Budget 2013 Infographics – things that matter to most

(Last Updated On: 01/10/2012)

Budget 2013, termed the election or  voter friendly budget, is finally out. Proof? No subsidy reductions or GST or increase in tobacco/alcohol duties. As usual, it is a long list of goodies that man in the street like you and me will never really get to enjoy because they are sector or business specific. However, there are things that will matter to most Malaysians regardless of your income level.

There are a few incentives for students and youths as well. So check this out and see if you are eligible for it.

Budget 2013 Infographics

 

The one statement that most people find it confusing is this:-

“In the transition process from the current tax system, based on income to a tax system that is fairer, the Government proposes that individual income tax rate be reduced by 1 percentage point for each grouped annual income tax exceeding RM2,500 to RM50,000. The measure will remove 170,000 taxpayers from paying tax as well as provide savings on their tax payment. As an example, unmarried young professional with a monthly income of RM5,000 will enjoy income tax savings up to RM425 per person.”

Source: TheStar

Let us use an illustration to explain this. Take this table from LHDN website.

For someone earning RM 5,000 a month, his annual income is RM 60,000. Hence, his tax payable computation is as follows for YA2012.

budget 2013 tax point reduction 2

Now, with this one percentage point reduction, his tax payable is as such for YA2013

budget 2013 tax point reduction 1

I computed the savings of RM 475 instead of RM 425 though,  without the inclusion of other tax relief and rebates.

Anyone spot where I might have made a mistake? Anyway, you get the idea.

To quote from an article in TheStar, – “A significant number of Malaysian families fall into a group with household income of between RM 6,000 to RM 7,000,  and they will be able to save an average of RM1,000 on their tax payments each year.”  This group usually comprises graduates aged between 27 and 35 who have just been married or have a young family. It is a good move that will benefit the majority of middle income earners, but will not make much difference to the very rich or the poor.

Additional salients point from my pal, Calvin Yeo at Making Passive Income:

“So does that mean only people with chargeable income below RM 50,000 will get entitled to the tax reduction? Or does it mean that for everybody, the tax tier between RM 2,500 to RM 50,000 get reduced by 1% no matter how much the chargeable income is?”

“Another thing that most people don’t see is federal debt is now at RM 502.4 bil, about 53.7% of GDP. It’s rising, and it’s alarming”

Update 1 October 2012
I emailed the author of this news at TheStar, here’s what he replied:

According to the IRB, those tiers are reduced for everyone, no matter how much the chargeable income is.

TheStar budget 2013 tax
Click to Enlarge

Post your comments below 🙂

This Post Has 8 Comments

  1. Awesome CK, thanks a lot for the information!

  2. Yea me too, didn’t know too. Perhaps at corporate (insurance company) level?

  3. Hi CF, The info posted at Star Biz Week pg19, “Insurance industry player say tax incentive proposal timely”..OR Sin Chew daily pg A5. I’m didn’t aware had 8% investment income tax on this product..

  4. Hi TY, I missed this part. Checked again and couldn’t find any mention of what you stated? Can you elaborate more? Thanks

  5. Yea, it’s certainly catching up to Singapore’s SSD (Seller Stamp Duty)

  6. Proposal to remove of 8% investment income tax on deferred annuity.. Good kick start for retirement planning.

  7. The RGPT is going to at least cool down the hot hot property markets. With ballooning demand, this tax increased is going to damp things down.

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