BUDGET 2021 – KEY HIGHLIGHTS

OVERVIEW & BUDGET ALLOCATION

  • Total budget allocation
    RM322.5bil
  • Three main objectives of Budget 20211. The wellbeing of the people
    2. Business continuity
    3. Resilience of the economy

PROPOSALS AFFECTING INDIVIDUAL

TAX RATE

  • The income tax rate of those earning between RM50,001 and RM70,000 will be lowered by one percentage point (from 14% to 13%).

TAX RELIEFS & EXEMPTIONS

  • The tax relief on expenses for medical treatment, special needs and parental care will be increased from RM5,000 to RM8,000.
  • Tax exemption will be given for the vaccination costs for taxpayer, spouse and children limited to RM1,000.
  • The tax relief limit on taxpayer, spouse and child medical treatment for serious illnesses will be increased from RM6,000 to RM8,000. This includes the tax relief for medical examination expenses which will be increased from RM500 to RM1,000.
  • The tax relief for disabled spouse will be increased from RM3,500 to RM5,000.
  • The Private Retirement Scheme (PRS) tax relief of RM3,000/year will be extended until year of assessment 2025.
  • The limit of the ‘lifestyle tax relief’ will be increased from RM2,500 to RM3,000, which is an increase of RM500 specifically for sports-related expenditure.
  • A tax relief of up to RM8,000 for National Education Savings Scheme (SSPN) net savings will be implemented until year of assessment 2022.
  • The scope for the tax relief for education expenses has been expanded to cover fees for attending up-skilling and self enhancement courses in any field of skills recognized by the Department of Skills Development, Ministry of Human Resources. This relief is only limited to RM 1,000/year until year of assessment 2022.
  • The income tax exemption limit for compensation paid upon job loss will be increased from RM10,000 to RM20,000 for every year of service completed for years of assessment 2021 and 2022.
  • To encourage more individual investors to participate in equity crowdfunding (ECF) platforms, an income tax exemption of 50% from the invested amount or limited to RM50,000 will be given.

EMPLOYEES PROVIDENT FUND (EPF)

  • EPF contributors will be allowed to withdraw RM500/month from EPF Account 1, up to a total of RM6,000/year, application starts from January 2021.
  • EPF contributors can also make withdrawal from EPF Account 2 to purchase insurance products for themselves and their family members.
  • The minimum employee EPF contribution rate will be reduced from 11% to 9% for a period of 12 months starting from January 2021.

STAMP DUTY

  • Stamp duty exemption for first residential home
    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 extended until year 2025 for the sale and purchase agreement executed from 1 January 2021 to 31 December 2025.
  • Stamp duty exemption for Perlindungan Tenang products
    Stamp duty exemption is given on the purchase of insurance policies and takaful certificates for Perlindungan Tenang products covering life, fire and flood insurance with an annual premium or contribution value not exceeding RM100. This exemption will be extended until year 2025 for insurance policies and takaful certificates issued from 1 January 2021 to 31 December 2025.
  • Stamp duty exemption on contract notes for trading of Exchange Traded Fund (ETF)
    This exemption will be extended until assessment year 2025 for the trading of ETF executed from 1 January 2021 to 31 December 2025.

OTHERS

  • Excise duty will be imposed on all types of electronic and non-electronic cigarette devices starting from 1 January 2021.
  • The scope of imposition of tourism tax will be expanded to accommodation premises reserved through online platform providers.

PROPOSALS AFFECTING COMPANIES

  • Additional tax deductions will be given to employers who employ senior citizens, ex-convicts, parolees, supervised persons and ex-drug dependants. This tax deduction will be extended until year of assessment 2025.
  • A Human Resource Development Fund (HRDF) levy exemption will be given for six months effective 1 January 2021 which covers the tourism sector and companies affected by Covid-19.
  • The tax exemption for private healthcare service exports will be extended until year of assessment 2022.
  • The stamp duty exemption for revival of abandoned residential property projectcertified by the Ministry of Housing and Local Government will be extended until year of assessment 2025.