As we approach the end of 2023, it’s crucial to take a closer look at your finances and consider strategic tax moves that can set you up for long-term success. With proper planning, you can not only secure your financial future but also potentially reduce your tax burden, ensuring you make the most of your hard-earned money. Win-win!
1. Plan for a Comfortable Retirement
Investing in your retirement fund while simultaneously saving on taxes is a smart move. Contributing to a Private Retirement Scheme (PRS) can unlock significant tax relief of up to RM3,000. This means that the amount you invest in PRS can be subtracted from your taxable income, ultimately lowering your overall tax liability.
PRS is also a great complement to your Employees Provident Fund (EPF). The CEO of The Private Pension Administrator Malaysia (PPA) has said PRS were established as complementary or voluntary schemes for long-term savings as based on its studies, “savings in EPF alone were not enough”.
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Don’t forget about your EPF contributions. Besides building a secure retirement fund, EPF contributions are eligible for tax relief, making it a practical way to reduce your taxable income.
2. Explore Tax-Exempt Investment Opportunities
Consider exploring tax-exempt investment instruments such as Perbadanan Tabung Pendidikan Tinggi Nasional (PTPTN) student loans or specific Islamic investment options. These investment avenues allow you to grow your wealth without worrying about additional tax burdens.
3. Embrace the Spirit of Giving
Supporting charitable organisations not only contributes to meaningful causes but also offers you the opportunity to claim valuable tax deductions. Ensure your donations go to registered charitable entities to make the most of this tax-saving strategy. Keep in mind that certain donation categories are limited to 10% of your aggregate income:
- Gifts of money to approved institutions, organisations, or funds.
- Gifts of money for approved sports activities.
- Gifts of money or in-kind contributions for approved national interest projects.
- Gifts of money in the form of wakaf to religious authorities or public universities, or endowments to public universities.
4. Maximise Tax Relief on Lifestyle Purchases
Getting tax benefits on specific lifestyle purchases can save you money and improve your lifestyle. These purchases can help you expand your knowledge, embrace technology, boost your health and wellbeing, and stay connected with others.
You’re entitled to claim up to RM2,500 in tax relief for expenses such as:
- Books, journals, magazines, printed newspapers (excluding banned and offensive materials), and similar publications in both hardcopy and electronic formats.
- Personal computers, smartphones, or tablets (excluding additional charges for warranties or devices used for business purposes).
- Sports equipment for activities defined under the Sports Development Act 1997, including golf balls and shuttlecocks, as well as gym membership fees. Note that motorised bicycles and club memberships that offer gym facilities are excluded.
- Internet subscriptions paid through monthly bills registered under your name.
5. Invest in Your Family’s Well-being
Investing in insurance premiums that cover medical benefits is a wise choice for your long-term well-being. It ensures financial stability, access to quality healthcare, and peace of mind for you and your family.
You can claim tax relief of up to RM3,000 for insurance premiums related to education or medical benefits for yourself, your spouse, or your child. The total deduction under this relief is capped at RM3,000 for individuals and RM3,000 for spouses with a source of income. Couples opting for joint assessment will also have a deduction limit of RM3,000.
As you plan your financial strategy for the remainder of 2023, remember that every person’s financial situation is unique. It’s advisable to consult with a financial advisor or tax professional to customise these strategies to your specific needs and goals. By making informed decisions now, you can pave the way for a more financially secure and tax-efficient future.