AS Malaysia enters the individual tax filing season, taxpayers are encouraged to move beyond last-minute submissions and adopt a more strategic approach to their tax filings.
Filing an income tax return is not merely a statutory obligation but it is also an opportunity to optimise one’s tax position within the tax law framework.
Personal tax returns for the tax/calendar 2025 has to be electronically filed by May 15, 2026, if you are sole proprietor carrying on a business you need to file electronically by July 15, 2026.

Declaring all sources of income
Key starting point is ensuring that all sources of income are properly reported. For most individuals, employment income forms the bulk of earnings. This includes not only salaries and bonuses, but also allowances, benefits-in-kind (BIK), and perquisites provided by employers.

Reporting supplementary and freelance income
Many Malaysians earn supplementary income through freelancing, consulting, or online businesses. Such income is taxable and must be declared accurately, as failure to do so may result in penalties during audits.

Understanding rental income and allowable deductions
Rental income is fully taxable, taxpayers can claim deductions on loan interest, assessment, quit rent, insurance, and routine repairs. It is important to distinguish between revenue and capital expenses—renovations, extensions are not deductible. If you own multiple rental properties, losses from one can be offset against income from another, but such losses cannot be carried forward.

New dividend tax rules for YA 2025
Dividends received by individuals from Malaysian companies are generally tax-exempt. However, starting from 2025, dividend income exceeding RM100,000 will be subject to a 2% tax.

Family reliefs
Malaysia’s tax relief system remains the individual relief of RM9,000. Additional reliefs are provided for family responsibilities, including spouse relief of RM4,000, with higher deductions applicable for disabled spouses or individuals (RM7,000). Taxpayers may claim RM2,000 per child under 18, while those pursuing higher education may qualify for reliefs of up to RM8,000 per child. Additional relief is available for disabled children (RM8,000), reflecting continued support for families with special needs.

Healthcare and medical expense reliefs
Taxpayers can claim up to RM10,000 for medical expenses covering serious illnesses, fertility treatments, vaccinations, and dental care. Expenses for parents and grandparents, including medical treatment and caregiving, are claimable up to RM8,000, while supporting equipment for disabled family members qualifies for relief up to RM6,000.

Education and skill development reliefs
Individuals can claim up to RM7,000 for approved education and professional courses. Contributions to the Skim Simpanan Pendidikan Nasional (SSPN) are also eligible for relief of up to RM8,000.

Family support and childcare reliefs
Family support reliefs include childcare fees of up to RM3,000 for registered centres, as well as relief for breastfeeding equipment for children aged two years and below RM1,000.

Lifestyle and personal development reliefs
Lifestyle reliefs allow claims of up to RM2,500 for purchases of books, journals, magazines, newspapers, personal computers, smartphones or tablets, internet subscription fees, and personal development course fees. An additional RM1,000 is available for sports-related expenses, including gym memberships and sports equipment.

Financial security and protection reliefs
Reliefs for financial security include contributions to (EPF) and life insurance premiums up to RM7,000. Additional reliefs include education and medical insurance (RM4,000), Private Retirement Scheme (PRS) contributions (RM3,000), and SOCSO (RM350).

Property and green incentive reliefs
For first-time homeowners, tax relief is available on housing loan interest ranging from RM5,000 to RM7,000, depending on eligibility. Taxpayers can claim up to RM2,500 for expenses on electric vehicle (EV) charging facilities and green home equipment.

Importance of proper documentation and planning
Proactive tax planning helps taxpayers optimise income timing and maximise eligible reliefs. Maintaining proper documentation such as receipts and invoices is essential, as unsupported claims may be disallowed during audits, leading to additional taxes and penalties.

This article is contributed by Thannees Tax Consulting Services Sdn Bhd managing director SM Thanneermalai (www.thannees.com).