Mariah Carey is defrosting and I can already hear her singing in malls, radios, and shops.

All Malaysians have less than 2 months remaining to maximize their tax reliefs. Doing so could save you hundreds of ringgit in taxes, and in some cases, you’ll fall into a lower tax bracket entirely, possibly saving thousands.

Here are some of the notable reliefs that you should be aware of:

1. Lifestyle: RM2,500 (self, spouse, or child)

• Any reading material (physical or electronic) as long as it’s not banned

• Personal computer, smartphone, or tablet*

• Fees for any upskilling of self-enhancement courses**

• Internet subscription (under your own name)

*Applies to these 3 gadgets only. Smartwatches cannot be claimed.

**Applies to any skill areas recognized by the Department of Skills Development under the National Skills Development Act 2006 (Act 652).

2. Sports: RM1,000 (self, spouse, child, or parents)

• Sports equipment (shuttlecocks, golf balls, etc.)

• Entry / rental fees for sports facilities

• Registration fees for sports competition

• Gym membership fees

• Sports training fees

To claim this relief, the sport has to be part of the 103 activities listed in the Sports Development Act 1997.

A one-off session or a series of training sessions such as classes, clinics, courses, or workshops are also eligible.

However, the classes / training must be conducted by a coach, club, or company registered with the Sports Commissioner.

3. Dental Examination and Treatment: RM1,000 (self, spouse, or child)

Applies to any general dental treatment such as:

• Checkup

• Cleaning

• Extraction

• Filing

• Scaling

I’m too sure if braces can be claimed or not, so it’s best that you double check with a tax agent before filing it in your taxes next year.

4. Contributions to EPF (self or voluntary): RM7,000

• First RM4,000*: Voluntary or mandatory contributions

• Remaining RM3,000: Life insurance premiums and/or voluntary contributions

*You will hit the RM4,000 mandatory contribution limit if your salary exceeds RM3,030.

5. Other notable ones

• Socso: RM350

• PRS: RM3,000

• SSPN: RM8,000

• Education: RM7,000

• Insurance premiums (education or medical): RM4,000

• Medical Expenses: RM10,000*

• Medical examination: RM1,000*

• Vaccinations: RM1,000*

*Can be claimed for self, spouse, or child.

View the full list of YA2024 tax reliefs here.

Q1: Should I buy stuff just for the tax relief?

No, because you’ll still be spending the majority of your own money (ie. tax 10%, spend 90%).

That said, EPF, SOCSO, PRS, and SSPN are exceptions, because they’re considered as your future money.

So, only buy stuff that you absolutely need and don’t splurge for the tax relief.

Q2: If my company paid for my medical expenses, can I still claim them for tax relief?

No. You must be the one paying for the expenses to claim any tax relief.

This means that if you’ve already made claims with your insurance company, you’re no longer eligible for the tax relief.

That said, if your insurance does not cover your expenses completely, then the remaining sum can be claimed. [source]

Q3: What type of sports equipment can I claim?

The equipment must be associated with the 103 activities listed in the Sports Development Act.

Here are a few examples:

Sports shoes, pants, shirts, and jerseys are considered as sports attire - these cannot be claimed. [source]

Q4: Can I claim for Pilates classes under sports relief?

No, Pilates cannot be claimed because it is not listed in the Sports Development Act. Neither is it considered as a gym membership. [source]

Q5: For the lifestyle relief, can I claim monitors and keyboards?

No. Monitors and keyboards cannot be claimed for this relief. However, if they are purchased in the same receipt as the CPU (ie. whole computer set), then the entire receipt is eligible for the relief. [source]

Q6: EPF or PRS - Which to max out first?

I would max out EPF first. Allow me to explain why.

Both EPF and PRS have the same goal in helping you save for your retirement, but they have one big difference:

EPF doesn’t charge any fees. What you see is what you get.

If they declare 6% dividend for 2024, you'll receive RM6,000 if you have RM100,000 saved up in your account.

PRS, on the other hand, charges:

• Sales fees

• Trustee fees

• Annual flat fees

• Annual management fees

Though some fees are waived for certain funds, all of these will eat into your profits over the years.

PRS funds also heavily depend on your provider.

A LOT of them tend to underperform, with some not even keeping track of inflation every year.

Unlike EPF’s positive returns, PRS funds can have a negative performance in some years, which will impact your returns.

“But the tax reliefs make it worth it right?”

Not quite.

Here are two scenarios:

1) The left is starting with a 10% bonus (assuming you’re taxed 10% and reinvest the reliefs into PRS).

2) The right is leaving the sum (RM3,000) in EPF, without tax reliefs.

If PRS returns are 4%, over 20 years, you'll have significantly more funds if you invest in EPF.

“What if my tax bracket is high?”

Even if your tax bracket is high, say 20%, you may still need to reconsider investing in PRS.

Using the same returns from the previous example, investing in EPF produces much better returns, despite the 20% initial bonus in PRS.

According to RinggitPlus founder Hann Liew, a good measure on whether to max out PRS is to check if your current tax exceeds 55 – your age.

Therefore, if you’re 28 and want to max out PRS, your tax rate should be more than 55-28 = 27%

To be in this bracket, you'll need to earn >RM400k per year (or RM33k/mo). 🤯

So, if you're currently investing in PRS, check with your agent on the fund's historic performance and its investments.

All these can be found in the fund's prospectus.

It will give you a better idea on whether you should continue maxing out or invest the money elsewhere.

Q7: I’m still unsure on what I can or cannot claim. Is there a reliable source to refer to?

All of the tax information I presented above is from YYC tax advisory. You may refer to their QNA on tax reliefs here: https://www.yycadvisors.com/tax-knowledge-english.html

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That’s all for this week’s newsletter!

Disclaimer: The information contained in this newsletter is for informational and educational purposes only. Nothing herein shall be construed to be financial, legal, or tax advice.