THE end of the tax year – Dec 31 2025 – is around the corner.
You still have just nine days or so to ensure that you pay the correct amount of tax after taking into account all the reliefs, deductions and opportunities to arbitrage the tax between yourself and corporate vehicles in which you have interest.
The 2025 tax return must be filed before May 15 2026, and all taxpayers must file using the MyTax portal.
Reliefs and deductions
The basic relief for an individual is RM9,000 and if you have chosen a joint assessment, you will be entitled to a further relief of RM4,000 if your spouse is not working. This amount increases by an addition of RM6,000 if your spouse has disability and if the person filing has disability, the relief is increased by an additional RM7,000.
Child relief is RM 2,000 per child for children under 18, and those who are 18 and above who are in full-time education it is RM8,000. A disabled child in higher education will be eligible for relief of RM16,000.
Relief is available for medical expenses incurred for serious illness for self, spouse and children up to RM10,000, support equipment for disabled individual, spouse, child and parents – RM6,000, breastfeeding equipment – RM1,000 available once every two years.
Other reliefs include spouse and alimony relief – RM 4,000, support for parents and grandparents – RM8,000 (this is for medical and care expenses), self-education fees up to RM7,000 for higher education for approved courses, child care and kindergarten fees for children six years and below at registered centre – RM3,000, and contribution to national education saving scheme – RM8,000.
Interest paid on the first home loan: RM7,000 for home costing less than RM500,000 and RM5,000 for home costing RM500,000-RM750,000 based on sale and purchase agreements executed between Jan 1 2025 and Dec 31 2027.
Do not forget you can contribute to a private retirement scheme and deferred annuity of RM3,000. Also, you are entitled to contribute to the Employees Provident Fund up to RM4,000 and an additional contribution of RM3,000 which can be made on a voluntary basis in the event you have not used the RM3,000 relief for life insurance.
On top of these reliefs, taxpayers are entitled to education and medical insurance premium up to RM4,000.
Other reliefs available to taxpayers are lifestyle relief of RM2,500 for the purchase of computers, laptops, tablets, smartphones, internet subscriptions, reading materials and skills enhancement courses. A further RM1,000 is available for the purchase of sport equipment or registration fees for sports competitions or entry fees for sport facilities, etc.
Matters to be given a thought
Review your tax positions if you are a shareholder of a private company. SMEs are taxed at 15% for the first RM150,000, 17% for the next RM450,000 and thereafter at 24%. In case your personal tax is above 24% after taking into account of all reliefs and deductions, you may wish to consider retaining income in the company and withdrawing the profits through dividends which would have been taxed at 24%.
This is an opportunity for the higher bracket taxpayers to use this arbitrage. The effective saving for a taxpayer at 30% bracket would be 4%: the difference between the maximum personal tax rate of 30% and the corporate tax rate of 24% together with 2% dividend tax.
In case you have not incurred the expenditure to enable you to maximise the reliefs and deductions you have another nine days to expedite the expenditure for deductions. In case you have any rental property, you could consider bringing forward the allowable expenditures such as repairs and maintenance before the year-end. If you wish to contribute to an approved charity, then accelerate such payment before the year’s end.
This article is contributed by Thannees Tax Consulting Services Sdn Bhd managing director SM Thanneermalai (www.thannees.com).
