Tax reliefs allow individuals to deduct certain eligible expenses or contributions from their total taxable income. These deductions help reduce overall income tax liability.
Common Categories of Tax Reliefs
1. Individual and Dependent Reliefs
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Self-Relief: A standard deduction for individuals filing taxes.
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Spouse Relief: Available for individuals with non-working or low-income spouses.
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Child Relief: For dependent children, including additional relief for children pursuing higher education.
2. Education & Lifestyle-Related Reliefs
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Education Fees: Tax relief on fees for pursuing tertiary education or acquiring professional certifications.
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Lifestyle Reliefs: Includes relief for purchasing books, journals, and electronic devices used for educational purposes, or purchasing sports equipment
3. Employment-Related Reliefs
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Benefits in Kind (BIK): Exemptions for specific non-monetary benefits provided by employers, such as medical benefits or work-related equipment.
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EPF Contributions and Life Insurance: A combined limit for deductions related to Employees Provident Fund (EPF) savings and life insurance premiums.
4. Social Responsibility Reliefs
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Zakat Contributions: A form of almsgiving and one of the pillars of Islam, aimed at wealth redistribution to assist the less fortunate.
Direct deductions for zakat paid within the tax year, up to the amount of tax payable. The relief is capped at the actual amount of zakat paid within the tax year.
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Charitable Donations: Relief for donations to government-approved charitable organizations.
What is Benefits in Kind (BIK)?
BIK refers to non-monetary benefits provided by employers to employees. While most BIK items are taxable, certain items qualify for tax reliefs or exemptions. Below is the list of BIK Eligible for Tax Relief:
- Household Furniture (Full)
- Leave Passage For Travel (Malaysia) more than 3 times
- Child Care Benefit
- Food And Drinks
- Household Gardener
- Household Furniture (Semi)
- Dental Benefit
- Household Utilities (BIK)
- Broadband/Telephone/Mobile Plans (Paid By Employer)
- Transportation
- Household Kitchen Equipment
- Household Entertainment And Recreation
- Household Furniture And Fittings
- Driver
- Household Telephone Bill
- Consumables Discount
- Services Discount
- Leave Passage For Travel (Overseas)
- Workplace Accident Insurance
- Household Servant/Guard
- Household Electricity Bill
- Medical Benefits
- Recreational Club Membership (BIK)
How BIK Tax Relief Works:
Employers report eligible BIK items, and employees can claim exemptions during their tax filings if the benefit aligns with LHDN guidelines.