Tax deductions are available for children under the employee's care. This deduction reduces the employee's chargeable income and subsequently, it will have an impact on their PCB.
For tax purposes, a “child” is a legitimate “unmarried dependent child or stepchild or adopted child”
If the employee's children has their own income and if their total income (excluding scholarships/grants) exceeds the amount of deduction that would otherwise be allowed, no deduction can be claimed.
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a) Below the age of 18
For each child below the age of 18, employees are allowed to claim RM2,000 annually.
b) 18 and above (not in higher education)
For each child aged 18 and above in full time education (A-levels, foundation, etc), employees can claim RM2,000 annually.
c) 18 and above (in higher education)
For each child studying within Malaysia for a diploma or higher, employees can claim RM8,000 annually.
For each child studying outside Malaysia for a degree or higher, employees can claim RM8,000 annually.
d) Disabled Children
For each disabled child, employees can claim RM6,000 annually irrespective of age.
For each disabled child in higher education, employees can claim RM14,000 annually.
NOTE:
If the employee's spouse also opted for separate assessment, it is advisable for the parent with the higher income to claim the child relief in order to minimise their tax liability.
However, spouses living together cannot claim 50% each. If the husband and wife are separated and both are spending on the child's maintenance, they can claim about 50% each.
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To set up tax deduction for children in Talenox, you can do so under Employee Profile > Setup children claimed for tax deduction:
In the respective field, please indicate number of children (own, legitimate child or step child) based on the category.
By populating this section, this will be taken into account for Potongan Cukai Bulanan (PCB) calculation each month.