Tax Relief from Insurance YOU must know

Want to save more from Tax? Read on…

 

 

Although this article is somewhat considered late for individual tax-payers this year, this could be useful next year anyway. When you buy insurance, besides getting the comprehensive protection and a worthwhile investment that will keep you financially stable should the unexpected happen, one more feature are very important for every tax payers.

 

Under Malaysian Income Tax Act 1967, you will also enjoy tax relief benefits provided. These tax incentives are given by Malaysia government to encourage us get have a protection plan, thus, inducing a good living life among Malaysians.

 

So what’s tax deductible? How much?

• Premiums on life insurance and/or deferred annuities.
• Premiums on education or medical benefits.

How much tax relief?

- Up to Rm6,000 for life insurance premiums and EPF contributions.

- Up to Rm3,000 for medical and education policies premiums.

 

You may qualify for tax relief under Education policies if:

• Beneficiary is the child.
• The life assured is the parent and the child is the nominee.
• Maturity amount must be payable when your child is between the ages of 14 to 25 years.

Or,

• The life assured is the child.
• Parent is the proposer.
• Payer benefit is attached for the full term.
• Maturity amount must be payable when your child is between the ages of 14 to 25 years.

You may qualify for tax relief under Medical policies if:

• Expenses are related to medical treatment resulting from a disease, accident or disability.
• The policy must be for coverage of 12 months or more.
• Both standalone policies and riders qualify, but if it is a rider, only the rider premium qualifies for deduction.

 

Common Mis-understanding:

How do I know how much relief I can deduct every year?

Every year, your insurer will send you a statement for tax deductions purpose and you just need to fill in the figures shown in that statement. You may request from your insurance company or agent, if you didn’t get it.

 

My premium is Rm2,400. Why the statement only shows Rm1,800?

Tax deductible is based on the actual premiums paid for that particular year. In this case, you only paid Rm1,800 for that year of assessment.

 

My premium is Rm2,400. Why I can’t relief full amount?

This may due to administration fees, or certain riders which didn’t entitle for relief.

 

If I buy insurance for my parents, can I get the relief?

NO. Your parents can get deductions if they bought insurance for their own. However, you may claim for your parents’ medical expenses of up to Rm5,000.

 

Not enough?

From 2010 onwards, premium on annuity scheme or additional premium paid on existing annuity scheme is qualify for another Rm1,000 relief. Amount exceeding Rm1,000 can be claimed together with life insurance premium category.

As the above criteria may change from time to time by regulatory authority, please seek your own tax advice if necessary.