that year. Each individual is allowed an
 amount of relief for each year based on the following formula:
AxB
C
where;
A = total interest allowable in the relevant year;
B = total interest expended by the relevant individual in the
relevant year;
C = total interest expended by all the individuals.

13 Husband/Wife/Alimony Payments 4,000 (Limited)

14 Disable Wife/Husband 3,500

15 Ordinary Child relief 2,000

16 Each unmarried child of 18 years and above who is receiving 2,000

full-time education ("A-Level", certificate, matriculation or
preparatory courses).

17 Each unmarried child of 18 years and above that:

(i) receiving further education in Malaysia in respect of an 8,000
award of diploma or higher (excluding matriculation/preparatory
courses).
(ii) Receiving further education outside Malaysia in respect of
an award of degree or its equivalent (including Master or
Doctorate).
(iii) The instruction and educational establishment shall be
approved by the relevant government authority.

18 Disabled child 6,000

Additional exemption of RM8,000 disable child age 18 years old

and above, not married and pursuing diplomas or above
qualification in Malaysia @ bachelor degree or above outside
Malaysia in program and in Higher Education Institute that is
accredited by related Government authorities
19 Life insurance and EPF 6,000 (Limited)

20 Deferred Annuity and Private Retirement Scheme (PRS) - with 3,000 (Limited)
effect from year assessment 2012 until year assessment 2021
21 Insurance premium for education or medical benefit 3,000 (Limited)

22 Contribution to the Social Security Organization (SOCSO) 250 (Limited)

3. Tax Rebate
Income Tax Rebates For Resident Individual with Chargeable Income Less Than
RM35, 000

Year Of Year Of
Assessment Assessment
2001 - 2008 2009
No. Tax Rebate Onwards

(RM) (RM)

a Separate Assessment - -
Wife 350 400
Husband 350 400

b Combined Assessment - -
Wife 350 400
Husband 350 400

Total 700 800

b Assessment Where Husband Or Wife Does - -

Not Has Any Total Income 350 400
Wife 350 400
Husband

Total 700 800

Other Tax Rebates

No. Tax Rebate (RM)

a Zakat/Fitrah Subject to the maximum of tax charged

b Fees/Levy on Foreign Subject to the maximum of tax charged

Workers ( deleted from year
assessment 2011 )
Tax Schedule

Assessment Year 2016

Chargeable Income Calculations (RM) Rate % Tax(RM)

0 - 5,000 On the First 2,500 0 0

On the First 5,000 0

5,001 - 20,000 Next 15,000 1 150

On the First 20,000 150

20,001 - 35,000 Next 15,000 5 750

On the First 35,000 900

35,001 - 50,000 Next 15,000 10 1,500

On the First 50,000 2,400

50,001 - 70,000 Next 20,000 16 3,200

On the First 70,000 5,600

70,001 - 100,000 Next 30,000 21 6,300

On the First 100,000 11,900

100,001 - 250,000 Next 150,000 24 36,000

On the First 250,000 47,900

250,001 - 400,000 Next 150,000 24.5 36,750

On the First 400,000 84,650

400,001 - 600,000 Next 200,000 25 50,000

On the First 600,000 134,650

600,001 - 1,000,000 Next 400,000 26 104,00

On the First 1,000,000 238,650

Exceeding 1,000,000 Next ringgit 28 ..........
Conclusion
In income tax planning, the tax strategy is to pay the taxes and to be smart in filing the tax
returns in order to minimize the tax payable. For a tax payer, his employer will automatically
deduct the tax from his monthly salary under the scheme of Schedular Tax Deduction
(STD).
A tax payer needs to file a completed BE Form, which determines whether a sufficient
amount of taxes was already withheld from our paycheck, whether we still owe some taxes,
or whether the government owes us a refund. A tax return is based on Self-Assessment
System (SAS), in which a tax payer is given the responsibility to compute his own tax
liability. In order to reduce the amount of taxes to be paid, a tax payer needs to know the
types of income that need to be declared and also about his deductions.
A tax payer needs to make sure that he submits his income tax returns by 30th April. In
addition, a responsible tax payer needs to always check with the latest National Budget
Announcement in August for any amendments.