Although i am not an accountant or tax auditor but I still want to share my thought with you all on how to reduce income tax without breaking any laws. First of all, it is determined by whether you are a fixed income earner or running own business.
If you are under employment, then you can increase expenditure by:
– Buying life insurance, educational insurance, and medical insurance
– Buying educational books include magazine subscriptions with the condition that it can directly improve your job service. For example, if an engineer buy accounting book, and then cannot get that relief.
– Getting married, and have lots of children
Or increase your assets by:
– Buying property
– Buying computer RM3, 500 instant rebate but I think is for every 3 years (This is New Announced Budget, before that is RM500 for every 5 years)
If you are doing business, then there are more ways of to reduce income tax as you can claim many of your personal expenses as business deductions.
–Appoint your family members as directors. They get pay and no need have to work. They just only have to attend meeting.
–Time your holidays during some conference related to your business. Fly first class; stay in the most expensive hotel.
– Put all sort of expenses into “salary package” which may include vacation, transportation, meal allowance and etc.
Why Company Like To Give Allowance To Their Employees?
There may have the reason behind its as the company can escape from EPF. So try to tell boss to convert the allowance to EPF, which can increase your EPF rate. This way, government will not be able to get your money
It is not necessarily to say that the allowance and claims will be included as you income. It is depends on some companies whether got file it or not. If they did not file it, then you no need to pay.