The tax filing season is here when every taxpayer tries his/her best to maximize the tax deductions which in turn reduces the amount of income that is subject to tax.
It’s worthwhile noting here that the Malaysian prime minister, in his Budget 2018 speech, declared 2018 as the year of Women Empowerment. In other words, a year that would see greater efforts to help raise women’s participation in the workforce.
The resulting good news for Malaysian women is that they can enjoy some extra financial relief to help ease the juggling of motherhood and career. Raising a child is far from cheap so every bit that working mums can save from tax will surely help. Wouldn’t you like to have at least RM2,000 shaved off from your taxable income?
Ladies, read on to know 6 areas where you can find some useful tax reliefs to support your busy roles and lifestyle.
1. Claim tax relief on breastfeeding equipment
The life of a modern-day mum is an increasingly hectic one, especially if she’s coping with a busy work schedule, but it doesn’t mean having to give up on breastfeeding. It’s a whole lot more convenient these days with a better choice of products available, except that the cost of the good ones can run very high because they make a discernible difference.
With this tax relief, women taxpayers can purchase quality breastfeeding equipment and claim income tax deduction of up to RM1,000, however, only once every two years of assessment. So if you purchased equipment in 2017 and made a claim for the 2018 year of assessment, your next claim can only be for the 2020 year of assessment.
The equipment allowed for this deduction is a breast pump kit and ice pack, breast milk collection and storage equipment, and a cooler set or bag. These items must also be intended for your own use to breastfeed your own child aged 2 years and below. If you have more than one child in that age group — twins, for example — you can still only claim a maximum of RM1,000 for that year. Do bear in mind that the above provision does not apply for a joint tax assessment if it’s named in your husband’s name (it needs to be in the wife’s name for you to take advantage of this tax relief).
2. Make the most of tax relief on childcare and kindergarten fees
Putting a child in a daycare centre or kindergarten is a necessity for many working parents even though the cost can be a financial strain. Based on a survey of such private centres around the Klang Valley in 2016, a Malaysian news portal discovered that parents were paying an average of RM1,000 a month for one child. That’s approximately RM12,000 a year before the kid has even started proper schooling.
However, there is a silver lining. With the new income tax relief for childcare and kindergarten fees, parents can claim a deductible amount of up to RM1,000 for a child aged 6 years and below. Having said that, the limit remains the same even if you have more than one child who meets the criteria. In addition, the amount of deduction allowed covers only the amount that you actually paid.
To enjoy this tax deduction, you must ensure that:
- The childcare centre is registered with the Department of Social Welfare
- The kindergarten or pre-school centre is registered with the Ministry of Education Malaysia
Ensuring that the centre is registered with the relevant authorities helps give you peace of mind knowing you have entrusted your child to a place that is regulated.
3. There are tax incentives for women returning to the workforce
In Malaysia, it’s not uncommon for women to leave the workforce after having kids to focus on becoming full-time mums. Some end up never returning to work. It’s certainly very tempting to swap client meetings and office drama for diaper drama and meeting other mommies on playdates.
However, to encourage more women to resume their careers and increase their contribution to the national economy, the government has offered a financial incentive. Those who return to work after a break of 2 or more years are eligible for a one-year individual income tax exemption. That translates to a significant saving especially if your income falls into a higher tax bracket.
To take advantage of this incentive, you need to submit an application to Talent Corporation Malaysia Berhad (TalentCorp) from 1 January 2018 to 31 December 2019. The exemption would then be effective for YA 2018 to 2020.
4. Take advantage of tax relief on medical expenses
Women are often so preoccupied with looking after others that they overlook their own health. It’s worth getting yourself a full medical check-up since a maximum of RM500 is allowed as a deduction.
You could also claim for a mammogram or a pap smear test but only if they are part of the complete check-up. As a caregiver to family members, remember to keep any receipts for expenses spent on your parents to treat any diseases, which also applies to a spouse or children.
The amount claimable for such parental medical expenses is a maximum of RM5,000. This deductible also applies to any treatment or care given if they have a physical or mental disability. On top of that, you can also get tax relief for purchasing equipment for them that provides disability aid such as a wheelchair, limited to RM6,000.
5. Claim tax relief on lifestyle expenses like gadgets, gym membership and more
There are lots of opportunities in this category that are sometimes overlooked. Remember those children’s books you purchased or your favourite magazine? Such reading material can be claimed as long as the title has not been banned. Access to technology is also encouraged so if you bought a handphone for your child or a new computer for yourself, it’s deductible.
If you or your family take part in sporting activities, collect the receipts for sports equipment such as badminton shuttlecocks and golf balls, but unfortunately, sports attire and sports shoes don’t qualify.
How about that gym membership that you signed up for at the start of the year because the hunky gym instructor was so persuasive? You might have stopped going after two months but if you paid up in advance for the whole year, all is not lost.
You can claim maximum tax benefit of RM2,500 in a year if you purchased these lifestyle products for self, spouse or child.
6. Figure out whether joint or separate tax assessment saves more tax for you
Married couples in Malaysia have a choice of filing a joint tax assessment with their spouse or doing so separately. Most of the time, joint filing saves you both money.
However, as a working wife whose monthly income exceeds RM4,000, consider separate assessment because you can each take advantage of the RM9,000 individual relief, not to mention all the other applicable reliefs too which help to bring down the taxable income for both of you to a lower tax bracket.
But should you earn less than RM4,000 a month, it’s advisable to file jointly, allowing your husband to take advantage of the additional spouse relief of RM4,000.
Click here for a complete list of tax reliefs Malaysian residents can claim.
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