Malaysia Tax Declaration for Year Assessment 2018

The deadline for BE form (without business source of income) is 30th April 2019.

The guide can be referred here.

Deductions / Rebates / Tax Deductions / Tax Relief

Item	Maximum amount
Individual and dependent relatives	RM 9,000
Medical treatment, special needs and carer expenses for parents	RM 5,000
Parents	RM 1,500 per parent shared among all siblings
Basic supporting equipment for disabled self, spouse, child or parent	RM 6,000
Disabled individual	RM 6,000
Education fees (self)	RM 7,000
Medical expenses on serious diseases for self, spouse or child	RM 6,000 (including RM 500 for medical examination)
Complete medical examination for self, spouse or child	RM 500
Lifestyle - expenses for the use / benefit of self, spouse or child	RM 2,500
Purchase of breastfeeding equipment for own use for a child aged 2 years and below	RM 1,000
Child care fees to a registered child care centre / kindergarden for a child aged 6 years and below	RM 1,000
Net deposit in Skim Simpanan Pendidikan Nasional	RM 6,000
Husband / wife / payment of alimony to former wife	RM 4,000
Disabled husband / wife	RM 3,500
Child	RM 1,000 to RM 14,000
Life insurance and EPF	RM 6,000
Private retirement scheme and deferred annuity	RM 3,000
Education and medical insurance	RM 3,000
Contribution to the Social Security Organization (SOCSO)	RM 250

Tax Rate

Let's learn something about income tax. Below show the income tax rate for assessment year 2016:

Source from: http://www.hasil.gov.my/bt_goindex.php?bt_kump=5&bt_skum=1&bt_posi=2&bt_unit=5000&bt_sequ=11

How should we analyse this table? Actually we can see them by section. Check the following table:

What does it mean? The first RM 5,000 that you earned (chargeable income) that year will be tax free! After that, the next RM 15,000 that you earned, each ringgit will be charged with 1% tax. Following that, the next RM 15,000 again you will be charged with 5% tax and so on.

Say you have a chargeable annual income of RM 36,000 that assessment year. The first RM 5,000 is tax free, next RM 15,000 is 1%, next RM 15,000 is 5%, and the final RM 1,000 is 10%, giving a total of RM 1,000 that you have to pay for income tax.

Do check out what item can deduct your chargeable income, as after you jump to another tax bracket, each extra ringgit is going to be charged with higher tax rate. As the scenario above, the first RM 35,000 is only charged with RM 900 tax but the final RM 1,000 alone you are paying RM 100 tax. It is up to you to keep the RM 900 and pay the RM 100 tax; OR you can use that RM 1,000 fully on tax relief items and do not need to pay that RM 100 tax.

The tax relief can be seen as an initiative for the government to promote spending on certain area/sector. Do use it wisely to maximise your gain on monetary or non-monetary portion. However, do keep a nice filing for all the receipts for the tax relief items as you could be penalised for not able to show proof when they do auditing on your tax submission.

Be smart with your money. ^_^

Potential Return vs Potential Risk

For an investment, return is always proportional to the risk. The higher the profit is, the higher the risk it could incur. However, with careful study and detailed analysis, you could minimize the risk you are facing when deciding to invest into an opportunity.

From Securities Commission Malaysia, the list below shows the type of investment you can involve in legally to obtain earning from the fund invested. The lower is the position of the item in the list, the higher potential you can earn a great profit, however, it also comes with higher risk.

1. Saving account
2. Fixed deposit
3. Money market
4. Government bonds
5. Corporate bonds
6. Bond unit trust
7. REIT
8. Balanced unit trust
9. Real estate
10. Dividend shares
11. Equity unit trust
12. Foreign currencies
13. Shares
14. Future and options

The return and risk of each investment is affected by many internal and external factors. Hence, you can never predict precisely the outcome of certain investment, especially for high risk investment.

Happy investing!

First Post

Financial planning is essential for us to enjoy our life when we retired. This involves controlling and managing your income and also spending. Insurance is also important so that when an unexpected and undesirable event occur, it will have lesser impact to our life as well as financial plan.

Investment is the key to increase our passive income and achieve financial freedom. However, ones must always do homework before putting money into any investment products (unit trust, stock, real estate, etc). If you blindly follow any "expert's advises", then good luck. Never invest into what you don't understand or you won't even know why investment makes you poorer.

Please get yourself far from any scam/ money games that promise you high return with no risk. Remember: Risk is always proportional to return of an investment. Those "investment" with ridiculously high return are bubbles with no one monitoring and regulating its growth. It could burst anytime.

Happy investing and learning more about your money. Be someone who is good in both health and wealth! :)