Key highlights of Budget 2013

Personal tax and tax relief

• Individual income tax rate to be reduced by 1 percentage point for the first RM50,000 of chargeable income.
• Child tax relief to be increased from RM4,000 to RM6,000 per child (6x of basic child relief of RM1,000) for children aged 18 and above and receiving receiving full-time tertiary education, effective from year of assessment 2013.
• Tax relief of RM3,000 for savings in the National Education Savings Scheme (SSPN) will be increased to RM6,000 for YA 2012 – YA 2017.

Bantuan Rakyat 1Malaysia (BR1M 2.0)

• RM250 assistance money for a household earning less than RM3,000.This is the 2nd cash assistance be given since its first last year. The criteria remains the same per last year’s. Existing BR1M recipients are not required to register for the 2nd time. RM250 will be paid effective Jan 2013. New applicant may register commencing Nov 2012 online or IRB offices, State Development Offices and District Offices.
• In addition, RM250 BR1M assistance money is extended for single unmarried individuals aged 21 and above with monthly income not more than RM2,000.

Real Property Gain Tax (RPGT)

• RPGT will be increased to 15% for disposal of property within 2 years, 10% for disposal within 2 to 5 years, effective from 1 Jan 2013. After 5 years, it is not subject to RPGT. Currently, 10% RPGT for disposal within 2 years, 5% within 5 years, 0% after 5 years.

RM200 rebate for 3G smartphone purchase

• RM200 one-off rebate for purchase of one unit 3G smartphone from authorised dealers, for youths aged between 21 to 30 years with monthly income of RM3,000 or below.

Other goodies

• Book voucher of RM250 for students.
• Passport fees for senior citizens and children aged 12 and below be reduced by 50% from RM300 to RM150 (5 years) and RM100 to RM80 (2 years). Effective from January 2013. [Comment: Age threshold for senior citizens is not made known yet. Could it be citizen aged 55 and above?]
• All Malaysians with a monthly income of RM3,000 and below and who travel by KTM Komuter, will get 50% fare discount. Currently, only the disabled, retirees and students enjoy a 50% fare discount.
• Reduce sugar subsidy by 20 sen per kg from 29 Sept 2012.

PTPTN loan discount

• Repayment of full loan from 1 October 2012 until 30 September 2013, a discount of 20% will be given on their loan. [Comment: It is still unclear whether 20% discount is on the outstanding loan or entire loan amount. It is likely that 20% discount will be given on the outstanding loan amount]
• For those consistent repayment of PTPTN loan in accordance to their repayment schedule, a 10% discount per annum on their repayment will be given effective from 1 Oct 2012.

My First Home Scheme and 50% stamp duty exemption

• My First Home Scheme income limit for individual loans raised from RM3,000 to RM5,000 per month, or in the case of joint loans of husband and wife of up to RM10,000 per month.
• 50% stamp duty exemption on sale and purchase agreements and loan agreements for purchase of the first residential property of up to RM400,000 (increased from RM350,000), be extended to 31 Dec 2014.

Tax incentives for pre-schools

• Launching grant of RM10,000 to assist operators of Early Childhood Care and Education (ECCE) private centres in opening new high quality pre-schools.
• A double deduction on the allowance or subsidies provided to the employees and expenses for the maintenance of childcare centres be given to the employers.
• Income tax exemption for 5 years and industrial building allowance at the rate of 10% a year be given to operators of pre-school and private childcare centres.
• Income tax exemption for 5 years and industrial building allowance at the rate of 10% a year be given to operators of private pre-schools.

Tax status of a Limited Liability Partnership

• Partnership established under Limited Liability Partnerships Act, 2012 will have the similar tax status to that of a company under Companies Act, 1965.

Stamp duty exemption on instruments of transfer assets to Business Trust which is established under the Capital Market and Services Act 2007

• Business trusts are subject to income tax in the manner as a company. At the initial stage of establishment, business trusts are given a stamp duty exemption on instruments of transfer of assets while person disposing real properties or shares in a real property company to a business trust are given real property gains tax exemptions.

Revival of abandoned Housing Projects

• Tax incentives be given to encourage the involvement of the private sector in reviving abandoned housing projects. Time Bar for Tax Assessments
• It has been proposed that the time bar for raising tax assessments or additional assessments be reduced from 6 years to 5 years (except for cases related to investigation, false declaration, wilful late payment and negligence). The requirement to keep records for 7 years in accordance with the existing law remains unchanged.

Tax Incentives for Security Equipment

• 100% Accelerated Capital Allowance (‘’ACA’’) given on security control and surveillance equipment installed in factory premises (for companies) and buildings used for a business (for individuals) currently given until YA 2012 be extended until YA 2015. The ACA are also proposed to be extended to companies that install security control and surveillance equipment in residential areas.

For more detail information and analysis of the Budget 2013, kindly contact our tax division at tax@slng2u.com or +603 3342 2178 ext 177.