Raising a child ain’t cheap and that’s a fact that many parents are forced to live with. Children can have many needs & wants which can make it expensive. Thankfully, LHDN has provided tax reliefs revolving around the expenses of children. With some careful planning, you could possibly have quite the tax savings, making child raising that ever so slightly less expensive.
In this blog, we will cover the rest of the tax relief available for 2023. This is part 2, a continuation of our previous blog on the same topic. If you’re curious about how to calculate child relief or the scope of medical relief applicable to your child, check out the 1st blog on this topic after reading this one!
Let’s begin with tax reliefs that will cover early childcare. For those that just became mothers, you can claim breastfeeding equipment relief up to RM1k for the purchase of these items:
o breast pump kit and ice pack
o breast milk collection and storage equipment
o cooler set or cooler bag
Do note that only mothers can claim this tax relief. Even when jointly assessed, the father cannot claim this tax relief, therefore if joint assessment will be more beneficial and you do purchase the above-mentioned items, it might be better to be jointly assessed under the wife’s name instead. A taxpayer can also only claim this relief once every 2 years, so if you did use this relief for 2022, this won’t be available for 2023.
For those with children aged below 7, you might be sending your child to a daycare or kindergarten. Tax relief is available for you of up to RM3k on those fees. However, the daycare must be registered with the Department of Social Welfare (JKM), while the kindergarten must be registered with the Ministry of Education Malaysia (KPM), therefore check the list of approved institutions provided by the government or ask the daycare/kindergarten if their fees are eligible for tax relief claim.
Before we move on, here’s a reminder to always keep any receipts that are used for tax relief claims well, either hardcopy or softcopy, for 7 years minimum. Tax reliefs also do not extend their cap when jointly assessed, so plan and calculate which is the most efficient way to use your tax reliefs.
Let’s now look at reliefs tied to education. Throughout a student’s academic life, they will surely use books (& nowadays even electronics) to study. Books, laptops, tablets & smartphone can be claimed under the lifestyle relief, which is capped at RM2.5k.
If you are purchasing either a computer, smartphone, or tablet for your child, you can also claim the separate lifestyle relief specifically for these electronics of up to RM2.5k. Bear in mind electronic dictionaries are not eligible for the claim.
Aside from immediate expenses, it is also important to plan for future expenses. One of the largest expenses a parent will pay for their child is higher education. Therefore, it is important that you start saving now if it is within your ability!
Education insurance (the beneficiary must be your child) allows you to save some money now & retrieve it in the future when your child pursues higher education. You claim tax relief of up to RM3k on insurance premium paid (limit shared with your/your spouse’s/your child’s medical insurance).
Leisure & Entertainment
Now, your child can’t just sit around all day. They need some entertainment, and relief in the lifestyle category could help you lessen the cost of these expenses. As mentioned above, books & electronics can both be claimed (electronics even have their own separate relief), including books for entertainment such as comics & novels.
One additional note on the purchase of computers, if your child purchases parts to build a computer, you should be aware that the tax relief is only for purchase of a functioning computer. Purchasing individual parts cannot qualify for tax relief claim.
The Receipt must include the components for a complete & functioning computer, which should include a motherboard, a CPU, a storage drive, RAM, a speaker & a power supply.
However, children also need to stay active & be healthy, so LHDN allows purchase of sports equipment to be claimed under the RM2,500 lifestyle tax relief! Sports equipment allows any gym equipment, balls, rackets etc. but disallows sports clothing like jerseys, sport shoes & sweatpants except for swimsuits (LHDN regards swimsuits as sports equipment).
There is also additional sports tax relief of RM500 for additional purchase of sports equipment, rental/entrance fee for sport facilities (ball courts, ping pong table), & registration fee for any approved & licensed sporting events. So get active and stay healthy with the family!
With that, covers all the tax reliefs available for you as a parent/guardian. Hopefully, you found these 2 blogs on tax relief helpful, or at least informative!
While tax saving is important, do remember that it is not the end goal, merely a bonus for having expenses that align with the government’s intentions.
This is why planning is necessary to maximise the benefits of these tax reliefs while also keeping everyone happy.
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LHDN’s list of tax reliefs: www.hasil.gov.my/en/individual/individual-life-cycle/how-to-declare-income/tax-reliefs/
Registered childcare center available at: www.jkm.gov.my
Registered Kindergarten list available at: eprasekolah.moe.gov.my/