MALAYSIA BUDGET 2011 SUMMARY

INDIVIDUAL INCOME TAX

RELIEF ON CONTRIBUTION TO PRIVATE PENSION FUND

Existing tax relief of RM6,000 on contributions made for life insurance premiums and/or approved fund contributions will be extended to the contributions made to a Private Pension Fund. Government to launch private pension fund in 2011. 

2011	2010
EPF	EPF
Life insurance	Life insurance
Private Pension Fund	-

MEDICAL FEE FOR PARENT SCOPE EXPENDED

Individual is allowed relied on medical fee for parents up to RM5,000 to the following:-

2011	2010
Treatment in clinics and hospitals	Treatment in clinics and hospitals
Treatment in nursing homes	Treatment in nursing homes
Dental treatment excluding cosmetic dental treatment	Dental treatment excluding cosmetic dental treatment
Expenses to care for parents	-

Tax relief be include expenses relating to the care are for parents such as :-

- Parents who suffer from diseases or with physical or mental disabilities
- Who need regular treatment certified by a qualified medical practitioner

Such treatment and care provided include treatment and care at home, day care centres or home care centres.

Qualifying expenses (supported with receipts) :

• treatment and medical expenses by registered medical centres, pharmacies or licensed medical stores; or
• expenses for the care of parents supported with receipts or written certification by carers (does not include the tax payer claiming the relief, the spouse and the children) certifying that the care was provided and the total payment involved. Foreign hired carers are required to posses valid visa/special work permit for the care of parents of taxpayers; or
• expenses on special needs for parents certified by qualified medical practitioner

STAMP DUTY EXEMPTION ON INSTRUMENTS OF TRANSFER FOR RESIDENTIAL PROPERTY

Stamp duty exemption of 50% is given on transfer of a residential property priced not exceeding RM350,000

Residential property price	Sales and purchase agreement executed on	Conditions
RM250,000 and below	8 September 2007 – 31 December 2010	For purchase of ONE residential property
RM350,000 and below	1 January 2011 – 31 December 2012	For purchase of FIRST residential property

STAMP DUTY EXEMPTION ON LOAN AGREEMENTS FOR RESIDENTIAL PROPERTY

Stamp duty exemption of 50% is given to loan agreement instruments for residential property

Residential property price	Sales and purchase agreement executed on	Conditions
RM250,000 and below	30 August 2008 – 31 December 2010	For purchase of ONE residential property
RM350,000 and below	1 January 2011 – 31 December 2012	For purchase of FIRST residential property

COMPANY INCOME TAX

WITHHOLDING TAX – PENALTY ON UNDERSTATEMENT OF INCOME

Presently, if taxpayer fails to deduct or remit any withholding tax, he is imposed an increase in tax of a sum equal to 10% of the amount which he fails to pay is imposed. In addition, the taxpayer would be disallowed a deduction for the payment made.

 However, if taxpayer pays the withholding tax and penalty imposed, the taxpayer would be allowed to claim a deduction of the payment made.

 It is proposed that if payer fails to deduct and remit withholding tax but made a claim for deduction on the payment that is subject to withholding tax in a return, a penalty on incorrect return under Section 113(2).

UTILISATION OF TAX PAID IN EXCESS

Presently, there is no legislation for the DG to utilise the excess of tax payable under the Income Tax Act 1967 (ITA) against the Petroleum (Income Tax) Act 1967 (PITA) or Real Property Gains Tax Act 1976 (RPGT).

It is proposed that any income tax overpaid may be utilised by the Director General to set off any tax payable under the ITA or PITA or RPGT.

Similarly, it is proposed that any income tax overpaid under the PITA or RPGT shall utilised for the payment of tax which is due and payable under ITA.

 
INDIRECT TAX
 
REVIEW OF SERVICE TAX RATE

The rate of service tax on all taxable services be increased from 5% to 6% effective from 1 January 2011.

SERVICE TAX ON PAID BROADCASTING SERVICES

Presently, no service tax imposed on paid television broadcasting services.
 Effectively from 1 January 2011, service tax of 6% is charged on the monthly subscription fees on paid television broadcasting services.