Some of the items that might affect the individuals and the individuals’ income tax payer after the tabling of the Malaysia 2010 Budget,
Income Tax
– A reduction in the maximum individual tax rate from 27 per cent to 26 per cent.
– 15 percent tax rate for local and foreign knowledge workers who apply and start work in Iskandar Malaysia before 2015
– Increase in personal relief from RM8,000 to RM9,000
– Tax relief for EPF contribution and life insurance was increased from RM6,000 to RM7,00. This increase of RM1,000 is for relief on annuity premium paid from 1 January 2010 for retirement scheme offered by insurance companies.
– A new tax relief of up to RM500 per year was given for Internet broadband subscription fee from 2010 to 2012
Credit Cards and Charge Cards
– Service tax on credit/charge cards of RM50 and RM25 on the principal card and supplementary card respectively. With this service tax, card holders probably could take a look on the credit cards that they have , evaluate the benefits or rebates that they might enjoyed and justify whether to have the credit cards or charge cards. Do look together this service tax together with the RM1,000 tax relief, RM 500 Internet broadband subscription fee tax relief and reduction of 1 percent individual income tax to 27% from 26%.
Real Property
– The reintroduction of Real Property Gains Tax (RPGT) on disposal of real property with effect from Jan 1, 2010. RPGT was abolished on April 1, 2007. However there will have exemption of the RPGT, the exemptions to the individuals are given as follow;
1) The level of exemption is increased from RM5,000 to RM10,000 or 10 per cent of the chargeable gains, which ever is the higher
2) Gifts betwen parent and child, husband and wife, grandparent and grandchild and
3) Disposal of a residential property once in a lifetime
– Those purchasing buildings with Green Building Index (GBI) certificates from developers will be given stamp duty exemption on instruments of transfer of ownership.
– RM200mil allocation to revive some of the country’s abandoned low- and medium-cost housing projects
EPF
– 1Malaysia Retirement Scheme for two million self-employed and non-wage earners. Government will contribute five per cent, subject to maximum of RM60 per annum, for every contribution of RM100 on top of existing dividends paid by EPF. The government’s contribution is only for a period of five years where contributors may withdraw their savings upon attaining the age of 55
– Utilization of current and future savings in Account 2 together with the take home pay to get higher mortgage financing eligibility in 2010
– Reverting employees’ EPF contribution rate to 11 per cent in 2011
Sukuk
– Government will issue Islamic bonds 1Malaysia Sukuk worth RM3 billion. This bond will be offered to all Malaysians aged 21 and above, with a minimum investment of RM1,000 and a maximum of RM50,000. It will have a maturity of three years with a 5 per cent annual rate of return paid quarterly.
Islamic Financing
– 20 per cent stamp duty exemption on Syariah financing instruments has been extended to 2015
Related statistics
– 18 per cent out of 5.72 million EPF active members have enough savings at the age of 54 to finance their retirements.
– Malaysia’s population life expectancy at birth for male had increased from 71.1 in 2004 to 71.6 years in 2008, while for female; the life expectancy has increased from 75.9 to 76.4
– Malaysia has about two million active individual taxpayers
For an individual, may be we need to evaluate the impacts of the Malaysia 2010 budget to us and replan if there is a need on our financial planning in order to gain any benefits that might come from the 2010 budget.
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