08/11/2020
Here are the key points from the budget!
1) Reduction in tax rate for the RM50,001 to RM70,000 income bracket by 1% (current tax rate is 21%. [Effective from YA2021] -
2) Expansion in the scope of tax relief for medical expenses for self, spouse or child to include vaccination costs up to RM1,000 and threshold increased from RM6,000 to RM8,000. For complete medical examination, threshold is increased from RM500 to RM1,000. [Effective from YA2021]
3) Bantuan Saraan Hidup replaced with Bantuan Prihatin Rakyat with higher rates of assistance.
4) Tax relief up to RM8,000 for net deposits into Skim Simpanan Pendidikan Nasional. [For YA2021 and YA2022]
5) Increase in the tax relief for expenses relating to parent’s medical expenses, special needs and carer expenses from RM5,000 to RM8,000. [Effective from YA2021]
6) EPF employee contribution rate reduced from 11% to 9% for 1 year starting Jan 2021.
7) Withdrawals from EPF Account 1 allowed for 12 months (application start Jan 2021) - RM500/month up to RM6,000 per annum, and Account 2 for insurance, takaful and critical illness products.
8) Exemption per completed year of service (compensation for loss of employment) increased from RM10,000 to RM20,000. [For YA 2020 and 2021]
9) Tax relief for education expenses (self) are expanded to include expenses for qualifying courses, limited to RM1,000 for each year of assessment.
10) Tax relief for PRS contributions of RM3,000 extended to YA 2025. [Effective from YA2022 to YA2025]
11) Increase in tax relief for disabled spouse from RM3,500 to RM5,000. [Effective from YA2021]
12) Increase in lifestyle relief from RM2,500 to RM3,000 and expanded scope to include sport expenses (sports equipment, facilities entrance / rental fees and participation fees) and electronic newspapers. [Effective from YA2021]
13) Preferential tax rate of 15% allowed for 5 years to foreign citizens holding key positions (C-suites) in new strategic investments in companies that move their operations into Malaysia.
14) Additional tax deductions will be given to employers who employ senior citizens, ex-convicts, parolees, etc. This tax deduction is extended until 2025.
15) Geran Khas Prihatin Tambahan of RM1,000 will be provided to traders, taxi drivers, e-hailing, rental car and tourist drivers to mitigate the drop in tourism in Sabah.
16) [New] Equity Crowd Funding - tax exemption for individual investor to encourage crowdfunding.
17) One off payment of RM500 for frontliners.
18) Proposed increase in monthly social welfare for OKU and senior citizens.
19) Stamp duty exemption - SPA and loan agreement for purchase of first residential property worth up to RM500k. For SPA signed between 1 Jan 2021 to 31 Dec 2025.
20) Stamp duty exemption - SPA and loan agreement on abandoned housing project - extended to 31 December 2025.
21) Stamp duty exemption on insurance policies and takaful from 1 January 2021 to 31 December 2025.
22) Stamp duty exemption on ETF transactions between 1 January 2021 to 31 December 2025.
If any of these points affect you then please get in touch to see how best to act upon them, every situation is unique!
