Tax relief for e-newspapers

Kota Kinabalu: Budget 2021 provides for an allocation of RM500 under lifestyle tax relief which will expand to cover subscription for electronic newspaper with effect from taxation year of assessment 2021, just like printed newspaper subscription since 2020.

This was detailed by Tax Director of Messrs. Cheng & Co., accountant Lam Kwai Soon (pic) in a G&A Group organised Zoom seminar “2021 Budget Talk & CEO Outlook” moderated by Dato’ George Lim of G&A Group on Monday, Nov 16.

“The lifestyle tax relief has been increased to RM3,000 from the current maximum of RM2,500 in which RM500 is allocated for cost of purchasing sport equipment; entry/rental fees for sports facilities and participations in sports competitions, now expanded to cover subscription for electronic newspaper with effect from 2021.”

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“The maximum tax relief for individual with chargeable income range between RM50,001 to RM70,000 has been reduced by one per cent from the current 14 per cent to 13 per cent with effect from 2021.”

“The tax exemption for compensation upon retrenchment has been doubled from the current RM10,000 to RM20,000 for every complete year of service with effect from taxation year of assessment 2020 and 2021.”

On tax relief for education fees (self), the maximum claimable remains at the current RM7,000, but RM1,000 that is inclusive in this relief can be deducted in 2021 for attending up-skilling and self-enhancement courses in any field of skills recognised by the Department of Skills Development of the Ministry of Human Resources with effect from the taxation year of assessment 2021 until 2022 only.

The maximum tax relief for the net saving relief on the National Education Savings Scheme (SSPN) remains at RM8,000, but under Budget 2021, it has been extended by two years with effect from taxation year of assessment 2021 to 2022 as parents should not rely solely on the government to fund for their children’s tertiary education, according to the National Higher Education Fund Corp (PTPTN) that provides two products – the SSPN-i and SSPN-i Plus, which both are shariah-compliant savings plans for the public.

For the maximum tax relief (2012 to 2021 ten years scheme) on Private Retirement Scheme (PRS), it remains at RM3,000, but under Budget 2021, the tax relief is extended from the taxation year of assessment 2022 until 2025 only.

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For tax incentive for talented individual under the Returning Expert Programme (REP) to be applied through Talent Corp, the flat tax rate remains at 15 per cent on employment income for five years. Under Budget 2021, the application process has been extended to Dec 31, 2023.

However, import duty and excise duty exemption of one CBU vehicle or excise duty exemption for one CKD vehicle is subject to total exemption limited to RM100,000, a reduction of RM50,000 from the current 2020 exemption of RM150,000. It remains to be seen with the signing of so many free trade agreements including the current RCEP just signed, whether the government is seriously committed to reduce the high prices of motor vehicles that burden the motoring public with high hire purchase debts coupled with poor public transportation system in Sabah.

Under Budget 2021, employers will be entitled to additional tax deduction for employing senior citizens and ex-convicts. This tax deduction will be extended until the taxation year of assessment 2025. The conditions are:

1. Full time employment basis.
2. Monthly remuneration is not more than RM4,000.
3. Employer and employee are not the same person.
4. Employer is not a relative of the employee.

Tourism sector and companies affected by Covid-19 pandemic can enjoy six months levy exemption by HRDF effective from Jan 1, 2021.

The bulk of the government’s revenue will still be derived from income tax (40.9 per cent), followed by borrowings and making use of government assets (26.5 per cent), non-tax revenue (19.4 per cent) and indirect tax like SST (13.2 per cent).

Without GST, the government aims to improve its revenue collection strategy by addressing the smuggling of high-duty goods. Hence, various measures have been proposed, with an eye to curb the rampant illicit trade in the tobacco market, but poor enforcement standards in Malaysia and corruption have always been a bane.

The imposition of excise duties on devices of new generation cigarettes and consumable liquids may imply the forthcoming of a proper regulatory framework for such next generation products.

Under Budget 2021, the federal government’s largest operating expenditure is to pay civil servants as their emoluments comprised 26.2 per cent with retirement charges at additional 8.6 per cent, followed by debt service charges at 12.1 per cent, while grants and transfer to state governments only comprised 2.4 per cent.