Chapter 5: Donation, Personal Relief and Rebates

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Tax Computation Format

Aggregate Income

Total Income

Chargeable Income

Tax Liability

Tax Payable/Refund

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Tax Computation Format

Aggregate Income
Less ?

Total Income
Less Reliefs ?

Chargeable Income
Tax Rate

Tax Liability
Less Rebate ?

Tax Payable/Refund

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What is…

Aggregate Income ?

Total Income ?

Chargeable Income?

Tax Liability?

Tax payable/refund ?

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Aggregate Income

S 4(a) Business Income xx

S 4(b) Employment xx
S 4(c) Dividend, Interest, Discount xx
S 4(d) Rental, Royalty, Premium xx
S 4(e) Pension, annuity xx
S 4(f) Others xx

Aggregate Income YYY

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 Total Income

Aggregate Income XXX

(-) Business Loss (Current Year) XX

Approved Donations XX (XX)
Total Income XXX

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 Business Loss (Current Year)

 Business losses in the relevant year

… to be deducted FIRST from aggregate
income (i.e. all sources of income) for that YA
[S44(2)]

 Unabsorbed business losses (/ b/f loss) to be carried

forward & to be utilized against future business income
ONLY [i.e. all business sources – S4(a) only]
[S43(2)]

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 Approved Donations

• Any gifts of money paid to the government, a

state government, a local authority/an
institution/organization approved by the DG shall
be deducted from the aggregate income
[S44(6)]
• Expanded to include (1) cash waqf contribution to state religious
authority or body established by the state religious authority to
administer waqf; (2) cash waqf contribution to public university
approved by the state religious authority to receive waqf; (3) cash
endowment contribution to public university

 Organization ? Institution ? See ITA 44(7)

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 Approved Donations

In the case of individual

• Cash donation to approved institution /organization will be
restricted to 10% of the aggregate income
• This restriction does not apply to cash donation made to
Federal/state government or a local authority

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 Approved Donations
• Cash contribution to public libraries & libraries
of school & IHL is restricted to RM20,000) [S44(8)]

• Contribution in kind (CIK) to such institutions

/organization do not qualify for deduction

• Original receipts must be attached

• Donations are to be deducted last

• The balance of unutilized donations cannot be

carried forward (i.e. permanent loss)

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 Approved Donations

• Exception of CIK (individual)

 CIK for the provision of facilities in public places for the

benefit of disabled person
[S44(9)]

 Cash or Gift of medical equipment (cost/ value < RM20,000)

to any healthcare facility approved by MoH
[S44(10)]

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 Approved Donations

• Exception of CIK (Person)

 Gift of painting to the National /state Art Gallery

[S44(11)]

 Gift of artifact, manuscript / painting to the government /

state government (value determined by Department of
Museum & Antiquities / National Archives)
[S44(6A)]

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 Approved Donations

• Other Approved Donations (cash/CIK)

 Approved sports activity (limited to 10% of aggregate

income) [S44(11B)]
 Project of National interest (limited to 10% of aggregate
income) [S44(11C)]
 Payment of zakah on business to religious authority
[S44(11A]

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Chargeable Income

Aggregate Income XXX

(-) : Business Loss CY xx
Approved Donations xx (XX)
Total Income XXX
(-) : Reliefs xx
…. xx
…. xx (xx)

Chargeable Income YYY

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 Personal Reliefs
 Available for resident individual
 It is allowed as deduction from total income in
arriving at chargeable income
 Relevant section - S46 – 49
 Personal relief
 Self relief
 Wife/husband relief
 Child relief
 Disabled child
 Disabled child studying HE
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Relief (cont’d)

 Life insurance & EPF reliefs

 Deferred annuity & private retirement scheme
 Serious disease
 Parent medical relief (or parental care)
 Supporting equipment for disabled person
 Education & medical insurance
 Education fees
 Deposit to SSPN
 Contribution to SOCSO
 Lifestyle expenses
 Breastfeeding equipment
 Fees for childcare center/kindergarten
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Self & Spouse Relief

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 Child Relief [S48]

 Child ?
 A legitimate child
 A step child
 an adopted child
 Child relief is given to either husband/wife
based on selection made by them. They may
allocate the number of child relief among
them.
 In case of divorce, if there is 2 claims, each
of them entitle to 50% of child relief.

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Child Relief

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 Working Child

 Includes part time income etc

 Child relief is not given if the child’s total
income exceeds the relevant child relief


 certain income are to be excluded

in calculating child’s total income

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Life insurance reliefs

 Includes payment for [S49] :

 premium for life insurance policy/deferred annuity
 contributions under any written law relating to widow’s
& orphans’ pensions/any approved scheme
 Max of RM3,000
 Policy under self, spouse, or joint lives of husband and
wife
 For public servants under the pension scheme,
combined relief up to RM7,000 is given on Takaful
contributions or payment for life insurance premium. 

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 EPF Relief
Max RM4,000on contribution made to EPF-For public servants under the pension
scheme, combined relief up to RM7,000 is given on Takaful contributions or
payment for life insurance premium. 
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Life insurance, EPF & Takaful
reliefs
 See Example

In case of joint assessment

 The total deduction is restricted to RM7,000
separated as:
 Tax relief for contribution to approved EPF
RM4,000
 Tax relief on Takaful contribution or payment
to life insurance premium RM3,000.

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Life insurance & EPF reliefs

 The life premium must be in respect of:

 taxpayer
 his / her spouse
 joint life of taxpayer, spouse / wives

 Life policy in respect of child (jointly or

otherwise) does not qualify for this relief

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Deferred Annuity &
Private Retirement Scheme

W.e.f 2012,
 deferred annuity & private pension scheme
given relief up to RM3,000

 On self, spouse, or joint

In case of joint assessment
 The total deduction is restricted to RM3,000
 No further deduction will be given

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Serious Disease

 Introduced in YA 1997 [S46(1) g]

 Serious disease ?
 Include AIDS, parkinson, cancer, renal
failure, leukemia, major organ transplant,
mental illness & other similar disease

 Life threatening, high cost of treatment,

acute medical illness that requires
admission to hospital
 Refer technical guidelines of IRBM for
Serious Disease
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 Serious Disease
 Expenses are incurred in respect of :
 taxpayer
 spouse
 child
 Include expenses on fertility treatment
 Vaccination up to RM1,000
 Amount of relief
 Up to a maximum of RM8,000
 include up to RM1,000 for complete medical
examination expenses [S46(1) h]

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 Parent Medical
 Expenses on medical treatment, special needs or carer
expenses for parents (evidenced by medical certification)
 Amount of relief
 Up to a maximum of RM8,000
 Original receipt needed as evident
 where the expenses are shared by > 2 children,
 claims by the respective individuals in respect of their
share of expenses are accepted by the IRB

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 Parental Care Relief [S46(1)(o)]

 Alternative to Parent Medical

 Relief of RM1,500 for each parent
 Max 2 parents
 To be apportioned among children
 Total relief is RM3,000
 Qualifying Criteria of parent
 Age of parent > 60
 Annual income =< RM24,000
 Resident
 No receipt is required
 This claim is not allowed if already claim parent medical

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Basic Supporting Equipment

 Introduced in YA 1996 [S46(1) d]

 For the use of taxpayer if disabled, spouse,

children, parent
 Amount of relief
 WEF2021, up to a maximum of RM6,000

 Receipt is required

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Education & Medical Insurance

 Introduced in YA1996 [S49(1B) a ]

 Expenses are incurred in respect of

taxpayer, spouse, child

 Amount of relief
 Up to a maximum of RM3,000

 The payment must be evidenced by an

original receipt

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Education & Medical Insurance

 In case of joint assessment (WEF 2001)

 no further deduction will be given for an
amount paid by spouse (if he/she has no
income)
 IRB’s Guidelines on criteria for an education
policy & a medical policy

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 Education Fee
 Fee expended for any course of study up to tertiary level other than a
degree at Masters or Doctorate level, undertaken for the purpose of
acquiring legal, accounting, Islamic financing, technical, vocational,
industrial, scientific or technological skills or qualifications or any course
of study for a degree at Masters or Doctorate level undertaken for the
purpose of acquiring any skill or qualification or approved courses with
professional bodies including professional courses in accounting, finance,
and ESG-related. 
 This includes fees for attending upskilling and self-enhancement courses,
limited to: RM1,000 (YA 2021)
 Amount of relief
 Up to a maximum of RM7,000 (wef 2021)

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SSPN Relief
 Introduced in YA 2007

 Saving scheme for children’s education under

the Skim Simpanan Pendidikan Nasional
 Amount of relief
 up to a maximum of RM8,000

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SOCSO relief

• Introduced in 2016
• A relief of up to RM250 is available
for contribution made to SOCSO S46(1)(n)

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 Lifestyle expenses
 For the use of taxpayer, spouse or child
 5 categories
 Books, journals, magazines, newspaper and other similar publications (in
the form of hardcopy or electronic) for the purpose of enhancing
knowledge
 Computer, smartphone or tablet
 Sports equipment for any sports (excluding motorcycle)
 Gym membership
 Internet subscription
 Amount of relief is limited to RM2,500
 Additional relief RM2,500 (on top of lifestyle relief) for purchase of
personal computer, smartphone or tablet (Special Relief) For purchases
made between 1 June 2020 until 31 December 2021
 Additional relief of RM500 (on top of lifestyle relief) for expenditure
related to cost of purchasing sports equipment, entry/ rental fees for sports
facilities and registration fees for sports competitions
 Receipt is required 36
Breastfeeding equipment

 Newly introduced in Budget 2017

[S46(1)q]

 Purchasing of breastfeeding equipment for

own child (≤ 2 years old) is given a relief
 of up to RM1,000
 available once in every 2 years

 Receipt is required

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Childcare expenses

 Newly introduced in Budget 2017

[S46(1)r]

 Child (≤ 6 years old) care fees to a child care

center/kindergarten is given a relief
of up to RM3,000
available to either husband/wife

 Receipt is required

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• Domestic travelling expenses of RM1,000 (payment for

Domestic Travelling accommodation and fee for entrance to tourist attractions).
•  For expenses incurred during the period 1 March 2020 until 31
Expenses December 2021 (extended to 31 December 2022). W.e.f March 2021,
the scope of this relief has been expanded to include expenses
relating to purchase of tourism packages through MOTAC-
registered local travel agencies, including:
i) payment of services of local tourist drivers
ii) purchase of local handicraft products
iii) food and drink, and
iv) hop-on hop-off transportation
Summary of Reliefs
 Self/personal relief RM9,000
 Disabled taxpayer + RM6,000
 Wife/husband relief RM4,000
 Disabled spouse + RM5,000
 Life insurance & EPF Max RM7,000
 EPF RM4,000
 Takaful and Life Insurance Premium RM3,000
 Serious disease Max RM8,000
(inclusive of medical exam of Max RM1000)
 Parent medical Max RM8,000
Or Parental care Max RM3,000
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 Summary of Reliefs cont’d

 Supporting equipment Max RM6,000

 Education & medical insurance Max RM3,000
 Education fees Max RM7,000
 Deposit to SSPN (child) Max RM8,000
 Annuity & Private Retirement Sch. Max RM3,000
 SOCSO contribution Max RM250
 Lifestyle expenses Max RM2,500+
RM2,500
gadget+RM500 sports
 Breastfeeding equipment Max RM1,000
 Fees (childcare/kindergarten) Max RM3,000
 Domestic Travelling Expenses Max RM1,000 41
 Summary of Reliefs cont’d

 Child relief
 Normal RM2,000
 Full-time Higher Education RM8,000
(in Malaysia or elsewhere)

 Disabled Child RM6,000

 Disabled child studying HE RM14,000
 Child has income to compare
 More than 1 claim 50 : 50

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 Tax Liability
 Having determined taxable income, tax
rates would be applied to arrive at tax due
 Resident individuals are subject to tax at
graduated rates 0 - 30%
 While NR rate is flat @ 30%

 Compute the tax liability of a resident

individual if chargeable income is:
 RM17,000
 RM62,000
 RM160,000

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Tax rates It is proposed that with effect from Year of Assessment (“YA”) 2021, the income tax rate for resident
individuals will be reduced by 1 percent for the chargeable income band of MYR 50,001 to MYR 70,000.  The reduction in the
income tax rate will result in a tax saving of MYR 200 for those in the chargeable income band above MYR 50,001.

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 Eg: Tax Liability 2019
 RM17,000
on the 1st 5,000 RM 0
next 12,000 @ 1% 120 120

 RM62,000
on the 1st 50,000 RM 1,800
next 12,000 @ 14% 1,680 3,480

 RM160,000
on the 1st 100,000 RM 10,900
next 60,000 @ 24% 14,400 25,300

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 Tax Rebates
 Once tax is calculated, it is reduced by tax
rebates as follows (in sequence) :
 Personal / spouse rebate S6A(2)

 Zakat, fitrah / islamic dues S6A(3)

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 Tax Rebates

 if the tax rebate is greater than the IT

charged, the excess cannot be carried
forward/refunded
(rebate is restricted to IT charged)
 tax refund is only applicable in respect of
overpaid via monthly tax deduction

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Personal Rebate S6A(2)

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Zakat, Fitrah etc S6A(3)

 A rebate is granted in respect of any

zakat, fitrah / any other Islamic religious
dues
 The payment must be evidenced by
receipts issued by an appropriate
religious authority in Malaysia

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Levy on UMRAH
• Actual amount of departure levy paid for umrah and pilgrimage (twice in a
lifetime)

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Joint/Separate Assessment

 Taxpayer would be automatically assessed

separately
 However, taxpayer (having income) may
elect in writing (each year) for joint
assessment
 if the spouse is not a resident he/she can
elect for joint assessment only if he/she is
a citizen

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Joint Assessment
 Tax implication
 Any payments made by spouse deemed to
be paid by taxpayer
 there is wife/husband relief
 Life Insurance & EPF
– restricted to a max of RM7,000
 EPF RM4,000
 Takaful and Life Insurance Premium RM3,000

 Insurance for medical & education

– restricted, to a max of RM3,000
 Private retirement scheme
– restricted, to a max of RM3,000
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Joint Assessment

 Joint Income ?
 Combined total income

 Total income is computed strictly

according to the facts of each individual

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Summary

Taxpayer’s Spouse’s
Total Income Total Income

Chargeable Income

Tax liability

Tax payable
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Summary of Format
S 4(a) Business Income xx

S 4(b) Employment xx

S 4(c) Dividend, Interest, Discount xx

S 4(d) Rental, Royalty, Premium xx

S 4(e) Pension, annuity xx

S 4(f) Others

Aggregate Income YYY

(-) Business Loss (Current Year) XX

Approved Donations XX (XX)

Total Income XXX

(-) : Reliefs
…. xx
…. Xx (XX)

Chargeable Income YYY

Tax Liability based on tax rates YYY

(-) Personal/Spouse Rebates (xx)
(-) Zakat/Fitrah
(-) Monthly Tax Deduction (MTD) (xx)
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Tax Payable/(Refund) YYY