Tax Budget 2023 Highlights: Personal Tax

Some of the key tax highlights:

Personal Tax

1. Tax Rates Adjustment for Resident Individual

With effect from YA 2023, the income tax rate for tax resident individual would be revised where:

• every band of chargeable income between RM35,001 to RM100,000 will be reduced by 2 percentage points.
• every band of chargeable income from RM100,001 to RM1,000,000 will be increased between 0.5 percentage point to 2 percentage point.

Tax Planning Consideration:

1. High income salaried individuals can consider to restructure employment package.
2. Sole proprietor or partnership can consider switching to LLP or Sdn Bhd to take advantage of the lower MSME tax rates which are at 15% and subsequent band at 17%.

2. Personal Reliefs – Medical Expenses

Scope of tax relief for medical expenses for self, spouse and children will be increased from RM8,000 to RM10,000 and is expanded to include a maximum of RM4,000 of intervention expenditure related to Autism (ASD), ADHD, Global Developmental Delay, Intellectual Disability, Down Syndrome or Specific Learning Disabilities.

3. Personal Reliefs – Child Care Fees

This relief of RM3,000 which was applicable for fees paid to registered child care centre or registered kindergarten for children aged 6 and below will be extended up to YA 2024. (previously was valid for YA 2022 and YA 2023)

4. Personal Reliefs – Life Insurance Premiums

Tax relief for life insurance premium or takaful contribution on the life of tax payer or spouse would qualify for a tax relief or RM3,000 (non-public servant) or RM7,000 (pensionable public servant). It is proposed now this RM3,000 relief would be expanded to include voluntary EPF contributions.

Therefore, individuals who have not exhausted this relief, can consider voluntary contribution into EPF accounts – this would help to build up retirement savings in additional to tax savings. Remember that to utilise this additional relief, it has to be voluntary contribution. (Mandatory contribution will only be able to get maximum RM4,000 relief)

4. Personal Reliefs – SSPN / NESS Deposit

Many who have benefited from depositing into SSPN / NESS Deposits for their children, with a tax relief up to RM8,000 – however in the retabled budget it was not being extended beyond YA 2022. However, the good news is that subsequently, the government responded to the public plea and extended further such relief up to YA 2024.

5. E-filing of Income Tax Return

It is proposed with effect from YA 2024, income tax returns for all persons shall be done electronically. This is to expand the scope from the current requirement that applies only to companies and limited liability partnerships.

This change will mean that taxpayers who are not IT-savvy and not capable to use the myTax system will need to seek help or assistance for their tax returns.

6. CP500 Bi-Monthly Tax Instalments

Presently, a taxpayer who receives a CP500 instalment notice can apply to vary their tax estimate any time not later than 30 June for the relevant year. This variation is allowed only once. It is now proposed that another variation is allowed not later than 31 October for the relevant year. Therefore, a taxpayer who underestimated the first variation has the opportunity to make a second variation to avoid the under-estimation penalty.

Other Budget 2023 Proposals

• Bring me to PERSONAL TAX PROPOSALS
• Bring me to CORPORATE & BUSINESS TAX PROPOSALS
• Bring me to STAMP DUTY & RPGT PROPOSALS
• Bring me to E-Invoicing

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