Income Tax Relief (YA 2023): What Individuals Can Claim in 2024

Tax season is here, Malaysia! It’s time to embrace your role as responsible citizens and contribute to the nation's progress.

We understand that not everyone looks forward to filing their taxes because it can be time-consuming. But think of the perks that we are eligible to gain: tax relief!

If you are looking for guidance on navigating tax filing smoothly, stumbling upon this article is no coincidence. Here are some tips on how you can save some cash through tax relief all while fulfilling your civic duty.

But before we jump into the world of income tax relief, let's start with the basics.

What is income tax and how does it work?

Income tax is your yearly contribution to the government based on earnings. It's taxed on income earned in Malaysia, regardless of where payment is received. For example, if your annual income exceeds RM34,000 (after EPF deductions), you are entitled to pay income tax on the portion exceeding the threshold.

What types of income are taxable?

Essentially, any income you earn including the following:

• Job salary: Your wages, bonuses, and allowances.
• Investments: Earnings from stocks, bonds, or other investments.
• Rental income: If you rent out a property.

Who oversees income tax?

The Income Tax Act 1967 acts as the guidebook on who needs to pay and how it's collected. Think of it as the "legal framework for income tax" for responsible citizens contributing to the nation’s progress.

Meanwhile, the tax officers at Lembaga Hasil Dalam Negeri (LHDN) collect and manage income tax, ensuring that they help bridge the gap between the Act and practical application for employed individuals like yourself.

But wait…what is the difference between Income Tax Returns vs Income Tax Relief?

Tax returns and tax relief are not the same thing. A tax return is getting back overpaid taxes (or excess tax) from the government.

On the other hand, tax relief is a discount lowering the amount you owe, like claiming deductions for things you have spent on such as personal education, life insurance, EPF contributions, and more. For easy understanding, the former returns your money, while the latter saves you money.

Understanding Income Tax Relief in Malaysia

In this article, we mainly focus on tax relief filing for employed individuals who are paying taxes in Malaysia for the Year Assessment 2023 (YA 2023). Here’s what you should do if you want to save money from your income tax.

According to Lembaga Hasil Dalam Negeri (LHDN), here are the individual relief types and the maximum amount that you can claim for the Year Assessment 2023 (updated on 6th November 2023).

What can you claim for Lifestyle Income Tax Relief this year?

1. Purchase of personal computer, smartphone, or tablet for yourself, spouse, or child (up to RM2,500)
2. Purchase of sports equipment for any sports activity, gym membership, or registration fee for any sports competition organised by approved and licensed organisers (up to RM500)
3. Purchase of charging facilities for Electric Vehicle for private use (up to RM2,500)

How to register and start filing your income tax online via e-filing on the MyTax website?

For first-time tax-filing individuals, online income tax filing is the most convenient way to make sure you file your tax returns and tax relief quickly and smoothly.

1. Login or register an e-filing account (for first-time users) at mytax.hasil.gov.my
2. Choose the e-BE form and select the year of assessment 2023 at the dropdown menu
3. Start filling in the requested personal and income details for the Year of Assessment 2023
4. Key in your expenses for allowable tax relief
5. Once completed, check your details on the Tax Summary page
6. Acknowledge the details are correct by clicking the “Tandatangan & Hantar” button
7. Re-enter your password for security purposes
8. Print/save your e-filing statement for your record or exit the e-filing webpage.

What if you miss the deadline for income tax e-filing submission?

LHDN imposes penalties for late submissions of e-filing forms. The penalty amount depends on how late you file after the deadline or any extension:

• Up to 12 months late: 15% penalty on the tax amount based on your YA2023 taxable income.
• Between 12 months and 24 months late: 30% penalty on the tax amount based on your YA2023 taxable income.
• More than 24 months late: 45% penalty on the tax amount based on your YA2023 taxable income.

How to avoid getting penalised for late tax filing:

• File your tax return by the deadline: This is usually by April 30th of the following year for employed individuals in Malaysia. Mark your calendar or set reminders to avoid missing the deadline.
• Apply for an extension: If unforeseen circumstances prevent you from filing on time, you can apply for an extension from the Inland Revenue Board of Malaysia (IRBM). However, submitting an extension request doesn't guarantee approval.
• File electronically: Consider using the MyTax e-filing platform as it's faster and easier than traditional paper submissions.

Remember, timely tax filing saves you money, time, and unnecessary worry. Plan, prioritise the deadline, and utilise resources like e-filing for a smooth and stress-free tax season.

‍