Budget 2015 Summary

INDIVIDUAL INCOME TAX 

           Personal relief

	YA 2015	YA 2014
Medical expenses for taxpayer, spouse and children on serious diseases	RM6,000	RM5,000
Child relief : Disable	RM6,000	RM5,000
Purchase supporting equipment for disabled taxpayer, spouse, children or parent	RM6,000	RM5,000

1.        Reduction in individual tax rate (Effective from YA 2015)

Chargeable income (RM)	Current rate (%)	Proposed rate (%)	Reduction (%)
0-5,000	0	0	0
5,001-20,000	2	1	1
20,001-35,000	6	5	1
35,001-50,000	11	10	1
50,001-70,000	19	16	3
70,001-100,000	24	21	3
100,001 – 250,000	26	24	2
250,001 – 400,000	26	24.5	1.5
Above 400,000	26	25	1

1.3         Monthly Tax Deduction (MTD) As Final Tax

In Budget 2014, employees whose total income tax is equivalent to the amount of monthly tax deductions (MTD) may elect not to submit tax return if:-

-     He has only one source of income i.e. employment income (without Benefits-In-Kinds and living accommodation)

-     Tax deducted by his employer in accordance with Income Tax (Deduction From Remuneration) Rules 1994

-     He was employed by the same employer for 12 months

-     His tax liability not borne by employer

-     Spouse did not elect for combine assessment.

Effective from YA 2015, MTD as the final tax paid will also apply to:

i)     Employee who receive employment income under:-

a)      Section 13(1)(b) – Benefit-in-kind

b)      Section 13(1)(c) – Accommodation provided by employer

ii)   Employee do not need to have an employment of 12 months in a calendar year.

 COMPANY INCOME TAX

Reduction in Company Tax Rate  (Effective from YA 2016)

Company	Current tax rate	Proposed tax rate
Resident company with paid up capital < RM2.5 million On first RM500,000 chargeable income Subsequent balance	20% 25%	19% 24%
Resident company with paid up capital > RM2.5 million	25%	24%

Small value assets

Description	YA 2015	YA 2014 or prior
The value of the qualifying plant expenditure not more than	RM1,300	RM1,000
Maximum limit to claim	RM30,000	RM10,000

(The maximum limit of RM30,000 is not applicable to SME)

 Due Date For Monthly Tax Instalment

Currently, due date for monthly tax instalment is on 10^th of each month.

It is proposed that the due date for monthly tax instalment be extended to 15^th of each month.

(Effective from 1 January 2015)

Accelerated Capital Allowance : ICT Equipment

It is proposed that expenses on the purchase and installation of Information, technology and communication (ICT) equipment and software be given ACA with an initial allowance of 20% and an annual allowance of 80%.

(Effective from 2014 – 2016)

Automation Capital Allowance

To encourage automation in manufacturing sector, additional capital allowance be given to manufacturers in the following industries:

Industries	First qualifying expenditure	Incurred in year of assessment	Capital allowance rate
High labour intensive industries (rubber products, plastics, wood, furniture and textile	RM4 million	2015 - 2017	200%
Other industries	RM2 million	2015 - 2020	200%

(Effective upon the gazetted of the Finance Act)

  Related Parties Loan Transactions

Effective from YA 2014, Interest receivables shall be treated as income when it is received. Interest income treated as being received when it is obtainable on demand.

Any loan between related parties, interest income deemed obtainable on demand when interest is due to be paid.

It is proposed that the loan to include loans between:-

a)      Persons one of whom has control over the other

b)      Individuals who are relatives of each other; or

c)      Persons both of whom are controlled by some other persons

Section 140(8) of the Income Tax Act 1967 defined Relative as parent, child, brother, sister, uncle, aunt, nephew, niece, cousin….

Further, it is proposed that where a relevant person is entitled to gross income

a)      accrued in / derived from Malaysia

b)      related parties transactions

c)      the amount first become receivable to the relevant person in relevant period

The relevant person is deemed to be able to obtain on demand the receipt such amount in the basis period immediately following the relevant period.

(Effective from YA 2015)

Revised in penalty rate

Type of offence	YA 2015	YA 2014 or prior
Failure to furnish return or give notice of chargeability	Maximum fine revised to RM20,000	Maximum fine is RM2,000
Leaving Malaysia without payment of tax	Maximum fine revised to RM20,000	Maximum fine is RM2,000
Offences under Section 120 (1)	Maximum fine revised to RM20,000	Maximum fine is RM2,000

(Effective upon the gazetted of the Finance Act)

REAL PROPERTY GAIN TAX

Retention sum

It is proposed that the amount retained by acquirer of real property on acquisition of the property to be increased from 2% to 3% of the total value of the consideration and remit the amount withheld to the IRB within 60 days from the date of disposal.

(Effective from 1.1.2015)

Property disposal by way of Gifts

It is proposed that the disposal of an asset by way of gift between:-

a)      Husband and wife

b)      Parent and child

c)      Grandparent and grandchild

i)                 Who is not citizen or permanent resident, the recipient shall be deemed to acquire the asset at an acquisition price equal to the acquisition price paid by donor plus the permitted expenses incurred by donor.

ii)               Who is a citizen or permanent resident and the gift is made within 5 years after the date of acquisition by the donor, the recipient shall be deemed to acquire the asset at an acquisition price equal to the acquisition price paid by donor plus the permitted expenses incurred by donor.

(Effective from 1.1.2015)