With regards to Budget 2019 announcement, below the payroll-related aspects of the Budget:

1. Income Tax Relief on Contributions to an Approved Provident Fund Or Takaful Or Life Insurance Premiums [Amendment of section 49, Income Tax Act 1967]

  • Currently, an individual taxpayer is eligible to claim income tax relief on contributions made to approved provident funds such as the Employees Provident Fund (EPF) and payment for life insurance premiums or takaful contributions up to RM6,000 per year of assessment.
  • As proposed in the Budget 2019, the above relief be increased to RM7,000 and separated as follows:

i) income tax relief on contributions to approved provident funds up to RM4,000; and

ii) income tax relief on takaful contributions or payment for life insurance premiums up to RM3,000.

  • For public servants under the pension scheme, the income tax relief on takaful contributions or payment for life insurance premiums is given up to RM7,000.

Notes: As checked with LHDN, there has minor changes on Borang TP1 & TP3 but the changes will only announce on end of Dec 2018 or Jan 2019.

2. Income Tax Relief on Nett Annual Savings In The National Education Savings Scheme – A Limit Of Up To RM8,000 [Amendment of section 46(1)(k), Income Tax Act 1967]

  • Currently, the income tax relief of up RM6,000 on net annual savings in the National Education Savings Scheme (SSPN) is eligible to be claimed annually by tax payers effective from year of assessment 2012 until year of assessment 2020.
  • As proposed in the Budget 2019, the individual income tax relief on net annual savings in the SSPN be increased from RM6,000 to RM8,000 from year of assessment 2019 until year of assessment 2020.

 3. EPF Contribution for working retirees

  • It is proposed that the employer’s portion of Employees Provident Fund (EPF) contributions for such categories of employees be reduced from 6% to 4%. While the mandatory employee’s contribution be reduced from 5.5% to zero.

Effective: 1st January 2019

4. SOCSO – Foreign workers to be covered under SOCSO/EIS

Effective: 1st January 2019

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