December 17, 2009


We are almost towards the end of the year. It’s the income tax filing again. But that’s nothing much as compared to the government recent announcement of GST or Good and Service Tax to replace the existing Service Tax. Though we understand that the government is in the dilemma in balancing the economic recession as well as, perhaps PETRONAS’ low Q2 profit, majority believes the announcement were made at the wrong timing.

The recent economic slowdown and Malaysian political scenarios do have an impact on government decision to introduce a new mechanism to address its deficit. And the sooner definitely the better. It is estimated in the first phase, government will be able to pocket a tangible RM 1 bill a year, not to mention billions more in the form of intangible value. This will allow a continuous and sustainable income for the nation. Can we imagine how these tangible and intangible values will be able to boost the economy? Not to mention the earlier announced stimulus package of RM67 bill, of course if it is ‘implemented’ accordingly.

The introduction of GST will suit better if the tax imposed on businesses, currently at 28% be reduced to lower percentage. This will allow free flow of FDI to Malaysia as the lower tax would make us bit competitive. Anyway, the GST principle is nothing than to have a fair taxation to all.

We should also understand that Oil & Gas (currently contributing more than 40% to GDP) might no longer be our savior come 2017 and beyond. Therefore an early introduction of GST might be good in the context of the government and its further development. But as rakyat I do understand when PR (who formed ‘anti GST’ Task Force recently) was against the implementation of GST. At the end of the day, the burden will be on us, the Malaysian people. Mungkin ada betulnya kata DAP if we consider to openly auction the 30,000 – 60,000 APs issued annually to private connected companies to import foreign vehicles which can in itself raise up to RM1.8 billion per annum.

So, the next time you wanted to buy house, allow another 4% GST on top of already high priced property. So cepat-cepatlah beli property sebelum implementation of GST expected in 2012 nanti.

Anyway, for the benefit of income tax filer and also for your update, below please find Budget 2010 Income Tax Changes that is relevant to individuals:

1) Maximum Tax Rate for chargeable income exceeding RM100, 000 be reduced from 27% to 26% (Effective Date: YA 2010)

2) Personal Relief be increase from RM8, 000 to RM9, 000 (Effective Date: YA 2010)

3) Relief on Contribution to EPF & Life Insurance is increase from RM5, 000 to RM6, 000. The Additional RM1, 000 relief is given solely in respect of annuity scheme premiums paid to insurance companies contracted with effect from 1 January 2010. It is also applicable to additional premiums paid on existing annuity schemes where payment commenced from 1 January 2010. (Effective Date: On or After January 2010)

4) Individual who pays for their own broadband subscription fees be given tax relief on broadband subscription fees up to RM500 per year. For those who wish to claim the RM500 Broadband Relief, please make sure the Broad band’s billing is under the Taxpayer's name and the payment made is either by Cash or If it is by using Credit Card, it must be charged to the Taxpayer own credit card. Otherwise it would not be allowed for deduction.

With the knowledge of above Income Tax Changes, you may start doing your Tax planning for Year 2010 as you fully utilize the Tax Relief given.

For those who are not really clear on Personal Relief entitlement for each individual, below find the list of Personal Relief which is applicable for YA 2009:

1) RM8, 000 Personal Relief

2) RM5, 000 Medical expenses for Parents. Parents medical bills or receipt to keep (even accepted Pharmacy Receipt)

3) RM5, 000 Medical expenses for taxpayer, spouse and children on serious diseases.
* RM500 Complete Medical Examination Expenses (RM500 Limit sharing the RM5, 000 Limit for serious diseases Medical Expenses)

4) Disable Person (further deduction)
* Own RM5, 000
* Spouse RM2, 500

5) RM5, 000 supporting equipment for Disable Person, spouse, children or parent. RM3, 000 Wife/Husband Relief if she has no source of income or elects for combined assessment.

6) Child Relief (claimed by either husband or wife)
* RM1, 000 per child (below 18 years of age)
* RM5, 000 per disable child (unmarried)
* RM4, 000 per child (above 18 years of age who is studying full time)
@ Overseas University, colleges or similar establishments
@ Local University, colleges or similar establishments

7) RM6,000 EPF & Life insurance premium

8) RM3, 000 Education or Medical premium

9) RM1, 000 Annuity premiums on annuity purchased through EPF Annuity Scheme.

10) RM5,000 Fees for acquiring technical, vocational, industrial, scientific, technological, law, accounting, Islamic financing, skills or qualifications at tertiary level or any course of study at post graduate level

11) RM1, 000 Purchase of books, journal, magazines and other similar publications (excluding newspaper or banned publications) for the use of taxpayer, spouse or children. To keep receipt for the purchase of any book or magazines except newspapers

12) RM3, 000 Purchase of Computer (Given once in three years)

13) RM3, 000 Net amount deposited into Skim Simpanan Pendidikan Nasional (SSPN) for child. Instead of saving in normal Kids Saving A/C, you may save in SSPN A/C in order to utilize the RM3, 000 Relief. You may start to save now but before 31 Dec 2009 in order to qualify for the Relief.

14) RM300 Purchase of sports equipment (Not include attire and shoes). To keep receipt for the purchase of sport equipment.

15) RM10, 000 Interest paid on housing loans for 3 Consecutive Years (S&P signing between 10 Mac 2009 to 31 Dec 2009)

Hope the above is helpful to all.

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