Review of Individual Income Tax Rates for Residents
| Present | As of AY 2021, the income tax rate system for resident taxpayers is built on progressive rates on chargeable income, which range from 0% to 30%.
The rates are tabulated below:
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| Proposed | It is suggested that the income tax rate for residents be decreased by 2 percentage points for each bracket of taxable income between RM35,001 and RM100,000.
It is suggested that the income tax rate for residents in the taxable income range be changed as follows in order to make the individual tax system more progressive:
These are the savings and increases in income tax for individuals brought on by the changes in tax rates:
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| Effective Date | From YA 2023. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commentary | The speech outlining the Revised Budget 2023 had a suggestion like this. The Finance Bill 2023 is the current legislation that proposes the law’s modification.
For people earning between RM35,001 and RM100,000, the proposal advises lowering individual income tax rates by 2%, which would benefit almost 2.4 million low- to middle-income people. Nonetheless, the government has suggested raising tax rates for people making between RM100,001 and RM400,000 by 0.5% to 2% in order to retain a progressive income tax system. By taking full advantage of government-approved donations, tax breaks, and rebates, people can lower their taxable income. Tax preparation is essential, and people should consult with tax professionals to find tax-saving options while adhering to tax laws and regulations. |
Evaluation of Medical Treatment Cost Relief from Income Tax
| Present | Currently, income tax relief is given on medical treatment costs up to RM8,000 in the following circumstances:
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| Proposed | The following is a proposal to include intervention costs for children under the age of 18 who have autism, attention deficit hyperactivity disorder (ADHD), global developmental delay (GDD), intellectual disability, down syndrome, and specific learning disabilities within the scope of income tax relief for medical treatment expenses:
It is suggested that the amount of tax credit for medical treatment expenses be increased from RM8,000 to RM10,000 with the expansion of this scope. |
| Effective Date | From YA 2023. |
| Commentary | The speech outlining the Revised Budget 2023 had a suggestion like this. The Finance Bill 2023 is the current proposal for the law’s modification.
The goal of this proposal is to encourage and support parents or guardians of children with disabilities in pursuing early intervention, which can enhance their children’s overall development and well-being. Early intervention programs would become more inexpensive and accessible thanks to the proposed tax relief, which would lessen the financial strain on parents and legal guardians. |
Review of Income Tax Benefits for Life Insurance Premiums, EPF Donations, and Takaful Donations
| Present | From Year 2022, self-employed voluntary contributors to the pension plan, including civil officials, are included in the scope of the individual income tax relief for EPF contributors.
Only the following claims may be made by civil servants under the pension plan who do not voluntarily contribute to the EPF:
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| Proposed | The following changes will be made to the tax reduction for takaful contributions and life insurance premiums:
All contributors to the pension plan, including those who are self-employed, employed, and government employees, are subject to the new approach. |
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| Effective Date | From YA 2023. | ||||||||||||||
| Commentary | The speech outlining the Revised Budget 2023 had a suggestion like this. The Finance Bill 2023 is the current proposal for the law’s modification.
This suggestion would make it clear that the combined limit for all kinds of contributors, such as employees, self-employed people, or civil officials under the pension system, is RM7,000 for the entire amount of deduction for mandatory and voluntary payments to the EPF. Beyond the required savings made by their employer, voluntary contributions enable people to save more money. This may help them accumulate more funds in their EPF account, which may be necessary to cover their retirement expenses. Generally, people who want to save for retirement or want to reduce their tax liabilities can benefit from making voluntary contributions to the EPF. |
Income Tax Benefit for Childcare Facilities and Kindergarten Fees: A Review
| Present | As of now, a deduction is permitted for up to RM3,000 spent or deemed spent by an ordinary person for a child of that individual who is six (6) years of age or younger in the basis year at a childcare center authorized with the Director General of Social Welfare under the Child Care Center Act, 1984, or a kindergarten registered under the Education Act, 1996. This expenditure must be supported by receipts provided by the childcare center. |
| Proposed | YA 2024 is the new deadline for this proposal. |
| Effective Date | Up to YA 2024 |
| Commentary | The speech outlining the Revised Budget 2023 had a suggestion like this. The Finance Bill 2023 is the current proposal for the law’s modification.
Even if there is more than one child who meets the requirements, the deduction is only worth RM3,000. The amount of deduction permitted is capped at the amount paid if the payment is less than RM3,000. The tax deduction under this paragraph may only be used by the husband OR the wife who undertakes the expenses when a husband and wife are evaluated separately. |
Tax return e-filing is required by law
| Present | A person who is not a corporation, a limited liability partner, a trusted body, or a cooperative organization is currently urged to submit their tax returns electronically but is still permitted to do so manually by obtaining the necessary forms from the MIRB website. |
| Proposed | Anybody who is not a corporation, limited liability partnership, trust organization, or cooperative society must file their tax filings electronically (i.e. e-filing) |
| Effective Date | As of YA 2024. |
| Commentary | The plan is in keeping with the government’s strategy to use more electronic media and enhance the filing of taxes. Electronic submissions may eliminate human mistakes on the return form and hasten the completion of assessments. |
Evaluation of installment payments
| Present | Just once per YA, by 30 June of that YA, may a person who is not a company, an LLP, a trust organization, or a cooperative group modify his estimate of tax payable for that YA. |
| Proposed | A person may alter his estimate of tax payment for a YA via Form twice per YA, CP500 with the second rewrite due by the end of that YA’s October if they are not a Business, an LLP, a trusted body, or a cooperative organization |
| Effective Date | From YA 2024 |
| Commentary | The plan would allow the relevant YA to undergo a second amendment by October 31.
The goal of this idea might be to provide people more freedom in managing their tax obligations, especially if their income or other circumstances change throughout the year. It is possible to prevent individuals from being hit with unforeseen tax liabilities or penalties at the end of the year by allowing for adjustments to the projected tax payable. |