Malaysia regulation update on tax reliefs for employees effective from 01 January 2024
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Changes in tax reliefs
The applicable forms “TP1” & “TP3” has also been revised in this regard.
| TP1 tax reliefs | Changes for 2024 |
|---|---|
| Medical treatment, special needs, and carer expenses for parents | The scope of the relief has been expanded to cover: • dental treatment expenses • full medical examination (up to RM 1,000) The overall limit for the relief remains as RM 8,000. |
| Education fees (self) for upskilling and self-enhancement course fee | The relief is extended till year 2026. |
| Medical expenses for self, partner, and child | The scope of the relief has been expanded to include: • dental examination and treatment (up to RM 1,000) |
| Lifestyle personal expenses | The relief has been amended as follows: • Claims for the purchase of sports equipment and membership fees for gyms are excluded from this relief. • It is expanded in scope to cover self-enrichment course fees. The overall limit for the relief remains as RM 2,500. |
| Lifestyle sports related expenses | The scope of the relief has been expanded to cover gym membership fees or sports training fees. The limit is also increased from RM 500 to RM 1,000. |
| Tax relief for electric vehicles | The relief is extended till year 2027. |
Changes for C-Suite employees
C-Suite employees are offered a flat tax rate of 15% on employment income for three consecutive years. Eligibility conditions for this incentive are:
- carry out employment with an approved company global service hub incentive.
- hold a C-Suite position or a key position in the company.
- receive a monthly salary of not less than RM 35,000 per month.
The amount of monthly tax deduction is determined in accordance with the following formula: “MTD for the month = [(PR) – (Z + X)] / (n + 1)”
Changes in childcare allowance exemption limit
Tax exemption limit on childcare allowance in respect of children up to 12 years of age, received by the employee or paid directly by the employer to the childcare centre is increased from RM 2,400 to RM 3,000 per year.
The above-mentioned changes are applicable from Jan 01, 2024.
Explanation on Voluntary EPF relief
More clarity has been provided on treatment of Voluntary EPF while calculating MTD.
There are two categories for Voluntary EPF relief:
- Voluntary EPF and Life insurance (TP1) (RM 3,000)
- Voluntary EPF including mandatory EPF (TP1) (RM 4,000)
K1 & LP1 amount calculation for MTD purpose:
Example: Mandatory EPF = RM 2,000, Voluntary EPF = RM 3,000, Life Insurance = RM 4,000
K1 = RM 2,000, LP1 = RM 5,000 (Vol. EPF (RM 4,000 category) = RM 2,000, Vol. EPF (RM 3,000 category) = RM 1,000, Life Insurance = RM 2,000)
Example: Mandatory EPF = RM 5,000, Voluntary EPF = RM 3,000, Life Insurance = RM 4,000
K1 = RM 4,000, LP1 = RM 3,000 (Vol. EPF (RM 3,000 category) = RM 3,000)
Please contact your Mercans’ services delivery team for any additional information regarding the implications of the above change
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Malaysia regulation update on tax reliefs for employees effective from 01 January 2024753.11 KB