NST 2009 - Post Budget 2010 - Impact on Individual

This is my first participation in the annual National Seminar of Taxation conducted by LHDN, a very comprehensive and informative seminar after the announcement made to the Budget 2010 last Friday.

1. Personal Relief of RM8,000 has been increased to RM9,000 w.e.f Year of Assessment (YA) 2010. So for next year filing of return, it will remain as RM8,000 because we are doing Previous Year Return.
2. Subscription of Broad Band is now a relief that you can deduct a maximum of RM500 from your Chargeable Income (CI). The officer has clarified further for individual to be eligible for this relief, there are several conditions:-
• Monthly bill under individual name for separate assessment, and either one of the individual name for joint assessment is eligible for the relief. The amount of relief is restricted to billed amount and up to the maximum of RM500.
• Expended / deemed expended in basis year. For individual, basis year would be starting from 1st January and ending at 31st December of every year. As prudent concept in Accounting, all bills that billed for the month within the basis year (i.e. 1st December 2010) although it is not paid, is deemed expended in the basis year.
• With effect from YA 2010 - 2012.
• Eventhough the subscription fee was paid by the company as a tax-free allowance, individuals can still utilize this relief as long as it is billed to the individual name.
3. The current provision of relief on EPF, Life Insurance and Annuity were up to a maximum of RM6,000 and now has been increased to RM7,000 w.e.f. YA 2010. However, the additional RM1,000 is only eligible for the payment of New Annuity (upgraded or new contract on or after 1st January 2010), a private pension scheme that offered by Insurance Companies. For example, if Mr. A has contributed RM7,000 of EPF, RM2,000 of Life Insurance, and RM800 for New Annuity in YA 2010, he will be eligible to claim [(EPF + Life = RM9,000) Restricted to RM6,000 + (New Annuity = RM800) = RM6,800. Mr. A will not able to utilize the balance RM200 for his EPF and Life Insurance balance after the maximum amount of RM6,000.
4. Tax rates for Non-Resident Individual has been decreased 1% from 27% to 26% w.e.f. YA 2010.
5. For Resident Individual the top band of scale tax rate has been decreased 1% from 27% to 26% w.e.f. YA 2010, other lower bands remain unchanged.
6. A proposal of tax rate for selected resident individual whom is a knowledge worker working in specified region of Iskandar Malaysia and engaged in qualified activity will enjoy a flat rate of 15% w.e.f. YA 2010. The eligibility will be determined by Director General of Inland Revenue Board and further details will be announced later.
7. To promote prudent spending, the government also proposes that service tax of RM50 per year be imposed on each principle credit card and charge card, including those issued free of charge. The government also proposes that service tax of RM25 a year be imposed on each supplementary card. The charges will start be with effect from 1st January 2010. The officer has clarified that this measure is included in those cards being issued prior than 1st of January 2010.
8. There is some amendments in Real Property Gain Tax (RPGT) w.e.f. YA 2010:-
• Submission of Return - both CKHT1 & 2 are required to submit within 60 days from date of disposal. Current provision is Disposer to submit CKHT1 and Acquirer to submit CKHT2 within 1 month from date of disposal.
• Retain and Pay part of Consideration - under current provision, the acquirer is required to retain amount of 5% from consideration (payment for such property) and wait for Director General of Inland Revenue Board to issue requisition to Acquirer and instruct the Acquirer to pay whole / part sum retained within a time specified in the requisition letter. It is proposed that Acquirer to retain & pay Director General of Inland Revenue Board 2% from consideration within 60 days from disposal date. Any failure to payment of such sum will be penalized for additional 10% of the sum. If Acquirer failed to retain the amount from consideration then he/she will need to fork out from his/her own pocket as it is considered due to the IRB. There will be no requisition issued.
• Chargeable Gains & Allowable Losses on Disposal of property: current provision of allowable losses @ appropriate rate which is being deducted as tax rebate to be replaced by a deduction of allowable loss from chargeable gains. Unabsorbed allowable losses can be carried forward.
• Incidental costs - Acquisition price excludes interest paid on capital employed.
• Exemption for individuals - Increased from RM5,000 to RM10,000 or 10% of chargeable gain; whichever is greater..
• During the transition, for all tax rebate unabsorbed till YA 2007 (ending 31st March 2007), can still be deducted from total tax assessed from YA 2010 till fully utilized.
• A flat Tax Rate of 5% is applicable to disposal in 5th year and above after the date of acquisition, calculated as [(Disposal price - Acquisition price - Exemption - Allowable Loss B/F) x 5%]
9. Safeguarding welfare of students - Netbook with free broadband service to be offered to promote broadband services amongst university students for RM50 per month for 2 years. As a start, Telekom Malaysia will offer this package to 100,000 local university students effective from 1st January 2010. Priority will be given to first year students and those from low-income families.
10. Restructuring of Fuel Subsidy Scheme - The fuel subsidy is currently enjoyed by all motorists, including luxury vehicle owners and foreigners which is a strain on Government finance. The government is implementing a fuel subsidy management system in early 2010 to promote a more people-friendly system utilizing MyKad and the existing infrastructure. This approach will ensure the subsidy provided to the targeted groups and also for other commodities.

It concludes that the government is actually working towards to ensure recovery of national economic by lowering the tax rates. However, personally I still think that it is not really good enough to help the public as 1% does not consider a lot in reduction. The increase and newly introduced reliefs are actually great approach to help lower down the tax payable for individuals. In contrast of the imposed of RPGT at the flat rate of 5% can be interpret as a revenue recoupment from the reliefs and reduce in tax rates for the government.


Do share with us if there is any additional information that you might know and that will benefit all of us as Rakyat of Malaysia.