BUDGET HIGHLIGHT 2020 with 2019 remarks

 

REAL PROPERTY GAIN TAX

 

YA 2020 – The acquisition price in computing gain on disposal for real properties acquired prior to year 2013 will adopt market value as of 1 January 2013 for disposal made from 12 Oct 2019.

 

YA 2019 – Real property gain tax for Malaysian Individuals will increase from 0% to 5% for disposal of properties after the fifth year.  However, low cost, low medium cost and affordable houses with price below RM 250,000 is exempted.

 

CORPORATE INCOME TAX RATE FOR SME

YA 2019 – Income tax rate for first RM 500,000 taxable income of Company with paid up capital below RM2.5m will be reduced from 18% to 17%.

YA 2020 – The chargeable income limit which qualifies for the preferential tax rate of 17% is to be increased to RM 600,000.

However, only companies with paid up capital or Limited Liability Partnerships (LLPs) with capital contribution of up to RM 2.5 million AND having an annual sales of not more than RM 50 million are eligible for the preferential tax rate of 17%.

 

UNABSORBED TAX RELIEFS

YA 2019 – Carrying forward of losses and allowances for tax reliefs are now restricted to a maximum of 7 years.

 

SECRETARIAL FEE AND TAX FILING FEE DEDUCTION

Tax deduction for Secretarial fee is RM 5,000 and Tax filing fee RM 10,000 respectively since YA 2015 for each Year of Assessment.

Effective YA 2020, it is proposed that the tax deduction for both fees limit be combined and allowed up to RM 15,000 for each Year of Assessment.

 

SPECIAL ALLOWANCES FOR SMALL VALUE ASSETS (SVA)

Currently, assets valued at not more than RM 1,300 each are eligible for special allowance of 100%. The total special allowance for the SVA is limited to RM 13,000 each YA for non SMEs. There is no limit for SMEs.

Effective YA 2020, it is proposed that the value of each SVA be increased from RM 1,300 to RM 2,000 for SMEs and non SMEs and the limit of total claimable SVA special allowance for each YA be increased from RM 13,000 to RM 20,000 for non SMEs.

 

PERSONAL TAX RATE

Effective YA 2020, non-resident tax rate is increased from 28% to 30%

For resident individual, a new band at a rate of 30% for chargeable income in excess of RM 2 million will be introduced. 

 

PERSONAL TAX RELIEF

SSPN

YA 2019 – Individual Income tax relief for the National Education Savings Scheme (SSPN) increased from RM 6,000 to RM 8,000

EPF & LIFE INSURANCE RELIEF

Tax relief for EPF and life insurance will be separated –

EPF relief                RM 4,000

Life insurance relief RM 3,000

For civil servants under the pension scheme, the tax deduction will be increased to RM 7,000

FEE PAID TO CHILDCARE CENTRES AND KINDER GARDENS

YA 2020 – Tax relief for fees paid to childcare centres and kinder gardens are proposed to be increased from RM 1,000 to RM 2,000 effective YA 2020. 

EXPANSION OF SCOPE OF INCOME TAX RELIEF FOR MEDICAL EXPENSES

Effective YA 2020, it is proposed that cost of fertility treatment is included as claimable medical treatment expenses.

 

DONATION

Currently, Tax deduction for contributions for charitable and sports activities, projects of national interest is capped at 7%.

Effective 2020, it is proposed that the cap to be increased from 7% to 10% of aggregate income. The tax deduction is also expanded to include the following –

  1. Cash endowment contribution to public university
  2. Cash wakaf contribution to state religious authority or body established by the state religious authority to administer wakaf;
  3. cash wakaf contribution to public university approved by the state religious authority to receive wakaf.