My brother-in-law told me yesterday that December is the most “expensive” month of the whole year. This means he has to pay a lot of bills during this final month. The biggest single expenses is life insurance premium!

I told him that he is a smart guy. He agrees too because this is what we call the “year-end-strategy”, in terms of tax planning.

In order to pay less income tax, one of the most effective method is to “increase your expenses” by utilizing the tax relief in certain areas. In order to have the greatest benefit for yourself, you can save and invest the money, and only spend on that area in December. This will allow you to utilize the full tax relief early next year, just a few months away!

For example:

1. Life insurance premium
Most tax payers know that there is a relief of RM6,000 for life insurance premium plus EPF contribution, and another RM3,000 for education and medical policy. If you buy these insurance policies in December, you can pay it in yearly mode. All the premium paid will be tax deductible early next year.

2. Upgrade Your PC

3. Do a full medical check up

4. Buy books

5. Upgrade your sport equipment

6. Save in SSPN account

Today is only 22nd of December, you still have a few days time to practise this year-end-strategy.

In fact, I just had a few customers who called me up to buy some new insurance policies.

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Personal finance author and trainer

    1 Response to "The Year-end-strategy of Personal Finance"

    • marxy

      To complement KC advices, I would like to opinion that one should only does the above mentioned out of necessity, not out of the sake of reducing tax. Bear in mind that you are “spending” to save your tax. Worse still you only get tax “relief”; not direct tax “rebate” (unless you could accumulate those relief to force your taxable income to be below RM35K). For example, you should not buy a new racquet (just to maximize your claim for item 5 above) while you still have a usable one. You won’t spend RM100.00 to save RM10.00, would you?

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