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Tax Deductions

The following compulsory and optional tax deductions in the year 2023 are deducted from your annual taxable income to arrive at your annual chargeable income, based on which the amount of tax payable will be calculated. Employees can claim optional deductions by submitting form TP1 to their employer. The employer can then enter the tax deduction amount in the payroll in order to lower the employee’s PCB. In PayrollPanda, all the optional tax deductions are preset under the Deductions category.

Compulsory Deductions

Deduction Amount limited to (RM)
Individual 
Deduction for an individual in respect of himself and his dependent relatives is granted automatically.
9,000
Spouse
Deduction in respect of a spouse living together in the basis year on condition that the spouse has no source of income/total income or has elected for joint assessment.
4,000
Children 
See here for more details on additional deductions in relation to children.
2,000
Contribution to EPF 
Deduction for EPF employee contributions.
4,000
Disabled Person
Additional deduction for disabled individuals.
6,000
Disabled Spouse
Additional deduction for an individual living with a disabled spouse with no income.
5,000

Optional Tax Deductions

Deduction Amount limited to (RM)
Medical Treatment, Special Needs or Carer Expenses of Parents
Medical treatment, special needs and carer expenses for parents. Medical expenses which qualify for deductions include:

  • medical care and treatment provided by a nursing home; and
  • dental treatment limited to tooth extraction, filling, scaling and cleaning but not including cosmetic dental treatment.

The claim must be supported by a certified medical practitioner registered with the Malaysian Medical Council that the medical conditions of the parents require medical treatment or special needs or carer.
The parents shall be resident in Malaysia. The medical treatment and care services are provided in Malaysia.
In the case of a carer, it shall be proven by a written certification, receipt or copy of carer’s work permit. “Carer” shall not include that individual’s husband, wife or child.

8,000
Basic Supporting Equipment
The purchase of any supporting equipment for one’s own use, if he/she is a disabled person or for the use of his/her spouse, child or parent, who is a disabled person. Basic supporting equipment includes haemodialysis machine, wheelchair, artificial leg and hearing aid but excludes optical lenses and spectacles.
6,000
Higher Education Fees (Self)
Deduction for higher education fees for any course of study in an institution or professional body in Malaysia recognized by the Government of Malaysia or approved by the Minister of Finance for the purpose of enhancing any skill or qualification:

  • up to tertiary level (other than Master’s and Doctorate) in law, accounting, Islamic finance, technical, vocational, industrial, scientific or technology; or
  • any course of study at Master’s or Doctorate level

Scope of relief includes expenses for any course of study undertaken for the purpose of up-skilling or self-enhancement conducted by a body recognized by the Director General of Skills Development up to RM2,000 per year.

7,000
Medical Expenses on Serious Diseases and Fertility Treatment
Medical expenses on serious diseases for self, spouse or child include the treatment of acquired immune deficiency syndrome (AIDS), Parkinson’s disease, cancer, renal failure, leukaemia and other similar diseases.
‘Other similar diseases’ such as heart attack, pulmonary hypertension, chronic liver disease, fulminant viral hepatitis, head trauma with neurological deficit, brain tumour or vascular malformation, major burns, major organ transplant or major amputation of limbs.
Medical expenses on fertility treatment for self or spouse.
Scope of relief also includes:

  • complete medical examination expenses (self, spouse and child) up to RM1,000;
  • vaccination expenses (self, spouse and child) up to RM1,000;
  • intervention expenditure for autism, ADHD, Down syndrome and specific learning disabilities (child) up to RM4,000.
10,000
Net Deposit in Skim Simpanan Pendidikan Nasional (SSPN)
Amount deposited in SSPN by an individual for his children’s education. The deduction is limited to the net amount deposited in that basis year only (deposits less withdrawals for the year).
8,000
Payment of Alimony to Former Wife
Payment of alimony to former wife is deductible provided that the total deduction for wife with no income and alimony payment to former wife is limited to RM4,000 per year. Voluntary alimony payment to a former wife under a mutual agreement but without any formal agreement does not qualify as a deduction.
4,000
Life Insurance
Deduction for life insurance premiums and voluntary EPF contributions.
3,000
Contribution to a Private Retirement Scheme and Payment of Deferred Annuity
Deduction on contribution to Private Retirement Scheme approved by the Securities Commission under The Capital Markets and Services Act 2007 or payment of deferred annuity premium or both.
3,000
Education and Medical Insurance
Deduction for insurance premiums in respect of education or medical benefits for an individual, husband, wife or child.
3,000
PERKESO Contributions
Deduction for SOCSO and EIS employee contributions.
350
Lifestyle Relief
Combined tax deduction for reading materials, computers and sports equipment (Includes purchase of newspapers, smartphones and tablets, internet subscriptions & gymnasium membership fees). 
2,500
Sports Relief
Additional tax deduction for sports equipment, facilities rental and competition fees.
500
Breastfeeding Equipment
Deduction for purchase of breastfeeding equipment, for women taxpayers only.
1,000 (once every 2 years)
Early Education
Deduction for taxpayers who enroll their children aged 6 years and below in registered nurseries and preschools. To be claimed by either parent.
3,000
Electric Vehicle (EV) Charging Facility Expenses
Deduction for expenses related to:

  • the cost of installing an EV charger;
  • purchases (including hire purchase) of EV chargers;
  • EV charger rental; or
  • EV charging facility subscription fee.
2,500

Tax Rebates

Unlike tax deductions which are reductions in your annual chargeable income, tax rebates are reductions in the amount of tax you pay after you have calculated your tax for the year.

Rebate on Zakat

Zakat can be deducted via payroll, or paid direct by the employee to the zakat authority or eligible charity (with the tax relief then being claimed through form TP1).

Rebates for Individuals with Chargeable Income not exceeding RM35,000

A rebate of RM400 is available to individuals with an annual chargeable income not exceeding RM35,000. Where the spouse does not receive an income or is jointly assessed, a further RM400 rebate can be claimed.

Rebate on Departure Levy for performing Umrah and Pilgrimage to Holy Places

A tax rebate on the amount of departure levy paid when performing Umrah or Pilgrimage to holy places.

The rebate can be claimed twice in a lifetime and is to be claimed with proof of boarding pass and either one of the following:

(a) Umrah visa issued by the embassy of the Kingdom of Saudi Arabia; or

(b) Confirmation letter on pilgrimage to the holy place from a religious body recognized by the Committee for the Promotion of Inter-Religious Understanding and Harmony Among Adherents, Prime Minister’s Department.

The rebate shall not be granted in respect of the departure levy paid for the purpose of performing hajj.

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