Tax updates: Budget 2020 - Highlights on Personal Tax

Increase in limit of tax relief for fees paid to childcare centers and kindergartens. To assist the financial burden of parents in providing childcare and early childhood education, it is proposed that individual tax relief be increased from RM1,000 to RM2,000.
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Extension of tax exemption for women returning to work from a career break. It is proposed that the existing tax incentive be extended for a period of four (4) years from Year of Assessment 2018 to Year of Assessment 2024.
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Expansion of scope of income tax relief for medical expenses. The scope of income tax relief on medical treatment expenses be expanded to cover the cost of fertility treatment.
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Extension of period of income tax deduction on Perbadanan Tabung Pendidikan Tinggi Nasional (PTPTN) loan amount paid by employers on behalf of employees. To encourage more employers to make PTPTN loan repayments on behalf of their employees, the personal income tax exemption for employees be extended for further period of two (2) years.
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Income tax rebate for departure levy imposed on outbound air passenger performing umrah and pilgrimage to holy places. The rebate is equivalent to the amount of levy paid, to be given and can be claimed twice in a lifetime.
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Donation for charitable and sports activities and projects of national interest. Deduction on approved donation be increased from 7% to 10% of aggregate income.
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Eligibility for SOCSO contribution will be expanded to cover self employed individuals in 18 key sectors and eligible spouse under i-Suri programme:

• Self-employed group – expanded to enable contributions by other self-employment groups across 18 key sectors, such as fishermen, farmers, sole proprietors and partnership.

• I-Suri for spouse – expanded to provide social safety coverage to participants.

​Angel investors who invest in investee companies in the form of ordinary shares are entitled for tax exemption equivalent to the amount of investment in the investee companies for applications submitted to the Ministry of Finance by 31 December 2020 (PR 11/2015). It is proposed the application period for tax incentive for angel investors be extended for another three years.
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Currently, the distribution of profits by Real Estate Investment Trusts (REITs) to unit holders of resident and non-resident individuals and other local entities are subject to 10% of withholding tax from Year of Assessment (YA) 2009 to YA 2019. It is proposed that the existing tax treatment be extended for another six years.
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Lastly, to enhance the progressiveness of the personal tax structure, it is proposed that a new band for chargeable income in excess of RM2 million taxable at a rate of 30% to be introduced, effective from YA 2020. The non-resident individual tax rate is similarly increased by 2%, from 28% to 30%. The new proposed income tax rate schedule for resident individuals is as follows:
 

-	Chargeable Income (RM)	Current Tax Rates (%)	Proposed Tax Rates (%)
For every ringgit of the first	5,000	0
For every ringgit of the next	15,000	1	1
​For every ringgit of the next	15,000	3	3
​For every ringgit of the next	15,000	8	8
​For every ringgit of the next	20,000	14	14
​For every ringgit of the next	30,000	21	21
For every ringgit of the next	150,000	24	24
​For every ringgit of the next	150,000	24.5	24.5
​For every ringgit of the next	200,000	25	25
​For every ringgit of the next	400,000	26	26
For every ringgit of the next	1,000,000	28	28
For every ringgit of the next	2,000,000	28	30

​(Effective from Year of Assessment 2020)

​If you need further clarification, please do not hesitate to contact our tax team.
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Source: www.bnm.gov.my/documents/budget/bs2020.pdf
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