The saying goes that you have to spend money in order to make it. Taking that little nugget of wisdom for a twist; it is true that in income tax at least; spending money can save you money when it is time to file!
We all are now aware of the fact that income tax reliefs and rebates exist but few actually take the effort to claim these reliefs. Why not claim something that is in existence for your benefit? Well, mostly it is because you didn't file all the receipts!
We at Ringgitplus have talked about last-minute spending to save on income tax but how much more can you save by planning a little earlier? Like right now? Last-minute action drastically reduces the number of reliefs you can spend on to be eligible so, it's time to get cracking!
Even if the last thing on your mind right now is income tax filing for 2015; keep these 5 spending items in mind and horde those receipts!
Get Educated
It's hard to enroll for any course or certification in December as you rush to meet tax deadlines - but you can from now till December. Education fees up to RM5,000 are allowed reliefs so now may be the time to take that post-graduate you always wanted.
Even if nothing so fancy; maybe that certification in Microsoft Excel so you can finally figure out how the sum button works? We don't know but if you're getting educated and a tax relief out of it - it's probably worth pursuing.
Insure Yourself
There are a lot of things that could go wrong with your health. Just Google any symptom you have and you'll probably find that the possibilities range from nothing to fatal cancer.
We're sorry to be flippant but the truth is one really never does know, and with private hospitals charging RM11,000 for a dengue case (true story); you'd need a hefty donation to be able to afford medical fees today.
Insurance, especially for medical claims is important and even more so because you can claim tax relief of up to RM3,000 per year on premiums paid. You're welcome.
Psst: Clueless about policies? Check out our medical card insurance policy comparison page to
find the most competitive package.
Get Yourself Checked
Quite linked to the point above; many insurance underwriters will require you to present yourself for medical checks to ensure you are not lying on the application form.
Kill two birds with one stone (probably not the best metaphor) by getting a full medical check this year thus satisfying your insurance underwriter and earning tax relief. Call your local GP and have him pull out the X-rays, ECGs, Ultrasounds, and syringes because you're going to get yourself checked!
Medical checks are tax exempted for up to RM500 yearly so tell your doctor to cap the bill to that amount.
Donate, Donate, Donate
Donations have been popping up in the news lately but not for the right reasons. How about countering the bad rep the word has received by giving to someone truly in need and saving on your income tax?
According to our friends at Savemoney:
...you can deduct up to 7% of your Taxable Income for gifts to charities and institutions which are approved by the government (not all charities are approved, so be sure to find out before you donate away!), unless you are giving to a few selected government-related bodies, where there is less restrictions on the amount deductible from your income.
Find a charity that fits the bill and donate religiously until the end of the year. As long as it is within the 7% threshold - you're good for a deduction! What's even better is that you get the absolute satisfaction of donating to a good cause.
Contribute Voluntarily to PRS
At first sight of this item on the relief list, we wondered how one can involuntarily contribute but brush aside the comical image of a PRS officer threatening contributors at gunpoint.
Nonetheless, deciding to contribute to an additional retirement fund is not only good for your senior years; it's good for your wallet next year too. You can claim relief of up to RM3,000 for contributions made into PRS.
If you're wondering what the scheme is about; check out our guide and comparison to EPF.
Of course, these are just some of the big-ticket items you can do right now. As listed in our last-minute spending for tax reduction article; you could also buy more books at Big Bad Wolf, get some sporting equipment (no, the Wii version of exercise does not count), or buy a new laptop.
There is also an RM1,000 relief for each child under 18 but we left that out as it may be a tad difficult (re: impossible) to make another child in 5 months. Also, it's not really saving when you think about how fast RM1,000 will run out on diapers alone.
Have we missed a relief or do you have a plan of action to save on tax? Let us know in the comments.
Source:https://ringgitplus.com/en/blog/Personal-Finance-News/Save-on-Income-Tax-by-Spending-on-These-5-Items.html
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