{"id":26670,"date":"2016-10-27T11:09:57","date_gmt":"2016-10-27T03:09:57","guid":{"rendered":"https:\/\/www.imoney.my\/articles\/?p=26670"},"modified":"2017-03-30T14:57:48","modified_gmt":"2017-03-30T06:57:48","slug":"lifestyle-tax-relief-the-good-the-bad-the-ugly","status":"publish","type":"post","link":"https:\/\/www.imoney.my\/articles\/lifestyle-tax-relief-the-good-the-bad-the-ugly","title":{"rendered":"Lifestyle Tax Relief: The Good, The Bad & The Ugly"},"content":{"rendered":"
When middle-class Malaysians have more money in their pockets to save, invest, and grow the economy, the country benefits. Other than the government\u2019s continuous effort in boosting the lower-income group, also known as the Bottom 40 (B40), the last few federal budgets had also seen cuts in income tax rates.<\/p>\n
However, in his Budget 2017 speech, Prime Minister Datuk Seri Najib Razak did not announce any change to personal income tax rates. Instead, he announced a few tax reliefs, including the new lifestyle tax relief. The new lifestyle tax is not exactly new. It combines a few tax reliefs into one, allowing taxpayers to claim yearly. It is a combination of the tax relief for reading materials (up to RM1,000 a year), computer (up to RM3,000 every three years), and sports equipment (up to RM300 a year).<\/p>\n
Effective for year of assessment 2017 (tax filed in 2018), the lifestyle tax relief at a limit of RM2,500 yearly, also includes new categories such as the purchase of printed newspapers, smartphones and tablets, internet subscriptions as well as gymnasium membership fees.<\/p>\n
The good thing about the new relief is, it offers\u00a0more flexibility because it allows a slightly larger group of taxpayers to benefit from it.<\/p>\n
\u201cFor year of assessment 2016 and before, only individuals with a monthly income of RM3,800 and above would have enough chargeable income to utilise the RM1,300 or RM4,300 tax relief. Starting from year of assessment 2017, the lifestyle tax relief includes individual with a monthly income of RM3,600 and above,\u201d said\u00a0Choong Hui Yan, a tax consultant from SIMways Formulation.<\/p>\n
<\/span>But is the new tax relief really great news for taxpayers? <\/strong><\/span><\/h2>\n
So, what is the difference between the lifestyle tax relief and previous reliefs?<\/p>\n\n
\n\n
\n\t
<\/td>
YA 2016<\/center><\/td>
YA 2017 onwards<\/center><\/td>\n<\/tr>\n
\n\t
Purchase of books, journals, magazines and publications <\/td>
Up to RM1,000 (every year)<\/center><\/td>
Up to RM2,500 \n(every year) \n+ \nPrinted newspaper, smartphone, \ntablet, internet subscription & \ngym membership \n<\/center><\/td>\n<\/tr>\n
\n\t
Purchase of personal computer<\/td>
Up to RM3,000 (every 3 years)<\/center><\/td>\n<\/tr>\n
\n\t
Purchase of sport equipment for sport activities <\/td>
Up to RM300 (every year)<\/center><\/td>\n<\/tr>\n
\n\t
Total maximum reliefs<\/b><\/td>
Up to RM6,900 over 3 years<\/b><\/center><\/td>
Up to RM7,500 over 3 years<\/b><\/center><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n
The total relief you get over the same period of three years is higher by RM600. Sounds good.<\/p>\n
But does that mean lower taxes? Here\u2019s a comparison of the difference it makes in the tax payable for years of assessment 2016 and 2017.<\/p>\n\n
\n\n
\n\t
<\/td>
YA 2016 & prior<\/center><\/td>
YA 2017 onwards<\/center><\/td>\n<\/tr>\n
\n\t
Annual income<\/td>
RM48,000<\/center><\/td>
RM48,000 \n<\/center><\/td>\n<\/tr>\n
\n\t
Personal & family relief<\/td>
RM9,000<\/center><\/td>
RM9,000<\/center><\/td>\n<\/tr>\n
\n\t
EPF & insurance relief<\/td>
RM5,280<\/center><\/td>
RM5,280<\/center><\/td>\n<\/tr>\n
\n\t
Computer relief (every 3 years)<\/td>
RM3,000<\/center><\/td>
RM2,500*<\/center><\/td>\n<\/tr>\n
\n\t
Reading materials relief<\/td>
RM1,000<\/center><\/td>\n<\/tr>\n
\n\t
Sports equipment relief<\/td>
RM300<\/center><\/td>\n<\/tr>\n
\n\t
Total chargeable income<\/td>
With purchase of \ncomputer: <\/b>RM29,420 \nWithout purchase of \ncomputer: <\/b>RM32,420<\/center><\/td>
RM31,220<\/center><\/td>\n<\/tr>\n
\n\t
Total tax you will have to pay<\/b><\/td>
With purchase of \ncomputer: <\/b>RM621 \nWithout purchase of \ncomputer: <\/b> RM771 \nTotal over 3 years \n= RM621 + RM771 + RM771 \n= RM2,163<\/b><\/center><\/td>
RM711 a year \nTOTAL over 3 years \n = RM2,133<\/b><\/center><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n* Assumming that the individual taxpayer maximise the lifestyle tax relief fully with the added categories. <\/font><\/i><\/span>\n\n
<\/p>\n
Based on the example above, you will pay a lower\u00a0tax on the year that you claim for the computer tax relief in YA 2016 and prior, but you will see a higher tax in the two other years that you are not claiming for computer.<\/p>\n
On the other hand, because of the wider categories in the new\u00a0lifestyle tax relief, it is much easier to maximise the amount every year. In this case, you will see a savings of RM30 over three years.<\/p>\n