Tag: Tax Relief

Extension of Individual Income Tax Relief for Child Care Centre or Kindergarten Fees
Update: The Ismail Sabri Government Budget is no longer applicable. Malaysia’s national budget for 2023 was re-tabled again in February 2023.

To Download Revised Budget 2023 Speech and some other related publications – https://www.ccs-co.com/post/budget-2023-malaysia-madani

Current Position

To alleviate the burden of working parents, effective from the YA 2017, a new paragraph 46(1)(r) of the ITA was introduced to provide a tax deduction to individuals on the amount expended in respect of the payment for child care fees to a child care centre or a kindergarten for a child of that individual aged six years and below.

The establishment of the child care centre must be registered with the DSW under the Child Care Centre Act 1984 [Act 308] under the Ministry of Women, Family and Community Development, while a kindergarten is subject to the Education Act 1996 [Act 550] and must be registered with the State Education Department under the Ministry of Education.

The amount of deduction allowed is limited to a maximum of RM3,000 for the years of assessment 2020 and 2021. regardless of the number of children sent to the child care centre or kindergarten.

This income tax relief is extended until the year of assessment 2023 as announced in Budget 2022.

This deduction can only be claimed by a husband or a wife and must be supported by:-
1. birth document of the child, such as MyKid or birth certificate; and
2. receipts of the monthly fees issued by the such child care centre or kindergarten.
Separate Assessment

Where a husband and a wife are assessed separately, the tax deduction under this paragraph can only be claimed either by the husband or the wife who incurs the expenses.

Divorced Couple

Where a husband and a wife are divorced, the tax deduction can be claimed by the former husband and the former wife provided that they both made payment for the child care fees and that child is not the same child.

Proposal

To ease parents’ financial burden in providing early education for children, it is proposed tax relief of up to RM3,000 be extended for a year.

Effective Date

For the year of assessment 2024.
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19
February 26, 2023
Expansion of Scope on Covid-19 Detection Test Method
Update: The Ismail Sabri Government Budget is no longer applicable.

Malaysia’s national budget for 2023 was re-tabled again in February 2023; for more info, please visit – https://www.ccs-co.com/post/budget-2023-malaysia-madani.

This tax incentive included in Budget 2023, tabled in Parliament on 7 October 2022, was not included in Budget 2023 (Re-tabled) on 24 February 2023.
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Response from the MOF: The proposal will not be tabled again. It is no longer relevant as the country is moving towards an endemic phase, and self-assessment is encouraged for those experiencing symptoms.
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Current Position

Income Tax Relief of up to RM1,000 for COVID-19 detection test expenses, including the purchase of COVID-19 self-detection test kit, is given to the taxpayer, spouse or child.

These expenses comprise:
- COVID-19 detection test expenses conducted in a hospital or a clinic as supported with receipt issued by the hospitals/clinics/medical practitioners registered with the Malaysian Medical Council; or
- the purchase of a self-detection test kit supported with a receipt.
Proposal

It is proposed that the scope of tax relief be expanded to include tests carried out in a laboratory recognised by the Ministry of Health Malaysia so that existing COVID-19 detection test expenses can be treated equitably.

Effective Date [This tax incentive included in Budget 2023, tabled in Parliament on 7 October 2022, was not included in Budget 2023 (Re-tabled) on 24 February 2023]

From the year of assessment 2023.

Footnotes

In the exercise of the powers conferred by paragraph 154(1)(b), read together with paragraph 33(1)(d) of the Income Tax Act 1967 [Act 53], the Minister, on September 9, 2022, gazetted the Income Tax (Deduction for Expenses about the Cost of Detection Test of Coronavirus Disease 2019 (COVID-19) for Employees) (Amendment) Rules 2022 (P.U. (A) 291/2022) (“Amendment Rules“) to amend the Income Tax (Deduction for Expenses about the Cost of Detection Test of Coronavirus Disease 2019 (COVID-19) for Employees) Rules 2021 [P.U. (A) 404/2021] (“Principal Rules”).

The Amendment Rules amend the Principal Rules to state that, as an alternative, an employer wishing to claim such a deduction may present a receipt and the results of the Covid-19 Detection Test performed on its employees and issued by a health facility listed in the List of Laboratories Conducting RT-PCR Test for Covid-19 to the COVID-19 Management Guidelines in Malaysia No. 5/20201 issued by the Ministry of Health Malaysia.

To Read More:

https://www.ccs-co.com/post/double-tax-deduction-for-the-cost-of-detection-test-of-covid-2019
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Our website's articles, templates, and material are solely for reference. Although we make every effort to keep the information up to date and accurate, we make no representations or warranties of any kind, either express or implied, regarding the website or the information, articles, templates, or related graphics that are contained on the website in terms of its completeness, accuracy, reliability, suitability, or availability. Any reliance on such information is therefore strictly at your own risk.
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18
October 9, 2022
Extension of Individual Income Tax Relief for the National Education Savings Scheme
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Latest Update: The Ismail Sabri Government Budget is no longer applicable. 
 Malaysia's national budget for 2023 was tabled again in February 2023; for more info, please visit - https://www.ccs-co.com/post/budget-2023-malaysia-madani  
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To Download Budget 2023 Speech and some other related publications – https://t.me/YourAuditor/3276

Current Position

Income Tax Relief up to a maximum of RM8,000 for deposits made by a person during the year of assessment into Skim Simpanan Pendidikan Nasional for his or her kid (reduced by any withdrawals during that year) is provided

The relief, which was going to expire in the year 2020, has been extended until the year 2022.

Previously, the amount of relief that could be granted was RM6,000. It is increased to RM8,000 from YA 2019.

Proposal

It is proposed that a tax relief of up to RM8,000 on net annual savings in the SSPN be extended for a period of 2 years.

This would be done in order to further encourage savings among parents in order to finance the higher education of their children.

Effective Date

From the year of assessment 2023 until the year of assessment 2024.

Example

Amer and his wife each opened their SSPN accounts in 2022 for their son who is 13 years old.

During the year, Amer deposited savings of RM4,800 and his wife deposited a sum of RM8,000. They did not make any withdrawals in that year.

Amer and his wife are assessed separately for the YA 2022.

Amer is allowed a deduction for his deposits in his SSPN account of RM4,800 while his wife is allowed a deduction of RM8,000 for deposits made by her for the YA 2022.

If Amir and his wife deposit their savings in 2023 and 2024, respectively, they will be eligible for a tax deduction of up to RM8,000 in 2023 and 2024. This will allow them to pay less in taxes.

Footnotes

SSPN is a saving scheme introduced by the Perbadanan Tabung Pendidikan Tinggi Nasional (PTPTN).

PTPTN was established under the Perbadanan Tabung Pendidikan Tinggi Nasional Act 1997 [Act 566].

SSPN was introduced to enable parents to save and eventually finance their children’s education at higher learning institutions. To encourage individuals to deposit into SSPN account, paragraph 46(1)(k) of the ITA was introduced to allow a deduction for individuals who make deposits into the scheme.

The amount allowed as a deduction is the net contribution in the relevant year limited to a maximum of RM6,000 effective from the YAs 2012 to 2018. From YA 2019, the maximum amount of deduction for the net contribution is increased to RM8,000.

The net contribution is the amount of deposits made during a year reduced by the amount of any withdrawal made during that year.

SSPN accounts can be opened by parents for children aged 18 years and below and maintain the account until the child reaches the age of 29 years old.

Deposits made by parents to this account until the child reaches the age of 29 can be allowed as a deduction.

For children aged 18 years and above, they have the option to either open an account under their own name or under their parents’ name. If the account is opened under the child’s name, the child is not eligible for deduction on the deposit made into the account because the deduction under paragraph 46(1)(k) of the ITA is only eligible for the depositor who are the parents or the guardians. The parents are also not eligible for deduction since they are not depositor of the account when it is opened under the child’s name.
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22
October 9, 2022
Tax Relief on Voluntary Contribution to Employees Provident Fund
Update: The Ismail Sabri Government Budget is no longer applicable.

Malaysia’s national budget for 2023 was re-tabled again in February 2023; for more info, please visit – https://www.ccs-co.com/post/budget-2023-malaysia-madani

Current Position

Subsection 49(1) of the ITA provides that a deduction up to RM 7,000 can be claimed by an individual on –
1. payment of premium on life insurance policy;
2. contribution to an approved scheme (other than a private retirement scheme) made by the employee or by a self-employed person within the meaning of the Employees Provident Fund Act 1991 [Act 452]; or
3. contribution made under any written law relating to widow, widower and orphan’s pension or under any approved scheme within the meaning of any such law.
To explain in a more layman’s terms, individual income tax relief is given on contribution to approved provident funds such as Employees Provident Fund (EPF), takaful or life insurance premium payments as follows:-

From the year of assessment 2022, the scope of individual income tax relief for EPF contributors is expanded to include self-employed, voluntary contributors, including civil servants under the pension scheme up to RM4,000.

For civil servants under the pension scheme not voluntarily contributing to EPF, income tax relief on takaful contributions or life insurance premium payments can be claimed up to RM7,000.

Proposal

To further encourage voluntary contribution to increase savings in preparation for old age, it is proposed tax relief for life insurance premiums or takaful contributions be restructured as follows:

This new treatment applies to civil servants under the pension scheme.

Effective Date

From the year of assessment 2023.
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Our website's articles, templates, and material are solely for reference. Although we make every effort to keep the information up to date and accurate, we make no representations or warranties of any kind, either express or implied, regarding the website or the information, articles, templates, or related graphics that are contained on the website in terms of its completeness, accuracy, reliability, suitability, or availability. Any reliance on such information is therefore strictly at your own risk.
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20
October 9, 2022