Jan 12, 2024 2 min read

Malaysia regulation update on tax reliefs for employees effective from 01 January 2024

Changes in tax reliefs

The applicable forms “TP1” & “TP3” has also been revised in this regard.

TP1 tax reliefsChanges for 2024
Medical treatment, special needs, and carer expenses for parentsThe 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 feeThe relief is extended till year 2026.
Medical expenses for self, partner, and childThe scope of the relief has been expanded to include:
• dental examination and treatment (up to RM 1,000)
Lifestyle personal expensesThe 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 expensesThe 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:

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:

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

Mercans Recommends

View PDF

Malaysia regulation update on tax reliefs for employees effective from 01 January 2024
Size

753.11 KB

Most viewed posts

View all posts

Avasant Selects Mercans as a Leader in Payroll Business Process Tra...

The meticulous research methodology employed by Avasant included analyzing publicly available information like SEC filings, annual reports, and executive interviews, along with engaging in discussions and market interactions.

Dec 22, 2023 4 min read

Global BPO Leader Infosys Selects Mercans’ Payroll Tech to Power i...

This partnership brings together Mercans' disruptive payroll tech and Infosys' consulting and BPO capabilities to create the most tech advanced and operationally resilient global payroll offering.

Sep 26, 2023 3 min read

Mercans: A Leader in Global Managed Payroll – ISG Provider Lens™ 2023

Payroll solutions and services study meticulously assessed 36 vendors across three distinct quadrants, and Mercans proudly emerged as a frontrunner.

Nov 9, 2023 2 min read