Individual Tax Rebates in Malaysia
In Malaysia, individual tax rebates are specific incentives that directly reduce the amount of income tax payable by resident individuals. These rebates are available to taxpayers who are residents for a particular Year of Assessment (“YA”) and provide financial recognition for personal, family and religious obligations.
A clear understanding of the various rebates and their eligibility conditions is essential for taxpayers to ensure compliance with the Income Tax Act, 1967 (“the Act”) and to claim all the amounts they are entitled to.
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Self-Rebate
Under Section 6A(2)(a) of the Act, a rebate of RM400 is granted to a resident individual whose chargeable income does not exceed RM35,000 for a YA.
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This rebate applies individually to each taxpayer.
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If both husband and wife are separately assessed and each meets the income threshold, each may claim the RM400 rebate.
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Spouse Rebate
Under Section 6A(2)(b) and 6A(2)(c) of the Act, an additional rebate of RM400 is available to a resident individual who:
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Has a chargeable income not exceeding RM35,000; and
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Is entitled to a spouse relief of RM4,000 under Section 45A, 47(1) or 47(2) of the Act.
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Accordingly, a taxpayer who qualifies for the spouse relief and falls within the prescribed income threshold may enjoy a total rebate of up to RM800 (comprising the RM400 for self-rebate and RM400 for spouse rebate).
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Religious Payments
Under Section 6A(3) of the Act, a rebate is granted to taxpayers for zakat, fitrah or any other obligatory Islamic religious dues paid during the basis year for a YA.
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The rebate amount is equal to the actual payment made, up to the amount of tax payable.
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Zakat refers to the annual tithe calculated at 2.5% of qualifying assets in accordance with Shariah law.
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Fitrah is the obligatory payment made at the end of the month of Ramadan.
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The claim must be supported by a receipt issued by a religious authority established under written law.
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This rebate recognises the religious obligation of Muslim taxpayers and ensures that contributions to recognised Islamic authorities are offset against their income tax liability.
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Departure Levy for Religious Pilgrimage
Under Section 6A(2A) of the Act, a rebate equivalent to the amount of departure levy paid is granted to a resident individual who leaves Malaysia by air for the purpose of performing:
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Umrah; or
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Other religious pilgrimage (excluding Hajj, as the departure levy is borne by Lembaga Tabung Haji).
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The rebate is restricted to two trips in a lifetime and applies only when the departure levy is paid by the individual for their own travel. The claim cannot be made if the levy is paid on behalf of a spouse, family member or any other person, or if the levy for the individual’s own travel was paid by another party.
To substantiate the claims, the following documents must be retained:
(a) Boarding pass for the relevant flight; and
(b) Proof of performing the religious pilgrimage, as outlined below:
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Type of Religious pilgrimage
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Required proof
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Umrah
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Copy of the visa issued by the Embassy
of the Kingdom of Saudi Arabia
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Other recognised religious
pilgrimage
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Written verification by a
religious body recognised by the Committee for the Promotion of Inter Religious
Understanding and Harmony Among Adherents, Department of National Unity and
Integration in the Prime Minister’s Department.
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This rebate is available for all assessment type but only the individual in whose name the assessment is raised may claim the rebate.
The departure levy imposed on outbound air passengers beginning on 1.9.2019 is as follows:
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Class of
Travel
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Destination
/ Rate
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ASEAN
Destinations
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Non-ASEAN
Destinations
|
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RM
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RM
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Economy
class
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8
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20
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Business
or First class
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50
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150
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This takes effect from YA2019 onwards, in accordance with Section 6A(2A) of the Act and the Departure Levy (Rate of Departure Levy) Order 2019 [P.U.(A) 213/2019].
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Conclusion
Tax rebates under the Act provide direct reductions in income tax payable by eligible resident individuals. These rebates apply after the determination of income tax liability. Taxpayers should ensure that all eligibility conditions are met and retain relevant supporting documents to substantiate claims made in their income tax returns.
For further information, please visit the official website of the Inland Revenue Board of Malaysia at
https://www.hasil.gov.my/en
KAIZEN Group, together with its associate firms in Malaysia, can help the clients to perform these compliances formalities so as to maintain the Malaysia company in good standing. Please call and talk to our professional accountants in Kaizen for further clarification.
KNOWLEDGE
