In the PERMAI Assistance Package announced by Prime Minister Tan Sri Muhyiddin Yassin on 18 January 2021, he reiterated the tax deductions for donors who have been assisting in cash and/or in kind to those impacted by the pandemic. Donations and contributions made to fight Covid-19 that are eligible to claim tax deductions include:
- Tabung Covid-19 (Kementerian Kesihatan Malaysia) – Cash and in kind
- Tabung Covid-19 (Pengurusan Bencana Negara, Jabatan Perdana Menteri) – Cash only
- Donations to institutions and organisations approved under Section 44(6) of the ITA – Cash only
- Any community or charity project that assists Government or non- Government organisations registered under any written law to handle the Covid-19 outbreak – Cash and in kind
Supporting documents such as official receipts and transfer advice for cash donations will be required in order to file tax claims for Covid-19 donations.
For donations in kind such as medical equipment, personal protective equipment, etc., taxpayers are required to obtain a letter of acceptance of contribution from the recipient of the contribution together with the official stamp from the recipient according to the format published in the Ministry of Finance (MOF) Special Guideline. Taxpayers are required to submit their applications for tax deduction for donation in kind to the Tax Division of the MOF.
Supporting documents for donations in kind include:
- Original approval letter by MOF
- Official receipt or acknowledgement of contribution from the recipient body
- Letter of acknowledgement of service value or project cost value from the relevant Government agencies
Other tax relief for Malaysians includes:
Expanded tax relief on medical expenses
It was proposed in the Budget 2021 that a resident individual is entitled to claim up to RM8,000 on medical expenses for serious diseases for self, spouse and child, including fertility treatment for self and spouse. This includes expenses incurred for full medical check up for a maximum amount of RM1,000 which cover the following costs of vaccination:
- Human Papillomavirus (HPV)
- Combination of tetanus-diphtheria- acellular pertussis (Tdap) and Covid-19 (subject to availability of vaccine)
It is proposed that the scope of tax relief of RM1,000 allowed for the full medical check-up be expanded to include the cost of Covid-19 screening.
Year of assessment 2021
Extending special tax relief on the purchase of electronics
Currently under the Malaysia Short–Term Economic Recovery Plan (STERP), a special income tax relief of up to RM2,500 is given to individuals for the purchase of a personal computer, smartphone or tablet (not being used for business purposes) from 1 June 2020 to 31 December 2020 and is claimable in the year of assessment (YA) 2020. This relief is given in addition to the current lifestyle relief of RM2,500 for expenses incurred in respect of the following:-
- Purchase of books / journals / magazines / printed newspapers / other similar publications (not banned reading materials)
- Purchase of a personal computer, smartphone or tablet (not for business use)
- Purchase of sports equipment for sports activities defined under the Sports Development Act 1997 and payment of gym membership
- Payment of monthly bills for internet subscription
It is proposed that the special income tax relief period be extended to 31 December 2021.
YA 2020 and YA 2021