|Have you optimized all your tax relief? Do you have common questions you like to ask but are not sure where to ask them? You are at the right place. Before we proceed any further, have you downloaded our Tax Optimization Tool?
It’s a simple tool that I prepared which I use to plan ahead to see the difference between ‘taking advantage of the tax relief’ vs ‘not taking advantage of it’.
Our readers liked it and have already benefitted from them. Here is feedback from Alika Tan.
With the Tax Optimization Tool, you can see how much money you will save and, more importantly, you can see your Effective Tax Rate (ETR) – Read through last week’s email where I shared a case study on this.
In today’s article, I will go through some Q&A that I received from our readers.
Before that, here is a recap summary of the Tax Reliefs for YA 2022:
Q1: How do I claim the Lifestyle + Handphones and Sports Relief?
For the lifestyle, you can combine the relief with handphones, personal computers and tablet relief. For example, if you have bought an iPhone 13 at RM4,990, you can still claim it. Also, it doesn’t matter how many devices you buy as long as it is within the RM5,000 limit.
If you didn’t upgrade to a new phone, then for lifestyle, you can also claim for the purchase of books/journals/magazines / printed or e-newspapers, or broadband subscriptions.
Under the sports relief, you can also claim for the purchase of sports equipment like badminton racquets, footballs, etc. Let’s say you bought a new bicycle for RM5,000; you can claim up to RM3000.
Q2: Should I claim the PRS (RM 3,000 per year) or invest the RM3000 on my own?
If your tax bracket is at 30%, by putting in this RM 3,000 savings in any one of the seven approved providers, you will instantly save RM 900. I mean, like, WOW, where can you find a 30% return in today’s day and age? Imagine if that provider gets you a conservative 4% for the next year, you will end up with a 34% return for one year. Isn’t that amazing?
Q3: I went on an overseas vacation and did a Covid-19 test in Malaysia, can I claim that?
Yes, you can, as long as it’s within the RM1,000 limit. Remember to keep the corresponding receipts.
Q4: If I paid for hotel accommodation in 2021 but will only stay in 2022, can I still claim it in 2022?
You need only to book and purchase the accommodation in 2021; you don’t have to stay in 2021, and Yes, you can claim it in 2022.
Q5: I booked a hotel room for me and my friend. Can my friend claim tax relief too?
Only the person’s name that appears on the receipt can claim.
Q6: I recently went on a family trip to Penang, and we booked accommodation on Airbnb. Can I claim the accommodation charges under the domestic tourism expenses relief?
It depends. You can claim tax relief of up to RM1000 if the premise is registered under the Commissioner of Tourism Malaysia. You can click here to see if the place you stayed is listed. Most Airbnb premises are managed by individual owners and not eligible for tax relief, but some properties are registered with MOTAC. Remember, you can also claim the entrance fees to attractions like Escape, Sunway Lagoon, etc.
Q7: What qualifies as a medical check-up eligible for tax relief?
A basic complete medical check-up and above is eligible for tax relief. This usually includes the full blood and urine analysis. A urine test or blood test only is not eligible for tax relief.
Q8: I am a professional subscribing to two associations. Do you know if I can claim tax for both of the membership fees?
You can, as long as the association subscriptions are related to your profession.
Q9: I receive dividend income from REITs, stocks, and fixed deposit interest. Are these incomes taxable?
No, your dividend income and interest received from FD is tax-exempt as long as they are from approved institutions, including all licensed banks and financial institutions.
Q10: How do I find out whether the charity foundation I donate to is tax deductible?
You can check this list of institutions, organisations, and bodies to see if LHDN recognises the institution you donate to.
Q11: Are the registration fees for virtual runs eligible for lifestyle relief?
The virtual run or any sports competition and its organiser must be approved and licensed by the Commissioner of Sports under the Sports Development Act 1997. You can check here and see if it is registered, and you can claim up to RM500 for lifestyle relief.
Q12: Can I claim tax relief for the medical insurance premium that I am paying for my parents?
No, insurance premiums for medical benefits can be claimed for yourself, your spouse, or your child only.
Q13: I recently got into cycling. Are my purchases of bicycle equipment, such as helmets and jerseys, included under the sports equipment for claiming lifestyle relief?
A: Yes and no. You can claim helmets as they are considered sports equipment. Whereas jerseys and cycling shoes are considered sports attire and sports shoes, therefore, cannot be tax deductible. This includes swimsuits and swimwear, which you cannot claim.
Q14. Can I claim my Yoga class fee and Yoga mat under the lifestyle relief?
No. Unfortunately, Yoga is not a sport listed under the Sports Development Act 1977. Here is a list of all the sports that are listed. Scroll down to page 28.
Q15. What is the age limit for a child to claim the child’s medical insurance tax relief?
As long as you are the policy owner of the insurance, there is no age limit to claim tax relief for a child’s medical insurance.
Thank you to all the readers who have submitted your questions. I bet some of you have similar questions, and I hope you got your answers.
So if you have more questions on tax relief and want clarification on which one can claim and which one cannot, feel free to comment below. Please remember to keep all your receipts in a dedicated folder (physical or online) so that it will be easier to track them.
Next, I will share another Tax Saving Strategy (100% legal) by understanding the difference between Employee Tax and Self Employed Tax and taking advantage of what the government encourages.
P.S. All my sharing here is for educational purposes and are my own personal opinion. It should not be confused with tax advice. You should consult a licensed tax consultant for proper tax planning. I am sharing this with you as my best practice.