Budget 2021: 13 Financial incentives on tax breaks, government handouts, subsidies and more!

Share

The Malaysian government has announced various aids for the rakyat, aimed to alleviate living costs and to provide some financial relief following the Covid-19 outbreak.

belanjawan-2021

© Ministry of Finance Malaysia (MoF).

The long-anticipated Budget 2021 has been tabled by our Finance Minister  Tengku Zafrul Aziz on 7 November 2020.  Carrying a theme of Teguh Kita, Menang Bersama, this year’s budget had an allocation of RM322.5 billion, compared to last year’s RM297 billion.

1. More handouts under the Bantuan Prihatin Rakyat (BPR) programme

The Bantuan Prihatin Nasional (BPN) government aid package which was announced in September 2020 has been replaced with Bantuan Prihatin Rakyat (BPR). Next year, the government has decided to continue with a more targeted financial assistance package –  In total, RM6.5 billion has been allocated for the following disbursements:

  • Spouses earning less than RM2,500 with one kid will get RM1,200. Thos with 2 kids or more will obtain RM1,800
  • Spouses earning between RM2,501 to RM4,000 with one kid will get RM800, those with more than 2 kids will obtain RM1,200
  • For spouses earning between RM4,001 to RM5,000, they will get RM500 if they have 1 kid, those with more than 2 kids will obtain RM750
  • Bachelors earning less than RM2,500 will get RM350 (age requirement to qualify for this is decreased to 21 years old)

2. Tax exemptions for medical reasons

The global Covid-19 pandemic has made it tough for many of us, with millions of the rakyat struggling financially. With that in mind, the government has decided to increase the tax exemptions for these situations:

  • RM8,000 tax exemption if any of your family members (spouse and kids) undergo medical treatment for serious diseases – previously the exemption was capped at RM6,000
  • RM8,000 (used to be RM5,000) tax exemptions for your parents’ medical check-up, special needs and treatments
  • If you go for a full medical check-up, you can also get a RM1,000 tax exemption

3. Income tax reduction

© thamkc | 123rf

Income tax will be reduced by 1% for those earning between RM50,000 to RM70,000 per year. Also, for the years of assessment 2020 and 2021, it has been proposed that the income tax exemption limit be increased from RM10,000 to RM20,000 for each full year of service – this is to help taxpayers who have lost their jobs due to the Covid-19 pandemic.

READ: Must you declare your rental income to LHDN & what are the tax incentives available for landlords?

4. One-off disbursement for front-liners

Since March 2020, our front liners have been working day and night to save countless patients (thank you so much, guys). As a token of appreciation, the government have been providing them with a RM600 allowance per month since then. To top it off, Budget 2021 has allocated for medical officers to receive a one-off allowance payment of RM500. They deserve it!

5. B40 to get a voucher to buy Perlindungan Tenang insurance

For sure, the biggest life lesson for this year is that life is indeed precious. Unfortunately, not everyone is able to afford life insurance. The government is stepping in with some financial assistance by providing a RM50 voucher for the B40 income group to purchase  Perlindungan Tenang. There will also be a stamp duty exemption for all Perlindungan Tenang’s Takaful and insurance products with no more than RM100 annually for the next 5 years.

CHECK OUT: Which mortgage life insurance to pick – MRTA or MLTA?

6. Telco credit for the B40 group

Working and studying from home has been the norm in the last several months – This is why the government is committed to ensuring the B40 group has secure internet access with the Jaringan PRIHATIN Programme.

Eligible individuals will receive RM180 in the form of credit so that they will have a good and stable internet connection. This initiative will cost the government RM1.5 billion and is expected to benefit 8 million individuals from the B40 group.

7. Loan moratorium to continue but for the B40 only

Abdul Razak Latif / 123rf

Starting from December 2020 onwards, banks will improve the Targeted Repayment Assistances (TRA) to B40 borrowers that are also the Bantuan Prihatin Rakyat recipients. This includes micro-enterprises but only for those that have a total loan of RM150,000. These 2 categories can either choose to:

  • Postpone their monthly repayment for the next 3 months
  • Reduce 50% of their monthly repayment for the next 6 months
  • For M40 that are affected, don’t worry – you can make a self-declaration that you have less income than before. This is so that you can request for a loan repayment assistance too.

If you are interested in any of these moratorium options, make sure to pick up your phone and call the bank ASAP.

READ: What are the new updates for BNM’s Loan Moratorium extension?

8. Job Search Allowance (JSA) is extended by 3 months in 2021

Fret not, job seekers. You will receive a Job Search Allowance for up to 9 months under the enhancement of the Employment Insurance System (EIS), which is a scheme which offers Malaysians unemployment benefits and job search assistance should they lose their job for reasons like retrenchment, redundancy, etc

The current JSA is only for a period of 6 months. In 2021, the allowance rate will be 80 per cent in the first month, 50 per cent for the second till the sixth months and subsequently 30 per cent for the last three months. The government will be allocating RM150 million for the JSA extension and the targeted disbursements are expected to assist up to 130,000 job seekers.

9. You can withdraw monies from your EFP Account 1

The government is allowing EPF contributors to withdraw RM500 per month from their Account 1, beginning from January 2021 – for a period of 12 months or up to RM6,000. This new allowance is on top of the existing i-Lestari financial assistance which began in April 2020 -it allows one to withdraw RM500 monthly from their EFF Account 2

Do also note that beginning in 2021, employees’ EPF contributions will be reduced from 11% to 9% up until the end of the year. Moreover, it was announced under Budget 2021, that the rakyat will be allowed to utilise money from their EPF Account  2 to buy insurance. 

10. More hiring incentives under PERKESO

© JimmyFam | Getty Images

Following the previous hiring incentives programmes, the government will continue it under PERKESO. The good news? The incentives got increased as well:

  • Employees that earn RM1,500 and above will get up to 40% of their monthly income, subject to a maximum incentive of RM4,000 – this was enhanced from the previous flat rate of RM800 per month.
  • Employers will get total incentives of 60% (increase 20%) if the company hire disabled, long-term unemployed and retrenched workers
  • Those who replace a foreign worker with a local one for high-reliance sectors (think construction industry), will get a special incentive of 60% of monthly wages, where 40% will go to the company and the remaining 20 to the local worker.
  • Employers who hire a fresh graduate for an apprenticeship will obtain RM1,000 incentive for 3 months

On a side note, the wage subsidy programme has been extended and will now be targeted for those working in the tourism and retail sector. A worker who is earning RM4,000 and below will get RM600 per month. For employers meanwhile, the limit of 200 employees per application is now increased to 500 employees.

11. Monies for Reskilling and Upskilling

The job market has never been more competitive now with the ongoing pandemic.  If you are looking for employment or even a promotion, then you are in luck as the government is allocating RM150 million to the Ministry of Higher Education professional certification (KPT-PACE)  – fresh graduates will be eligible for a RM3,000 voucher to pursue a professional certification course at public or private universities.

Besides that, the following initiatives were announced:

  • RM100mn is allocated to the Human Resources Development Fund (HRDF) to implement training with private workers
  • Malaysia Digital Economy Corporation (MDEC) will get RM100 million to train the existing workforce with technology knowledge
  • Entrepreneurship training worth RM30 million by PERHEBAT that will benefit Malaysia’s army veterans

12. E-wallet incentive for youths

To encourage the adoption of e-wallets among Malaysian youth, the government will be crediting RM50 to youths aged 18 to 20 years old via the eBelia Programme.

13. Housing incentives for first-time homebuyers

To help support homeownership, the government will enforce the following:

  • Full stamp duty exemption on instruments of transfer and loan agreement until December 2025, for the purchase of residential properties priced up to RM500,000.
  • Stamp duty exemption on loan agreements and instruments of transfer given to original house buyers of abandoned housing projects will be extended for another 5 years. Do note that this is only for abandoned housing projects certified by the Ministry of Housing and Local Government (KPKT).
  • Rent-to-Own (RTO) Scheme until 2022. This involves 5,000 PR1MA houses worth more than RM1 billion.

For more details, read this next: 4 Budget 2021 Incentives Malaysian house buyers take advantage of

*This article was repurposed from “Budget 2021: 15 Things (Tax breaks, Handouts, Subsidies & More)“, first published on Loanstreet.com.my | 


Share