It is budget time again and most Malaysians are wondering whether there would be any tax "goodies" for them.
Based on observations, there were comments on reductions in personal income tax rates, the rising costs of living, affordable housing etc.
The following are "goodies" that could be (hopefully) included in the coming budget.
Reduction in personal income tax rates
With the implementation of goods and services tax on April 1, 2015, it was anticipated that there would be a reduction in personal income tax rates in the 2016 Budget. However, to the surprise of many, an unprecedented move to increase the tax rate for taxable income exceeding RM600,000 was announced instead.
Hopefully, for this coming budget, there would be a reduction in the personal income tax rates. If there is no reduction in personal income tax rates, in order to alleviate the burden of the middle-income group (i.e. M40s), perhaps the taxable income bands applicable to the tax brackets for this income group could be broadened.
Alternatively, the chargeable income level for the tax rebate of RM400 could be increased from RM35,000 to RM50,000. Additionally, the tax rebate of RM400 could be increased.
a) Special relief
A one-off special relief of RM2,000 had been given for M40s in year of assessment 2013 and 2015. This special relief previously gave taxpayers earning up to RM8,000 a month an additional RM2.000 deduction to be set-off against their taxable income. In order to ease the burden of M40s, this special relief could be reintroduced and be given for two years or more.
b) Relief on broadband subscription fees
It would be awesome if broadband subscriptions fees on the actual amount incurred be given tax deductions since most people are likely to have broadband. Previously there was a relief of RM500 but it is no longer applicable effective from year of assessment 2013.
c) Relief on Employees Provident Fund (EPF) contributions and life insurance premium
In the 2016 Budget, an increase in relief for spouses, children, fees on acquiring relevant qualifications and a new relief for parental care and Socso contributions were announced.
The much anticipated increase in relief for EPF and life insurance premium were not provided. It would be welcomed if an increase on the relief for EPF and life insurance premium (since the EPF of the M40s is already above RM6,000) be announced.
d) Deduction of interest on housing loans
It would be great if a relief on interest paid on a housing loan for first time owners be given in the coming budget to reduce the rising cost of living following the call from the people for affordable housing.
Currently, the relief on interest paid on a housing loan of RM10,000 is only applicable for purchases of property between March 10, 2009 and Dec 31, 2010.
In conclusion, hopefully some of the above "goodies" would be unveiled in the coming Budget 2017 as few of the reliefs had been provided for in the past.
Long Yen Ping is executive director of KPMG Tax Services Sdn Bhd
This article first appeared in The Star, on October 18, 2016.