Every year the working Malaysians scramble to file their personal income tax by April. Although we have passed the due date months ago, this can be useful to prepare for the assessment year 2017.
Tax relief in Malaysia is issued by the Inland Revenue Board of Malaysia (IRBM). It helps taxpayers, to reduce a certain amount of money spent on necessities in a particular year —from your total annual income.
The tax reliefs that you can claim ranges from the purchase of books, magazines, journals, sports equipment, insurance premium for education or medical benefit, housing loan interests, and much more.
But did you know that you can also enjoy tax relief for your medical insurance premium? Every year, as a resident in Malaysia you can claim up to a maximum of RM 3,000 under the education and medical insurance tax relief quota.
Here are 3 ways you can maximize tax relief with your medical insurance.
In case you didn’t know, there are two types of tax relief that you can take advantage of. They are the EPF and life insurance tax relief, and the education and medical insurance tax relief. Each has different limits.
Individual Tax Relief Limit
But how and when can you maximize the education and medical insurance quota? Let’s assume a scenario with the amount below:
EPF contribution: RM 6,000
Medical insurance premium: RM 2,500
Life Insurance plus rider premium: RM 1,000
Here as you can see, your EPF contribution has already maxed out the RM 6,000 limit leaving you no room to claim for your life insurance.
But not to worry. 60% of your life insurance premium is claimable under the education and medical insurance limit of RM 3,000.
First, you can include your medical insurance premium (RM 2,500) under education and medical insurance limit. You then take your life insurance premium (60% x RM 1,000 = RM 600).
And in total you would have RM 2,500 + RM 600 = RM 3,100. But since the limit is only RM 3,000, you can only claim up to RM 3,000 instead of RM3,100. This way you are maximising your medical insurance tax relief—fully.
This second point is more relevant to a married couple. According to section 45 of the Income Tax Act 1967, all individuals including a married person is considered as separate individuals— unless they choose otherwise.
Knowing whether to opt for a joint assessment or a separate assessment can affect your medical insurance relief limit.
A separate assessment is very beneficial for married couples who both draw high salaries.
Their combined income can result in a higher chargeable income which can be subject to a higher income tax bracket. Therefore claiming tax relief separately including medical insurance tax relief is best for this type of couple.
Scenario 1: Husband and wife opt for separate assessment.
Example: Husband and wife are both earning high salary
If Hakim paid RM3,000 a year for his medical insurance and his wife paid RM 3,000 per year, they each have a limit of up to RM 3,000.
It’s a reverse situation for cases of the following type of couple. A joint assessment is beneficial for married couples where for example a husband is the higher income earner and the wife earns lesser to no income at all.
In this case, the husband is allowed to claim for medical insurance spouse relief of up to RM 3,000.
Scenario 2: Husband and wife opt for joint assessment.
Example: Husband earns higher income and wife earns lower or no income
If Ragu pays RM 1,800 a year for his medical insurance and his wife’s medical insurance is RM 1,200, Ragu can maximize his medical insurance tax relief by adding both his premium together with his wife’s.
If you already have a medical insurance aside from your company’s group medical insurance, that’s great.
The reason behind this is because the group medical insurance provided to you is paid by your company. Therefore it’s not considered as your personal expense. What is considered as your personal expense is when you have to pay for a certain thing yourself.
In this case, having a medical insurance which you have to pay premiums by yourself, is considered a personal expense. Let’s look at how much you can save when you have a personal medical insurance.
Medical Insurance Premium (per year): RM 1000
Tax Rate: 26%*
*example is assuming the highest tax rate, which will depend on your salary range.
In actuality, you stand to pay only RM 740 (RM 1,000 x 26%) a year instead of RM 1,000. You can save RM 260 in medical insurance premium alone.
Tax Relief for Resident Individual 2017 – Malaysia Source: Inland Revenue Board Of Malaysia
Was this useful to you? Did it help you with your tax relief or with any tax relief problems? If so tell us what you think in the comment box below. And if you feel that this is an information worth sharing with your friends and family, go ahead and spread the word.
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View Comments
Hi , regarding your "Claim 60% of your life insurance premium under medical insurance tax relief" advice, may I understand the source reference of this provision? Is it from LHDN ? Because I check with my insurer, and they are ignorant of this!! Thanks.
Hi KH Tan,
Thank you for your question.
The reference is typical in Great Eastern policies where they categorize medical/life (60% of premium are eligible for tax relief as medical policy) at the back of their annual tax relief statement. This could be different if your policy is not with Great Eastern. But that does not mean you are not eligible for the 60% claim of your life insurance premium under medical insurance tax relief.
However, we highly advise you to check your annual tax relief statement and confirm with your insurance company again.
Hello, Mr Tan
I have two questions:
1. What is the meaning of "OR" in the sentence : "Insurance premium for education OR medical benefit".
Does this means I can only claime ether one premium?
2. Is the tax relief for:
self + spose + child (assuming I have three different policies paid by me)
self + spouse ; or
self + child; or
spouse + child?
Hi Goh,
1) Correct, you can claim RM 3,000 for education or RM 3,000 for medical. Also possible is RM 1,000 for education or RM 2,000 for medical. Any combination will do. However, if you have spend more than RM 3,000, you only can get a tax relief of RM 3,000. For example, you spend RM 2,000 on education and RM 2,000 on medical insurance, then you only get a tax relief of RM 3,000 in total.
2) The tax relief is for any person that is paying taxes. In your example.
Example: self (working) + spouse (not working) + child: max RM 3,000
If you are the only person working, then you can only claim one time RM 3,000.
Example: self (working) + spouse (working) : Max RM 6,000
If you file your taxes separately, you can each get RM 3,000 tax relief
I am not listing the other cases, because it does not matter if you have a child or how many children you have. Each person that pays taxes, gets max RM 3,000 for insurance premium paid for education or medical.
I hope this answers your question. Please let us know
Hi,
I have a question regarding insurance. If my insurance paid by my employer, but not deduct from salary, can I still claim for relief ?
Hi Zai,
if you can claim for relief depends on the BE form that you will get at the end fo the year from your employee. If the insurance that is paid by your employee is listed and you have paid taxes for it, then you can claim relief. If it is not listed, then you cannot claim for relief, because you have not paid taxes for it.
I hope the answers helps. Please let us know.
I work in Singapore & am collecting some rental from properties in Malaysia.
I consider myself a non-resident , thus, using e-M form for non-resident individual.
I'm also purchasing life insurance (incl.medical) amounting to $3276/year & endowment plan for $4140/year.
Am I allowed to deduct these from the taxable income ?
Dear Ivan, since you are not a tax resident, you do not enjoy the tax incentives. You are not allowed to deduct you life insurance or endowment plan in Malaysia. However, any expenses related to your rental properties can be deducted from the rental that you make. In Malaysia, you will be taxed at a flat rate. I hope the answers helps. Please let us know.
Hi,
As for the education and medical insurance for children, can I claim under the RM3,000 relief if the insurance was purchased under my husband's name with the child's name? My husband will be claiming relief for another child.
We have a few children. Thanks
Dear Brenda,
I am not a tax expert, but looking at the available information on the internet, you can only claim RM 1,500. Your husband can also claim only RM 1,500. I can share the following resources with you:
1) LHDN shows that each parent can only claim RM 1,500 as parent. LHDN
2) Vulcanpost: I am also attaching you a link to vulcanpost that says the same. It also gives more detailed explanation about each item that you can claim. Vulcanpost
To summarize:
1) If you have one, two children or more children, you can only claim RM 3,000 once. You cannot claim more, if you have more children.
2) If you and your husband are working and both want to claim this relief, you can each claim only RM 1,500.
Since a policy usually only has one parent stated as the policy holder, you should have no problem with claiming for relief.
I hope it answers your questions.
i received my AIA Premium Statement, it is show as below
Policy Plan : Critical Cover Coverage Type: Critical Illness $ 800
Policy Plan : Family Income Coverage Type: Life $1000
Policy Plan : Mediplus Coverage Type: Medical $ 900
Total i can claim = Life Insurance $1000
= Medical Insurance $1700
Please correct me, if i am wrong. Thank you.
Dear Yuki, Thanks for reaching out to us. It looks good. You want to watch out that you claim the medical insurance under "Insurance premium for education or medical benefit INCLUDING not through salary deduction".
Can I ask question about Medical expenses for serious diseases for child?
Hi Ian. Yes, we will try to help as much as we can.
Hi, I'm actually asking for academic purpose.
For example, if husband has medical insurance for RM3000 and the wife is RM1000 (pay by herself). In joint assessment, is their relief on medical insurance is RM3000 only, or RM4000?
Dear Carmen, Thank you for reaching out. If you are talking about item 20 on the webpage of LHDN, then for 2017 the tax relief is RM 3,000 for education or medical benefits. For joint assessment, the relief is still max RM 3,000.
http://www.hasil.gov.my/bt_goindex.php?bt_kump=5&bt_skum=1&bt_posi=3&bt_unit=1&bt_sequ=1&bt_lgv=2
Hi, i just want to know, when filling insurance tax relief, what are the supporting documents required, if any? Do we need to provide the policy or the receipt will suffice? thank you
Hi,
I am married but if I file my tax separately, can I still claim relief for medical insurance owned by my husband?
You can claim the medical insurance only once. If your husband has already claimed for medical insurance in his taxes, you cannot claim for it. If your husband has not claimed, you can claim if your name is clearly stated in the policy.