Budget 2015: Tax Breaks / Relief for Individual and Corporate

GST was supposed to rationalise the tax collection so that if you consume more, you are taxed more. Especially the GST rated goods. For the essentials, as usual, no GST. Oh yeah, until today, you can still get a loaf of economy bread from Tesco for just RM2. There are 16 slices which is enough for 4 meals of 4 slices. That, would remain GST free. For Budget 2015, what has happened to the individual and the corporate tax? Something which Malaysia has been struggling to adjust every year because the subsidy amount is getting higher every year? There’s good news for both.
Individual
– Income tax reduced by 1 – 3% and hey, 300,000 additional individuals no longer needs to pay tax. Anyone who’s earning RM4,000 or below DO NOT need to pay tax.
– Chargeable income subject to the maximum rate will be increased from exceeding RM100,000 to exceeding RM400,000. I think majority of the senior managers who are reading this would be happy. Many earn over RM100,000 per annum easily but if it is RM400,000 then the number affected reduce tremendously.
– Current maximum tax rate of 26% will be adjusted to 24, 24.5 and 25%. In other words, savings in tax of 5.3%
– Tax relief increased from RM5,000 to RM6,000 for treatment of serious disease, each disabled child and purchase of basic support equipment for disabilities. None of us want this kind of relief if possible but for those who needed it, this is indeed a relief.
Conclusion:  I think the one which will give us back more money to spend would be the income tax rate % itself. In fact I think if the GST works well, this will continue to be reduced. Just work hard, invest smartly. You already pay less tax now as long as your earnings per year is RM400,000 and below. That include me as well. Haha. Anyway,I do not regard income tax as the best tax structure because there are lots of people whom I know are NOT paying tax due to the type of business or work that they do. Yet, these people drive much better cars than me. Hmm…..
Corporate
– Cooperatives’s tax rate reduced by 1% beginning 2015. That’s pretty soon.
– Secretarial fee and tax filing fee are allowed for deductions.
– Corporate income tax will be reduced from 25% to 24% beginning 2016. Okay, if you ask, why not from 2015? I would just smile and would not answer this.
– Income tax for SMEs would be reduced from 20% to 19%. For those who are thinking of entrepreneurship, I think moving forward you should think and just do it.
– If you do CSR, it’s now double exemption Until Dec 31 2020. Come on, there are lots of CSRs that a lot of companies can do. Question is, are they ready to do. I still think there are way too many companies which think CSR is just a waste of productive time. Sigh…..
– Double deduction for scholarships to students in vocational and technical courses in the certificate level. This is easy to calculate.
– Double deduction on expenses incurred to implement a structured internship for students at diploma and vocational levels. As usual, internships are hard to control. Some companies are trying to use ‘cheap labour’ but at least with this, some of them may change their ways, hopefully.
– If employees are sent for certain certificate qualifications from accredited vocational and professional bodies, these expenses are allowed further deductions.
Conclusion: Corporate Tax % in Malaysia has been said to be higher than many countries. Very true. However, the so called ‘many countries’ already have GST while Malaysia will only be starting in April 2015. If after GST, the corporate tax remain as it is, rest assured, there would be less companies being set up in Malaysia. If GST works well, the corporate tax is definitely going to be adjusted downwards.
Malaysia is now at an important juncture. I do not see per capita income or subsidy or even property prices as separate issues but all these are national issues. Per capita income cannot rise productively if there are always distortions which are beyond our control. Subsidy cannot continuously be for everybody. Target the industries you want to push up. Target the needy. Everyone must be given a chance to own a property. A very famous leader once said, ‘Without a home, no one would fight to defend that home when the enemies attack’. There’s also a Chinese saying, ‘Country. Without a home country, where is my home’. My home is a roof over my head for my family and I.
written on 11 October 2014
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