source: [i3investor]
Special middle income tax relief for 2013 only - KiniBiz by Stephanie Jacob
Author: Tan KW | Publish date: Fri, 15 Nov 17:00
When announcing the relief in his Budget 2014 speech, Prime Minister Najib Abdul Razak who is also the nation’s finance minister said, “the government has never neglected the middle-income group, who form the largest number of taxpayers. They are also burdened by increasing cost of living,” and therefore, Najib said that the government would assist this group with a special tax relief of RM2,000 for those with a monthly income of up to RM8,000 or RM96,000 per annum.
With this relief, those who qualify will enjoy tax savings of up to RM480 after the special deduction from their aggregate income.
However KPMG Malaysia executive director Soh Lian Seng has pointed out that while the relief has been greeted with a lot of enthusiasm by many middle income earners, who are pleased that the government has seemingly addressed their concerns over the increasing cost of living – the issue is that many do not realise that it is only for the 2013 assessment year.
“Many people think that this is a permanent relief, however that is not accurate. If you carefully read the Budget speech, it says that the RM2000 relief is in fact only for 2013 year of assessment,” he emphasised.
Prior to the Budget announcement, many middle income earners had voiced their hope that the government would offer measures to ease the burden of living, especially in light of the fuel subsidy rationalisation and with more subsidy reductions likely to be seen in the coming year.
Along with this tax relief, the government also proposed several other changes to the income tax regime, including a 1% to 3% reduction to personal income tax rates and raising the chargeable income band to RM400,000 before the maximum 26% tax rate kicks in for year of assessment 2015; while the corporate income rate will be reduce by 1% for year of assessment 2016.The changes to the income tax regime, is seen to be in tandem and will coincide with the government’s decision to introduce a goods and services tax (GST) at a 6% rate in Apr 2015 in place of the existing sales and services tax.
