Budget 2021 Highlights for Individuals

1. The maximum tax relief for individual, spouse and children’s medical expenses for serious medical ailments be increased from RM6,000 to RM8,000.

2. The maximum tax relief for medical treatment, special needs and carer expenses for parents be increased from RM5,000 to RM8,000.

3. Tax relief for a full health screening be increased from RM500 to RM1,000.
Scope of health screening expanded to include expenses on vaccine such as for pneumococcal, influenza and Covid-19.
– This tax relief, given on vaccination expenses is for the taxpayer, spouse and child limited up to RM1,000.

4. Reduction of personal income tax rate by 1% for chargeable income bands from RM50,001 to RM70,000.

5. The income tax exemption limit for compensation on loss of employment will be increased from RM10,000 to RM20,000 for every completed year of service. Exemption is available for a period of two years of assessment.

6. Full stamp duty exemption will be given to transfer of ownership document and loan agreement for the purchase of a first home worth not more than RM500,000. This exemption will be for the purchase agreement from January 2021 to Dec 31, 2025.

7. The limit of the ‘lifestyle tax relief’ has been raised from RM2,500 to RM3,000, which is an increase of RM500 specifically for sports-related expenditure, including entrance participation fees for sports competitions. The scope of the relief has also been expanded to include subscription to electronic newspapers.

8. To encourage parents to save for the costs of their children’s higher education fees, a tax relief of up to RM8,000 for National Education Savings Scheme (SSPN) net savings will be implemented until year of assessment 2022.

9. The Private Retirement Scheme (PRS) tax relief of RM3,000 a year has been extended till year of assessment 2025.

10. The maximum tax relief for disabled husband and wife be increased to RM5,000 from RM3,500.

11. The scope of tax relief on self-education fee of RM7,000 be expanded to include courses of up-skilling or self-enhancement. The maximum relief for education fee under this scope to be limited to RM1,000.

12. Returning expert may choose to be taxed at a flat rate of 15% for a period of 5 consecutive years. This is extended till year 2023.

13. Imposition of excise duty at ad valorem rate of 10% on electronic cigarette and RM0.40/ml on liquid or gel used in electronic cigarette (including Vape)

14. Tourism tax is expanded to include accommodation booked thru online platform

15. Stamp duty exemption on insurance policy and takaful certificate relating to Perlindungan Tenang Products with yearly premium/contributions not exceeding RM100 be extended till 31 December 2025.

16. RM6.5billion allocated in Bantuan Prihatin Rakyat (BPR)

Household Income <RM2,500

1 child   RM1,200

≥ 2 children   RM1,800

Household Income RM2,501 to RM4,000

1 child   RM800

≥ 2 children   RM1,200

Household Income RM4,001 to RM5,000

1 child   RM500

≥ 2 children   RM750

Single individuals earning < RM2,500

21 years old & above RM350

17. Banks will enhance the TRA to B40 borrowers who are BSH recipients or BPR, and to micro enterprises with loans of up to RM150,000. Borrowers in this category will be given the following options:

Option 1: A moratorium on their instalments for a period of 3 months; or

Option 2: Reduce their monthly repayment by 50 percent for a period of 6 months

Eligible borrowers will only need to contact their banks to choose the options and complete the documentation.

For the M40 borrowers, the application process for the repayment assistance will be simplified. Borrowers would only need to make a self-declaration of the reduction in income in order to secure the repayment assistance. The facility for the B40 and M40 will commence in December 2020.

18. mySalam’s coverage broaden to include medical devices such as heart stent or prosthesis.

19. B40 aid recipients will be given a RM50 voucher under Perlindungan Tenang Voucher Programme as financial aid to purchase Perlindungan Tenang products such as life takaful and personal accident. At the same time, the Government will also extend the stamp duty exemption period on all Perlindungan Tenang products with an annual premium or contribution value not exceeding RM100 for another 5 years until year of assessment 2025.

20. minimum employee EPF contribution rate is reduced from 11 to 9% beginning January 2021 for a period of 12 months

21. Facility to withdraw EPF savings from Account 1 for EPF members who have lost their jobs. The amount allowed will be RM500 a month with a total of up to RM6,000 over 12 months. Eligible contributors can apply beginning January 2021.

22. EPF will allow members to withdraw from EPF Account 2 to purchase insurance and takaful products which are approved by EPF relating to life and critical illnesses coverage for themselves and their family.

23. For the year 2021, the Job Search Allowance will be extended by 3 months and the rate will be:
80% in the first month,
50% for the second till the sixth month
30% for the last three months.
For this purpose, an allocation of RM150 million will be provided and is expected to benefit up to 130 thousand job seekers.

24. The Government will also continue the PenjanaKerjaya – hiring incentive programme under PERKESO, with several enhancements as below:

i. Incentive for employees earning RM1,500 and above will be enhanced from a flat rate of RM800 per month to 40 percent of monthly income, subject to a maximum incentive of RM4,000;

ii. to encourage employment for the disabled, long –term unemployed, and retrenched workers, employers will be given an additional incentive equivalent to 20 percent of the employee’s monthly income making the total incentive to employers’ amount to 60 percent; and

iii. For sectors with a high reliance on foreign workers such as construction and plantations, a special incentive of 60 percent of monthly wages will be provided whereby 40 percent will be channelled to the employer while 20 percent will be channelled as a wage top up to the local worker replacing the foreign worker.

The above three incentives will be given for a period of six months; and

iv. For those employed under the PenjanaKerjaya, the maximum training rate which can be claimed by employers will be increased from RM4,000 to RM7,000 to enable workers to take up high skilled training and professional certifications.

To ensure the success of these four PenjanaKerjaya initiatives, a total of RM2 billion will be allocated, which is expected to increase the employment opportunities for 200 thousand job-seekers.

25. one-off RM50 into e-wallet accounts for those aged 18 to 20 years via the eBelia Programme.

26. To enhance the welfare of vulnerable groups, the Government has agreed to increase the monthly rate of financial assistance as follows:
i. The rate for Financial Assistance for Person With Disabilities (OKU) who are Incapable of Work is increased from RM250 to RM300;

ii. The rate for Financial Assistance for Older Persons, Carers of Bed-ridden Disabled Person (OKU) and Chronically Ill Patient is increased from RM350 to RM500;

iii. The rate for Incentive Allowance for Disabled Workers is increased from RM400 to RM450; and

iv. The rate for Financial Assistance for Children is increased from RM100 per child with a maximum of RM450 per family, to RM150 per child aged seven years to 18 years, or RM200 per child aged six years and below with a maximum of RM1,000 per family. It is hoped this increase will help with childcare and nutritious food.

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