Wednesday, September 28, 2016

Kewangan : How to minimize your tax burden and maximize your sadaqah

Malaysian is good when it comes to charity. When someone need helps, we donate money, we give our effort and other kind of help to help them. When other states are in trouble, we come to help them regardless their races and religions. We are good at helping people domestically and internationally.

How this habit of helping others can minimize our burden of paying tax every year and at the same time, maximizing our sadaqah. There are a few things we need to check before helping others especially in terms of monetary help.

  1. You have to know that, donations, charity, zakah can reduce your tax burden. If you have to pay yearly tax of RM3000.00 a year, you can donate to registered charity organization or Lembaga Zakat with the same amount or more. At the end of the financial year or before the due date for tax filing, you can submit the amount of donation, sadaqah, zakat you make. The tax deduction you pay monthly or quarterly or yearly eventually will be credited back to your account. (This what happen to me every year. I get back the money i pay for tax because the amount of money for zakah, sadaqah and donations exceeded the amount of i need to pay). 
  2. Before you give donations or charity to others, do some checking on the organization or the NGOs or the charity organizer. Most of organization and NGOs have the entitlement for tax exemption. The money we give can be claimed for tax exemption. Make sure that donation is only for legitimate causes. You have to know that, donations to unrecognized institutions will not be considered for tax relief.
  3. Go local. Contribute on local charity organization. Visit their places or premises. Get to know them and identify what they really need. Some may need mental support, some may need health equipment or others. Not all charity organization need money all the time.
  4. Give other than money - you can give your used clothes, food, effort and energy to the institutions you want to help. It's not all about money. 
  5. If you want to contribute money, make it a habit to contribute monthly. Set-up for monthly deduction to registered institutions. Eventually, you will not feel the burden to contribute and give sadaqah to others. Make sure you get the receipt from the institutions to claim for tax relief later and keep the receipt safely.
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