Income Tax Malaysia 2020 – What has changed and what you should know?

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Come March and April and it is income tax season. For those of you who are subjected to this, it is time to fill up your assessments, top-up if you haven’t paid enough or wait for your excess if there are any. As a rule of thumb, most of the percentage of income tax has not changed much but for those earning more than RM2 million per year, there will be a new band which is 30%.

Pandemic and tax

The COVID-19 pandemic has created a lot of hardship for Malaysians from all walks of life. The government of Malaysia has since given out many types of provisions to help Malaysians get back and to have better financial sustainability. One of the areas that they have focused on is in providing more tax reliefs for income tax earners. If you have been paying your income tax promptly through e-filing in the past, do take note that there are additional reliefs for Assessment Year 2020.

New Lifestyle Claim

Previously, you would have claimed up to RM2,500 for the purchase of digital devices. That is covering buying of books, sports equipment and also if you pay for the internet every month. This is a different one and you can now claim AN ADDITIONAL RM2,500 if you bought a digital device between 1 June 2020 and 31 December 2020. These devices, however, must be purchased only for your own, spouse or child’s use.

Meanwhile, should you be given a digital device by your employer as a gift, you will not be taxed. This is for a value of up to RM5,000 to stimulate more companies to help their employees work from home.

Domestic travel and tourism

Income tax has added an RM1,000 relief if you went on a holiday in the domestic destinations. This can be included as hotel stays and if you pay for tickets to tourist attractions. The period for this is between 1 March 2020 and 31 December 2021. You have to ensure that the hotel or premise is a registered business with the Commissioner of Tourism.

Tax relief for childcare and family planning

Under the PENJAYA Economic Recovery Plan, you can claim up to RM3,000 for childcare services that you pay for as tax relief. This has been increased from RM1,000 previously. Meanwhile, there will be income tax relief for fertility treatment of up to RM6,000. This means that if you make any payment for treatment like IUI (insemination treatment), IVF (in vitro fertilization) or any other form of treatment, you can claim tax relief.

Donations and contributions and sale of properties

If you have made any donations or contributions in 2020, the tax relief has been increased to 10% from the previous 7%. This includes any gifts or money to funds, sports body, projects and such that also covers any contributions for COVID-19 efforts like the Ministry of Disaster’s COVID-19 Fund.

Between 1 June 2020 and 31 December 2021, you will get an exemption for RPGT or Real Property Gains Tax if you sell your residential properties (provision of up to 3 properties for each individual).

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