MRCA Youth Talk: Tax Tips for Retailers, What You Should Know

MRCA Youth recently hosted a session to enlighten members on tax tips featuring two leading tax experts from McMillan Woods – Dato’ Seri Raymond Liew, Founder President and Jason Boey, Tax Director.

O

n 9 June 2021, members of MRCA came together for a virtual session on tax tips facilitated by Dato’ Seri Raymond and Jason Boey. A total of 134 members attended the session which addressed tax rates, personal tax relief, microcredit schemes, enhancement of wage subsidy, and IRB’s regulations during MCO, among others.

During the session, Dato’ Seri Raymond advised members seeking tax advice to reach out to MRCA. He added that many retailers were facing uncertainty on tax relief efforts by the government, the moratorium and PEMERKASA Plus. “There is a revised tax rate for SMEs with a capital of up to RM2.5 million and an additional condition of annual sales of not more than RM50 million with, 17% for chargeable income of up to RM600,000, and 24% for the remaining chargeable income from the year of assessment 2020,” said Dato’ Seri Raymond.

CAPITAL ALLOWANCE

On capital allowance, Dato’ Seri Raymond shares that accelerated capital allowance will be given for qualifying capital expenditure incurred on machinery and equipment including information and communication technology (ICT). “That starts from 1 March 2020 to 31 December 2021 where the annual allowance will be increased to 40% (current rates range from 10% to 20%) with initial allowance of 20%,” he explains.

PERSONAL TAX RELIEF

Touching on Personal Tax Relief 2021, Dato’ Seri Raymond notes that special tax relief of up to RM2,500 is given for the purchase of personal computers, smartphones or tablets, incurred from 1 June 2020 to 31 December 2021. A tax relief amounting to RM8,000 is given for the National Education Savings Scheme (SSPN) extended from the year of assessment 2020 to year of assessment 2021.

“In so far as personal tax is concerned, there is a tax deduction of 1% (from 14% to 13%) for individuals whose chargeable income range from RM50,001 to RM70,000, to help out mid-tier income earners,” states Dato’ Seri Raymond.

“There is a personal tax relief of up to RM8,000 given for medical expenses incurred for the treatment of serious diseases for taxpayers, spouses and children, as well as the cost of fertility treatment, including a full medical check-up of RM1,000 and prescribed vaccination of RM1,000,” he adds.

Tax relief is also extended for full medical check-up to cover COVID-19 screening. A restricted amount for Lifestyle Relief has been increased from RM2,500 to RM3,000, extended to include sports-related expenditure

and electronic newspaper subscriptions. An extension of four years has been given for the Private Retirement Scheme Relief (PRS) of RM3,000 from year of assessment 2022 to year of assessment 2025. An additional tax relief limit for disabled spouses has been increased from RM3,500 to RM5,000.

Dato’ Raymond stresses that many are unaware that medical treatment for parents can also be claimed – this has been increased from RM5,000 to RM8,000, supported by receipts for the purchase of all medicines and treatment.

With digitalisation rapidly taking root, a tax relief of RM1,000 is also given for expenses incurred for attending up-skilling courses provided by a certified body by the Department of Skills Development of the Ministry of Human Resources, for the years of assessment 2021 and 2022. A special tax relief of RM1,000 is given for individuals on domestic travel expenses incurred from 1 March 2020 to 31 December 2021.

MICROCREDIT SCHEMES

Dato’ Seri Raymond shares that the government will speed up the implementation of microcredit schemes, which include RM390million by Bank Simpanan Nasional, RM350million by Agrobank and RM295million by TEKUN. The objective of this measure is to assist in cash flow of micro-enterprises and SMEs.

INCREASING JOB OPPORTUNITIES

With the increase in unemployment, especially during the MCO, the government has set aside funds to create more job opportunities under Budget 2021.

“RM3.5billion has been allocated new applicants,” advises Dato’ Seri Raymond.

to the JanaKerja Scheme to provide 500,000 new job opportunities. RM2 billion will be set aside for the PenjanaKerjaya initiative, where employers will be given additional incentives for hiring local workers, people with disabilities, those who have been unemployed longterm and workers who have been terminated,” explains Dato’ Seri Raymond.

“RM250 million has been assigned for an apprenticeship hiring incentive. Employers will receive RM1,000 per month (for 3 months) if you hire fresh graduates for an apprenticeship programme,” he adds.

TARGETED LOAN REPAYMENT ASSISTANCE (TLRA)

To ease the burden of loan repayment, there has been an enhancement of TLRA for SMEs with loans up to RM150,000. “Banks will provide two options to borrowers which is a moratorium on the installments for a period of 3 months; or, a reduction in the monthly repayment by 50% for a period of 6 months,” explains Dato’ Seri Raymond.

WAGE SUBSIDY PROGRAMME 3.0 (WSP 3.0)

“Effective January 2021 to 30 June 2021, there is a wage subsidy declared in Budget 2021 for the tourism and retail sectors. There are three additional months for existing WSP participants and 6 months for

HUMAN RESOURCE DEVELOPMENT FUND (HRDF) LEVY EXEMPTION

Under the PERMAI Assistance Package, companies unable to operate during the MCO and CMCO periods are eligible for the HRDF levy exemption. This exemption is for 6 months starting 1 January 2021 to 30 June 2021, and thereafter.

SPECIAL DEDUCTION ON RENTAL RENOVATION

The government has extended the special tax deduction on cost of renovation for business premises incurred for business purposes only, up to 31 December 2021, however, there are certain pre-determined criteria.

Dato’ Seri Raymond advises that the eligibility period has been stipulated from 1 March 2020 to 31 December 2021. The eligibility amount is up to RM300,000, for the years of assessment 2020 and 2021. The cost has to be certified by external auditors, while the expenses not eligible for special deduction include designers’ fees, professional fees, and purchases of antiques.

SET-UP OF NEW BUSINESSES

To spur the set-up of new businesses during these difficult times, the government is offering financial relief. For newly created SMEs between 1 July 2020 and 31 December 2021, an income tax rebate of up to RM20,000 per year is given for three years of assessment. Between 1 July 2020 and 30 June 2021, SMEs will be excluded from paying stamp duty on any instruments undertaken for mergers and acquisitions (M&As).

BOOSTING ONLINE BUSINESSES

Dato’ Seri Raymond noted that the government will accelerate the implementation of the SME and micro SME e-Commerce Campaign and Shop Malaysia online initiative, with a total allocation of RM300 million. Micro-entrepreneurs are also set to receive business coaching and on-boarding onto e-commerce platforms while buyers will enjoy savings through online shopping. “The objective is to continue the support for entrepreneurs and businesses in generating income through online sales,” he adds.

COVID-19 SCREENING

The government now allows double deduction for the costs incurred by employers to fund COVID-19 screening for their employees in year 2021.

RENTAL REDUCTION

Dato’ Seri Raymond added that a special deduction will be given to property owners who provide at least 30% rental discounts to SMEs from 1 April 2020 to 31 March 2021. It has now been announced that the special deduction will be expanded to include non-SMEs. In addition, the special deduction will also be extended for another three months, until 30 June 2021.

SPECIAL PRIHATIN GRANT/ GERAN KHAS PRIHATIN 3.0 (GKP)

Payment of the GKP 3.0 is set to begin from June 2021, benefiting close to 1.2 million micro-SMEs in Malaysia. Micro-SMEs will receive a one-off GKP 3.0 assistance of RM1,000. “Those applying for GKP 3.0 must meet certain eligibility requirements,” says Dato’ Seri Raymond.

The requirements include :

• Not receiving any previous GKP 1.0 and GKP 2.0 • Available to Malaysian citizens only • Applicants who run SMEs with total annual sales of less than RM300,000, and with not more than 4 full-time employees excluding owners must be registered with LHDN or IRB on or before 28 February 2021; or a local authority or SSM before or on 28 February 2021, • The company is actively conducting its business at the time the application is made.

IRB DURING MCO 3.0

Dato’ Seri Raymond highlighted that IRB payment counters are operational between 8:00am and 12:00pm, Monday to Friday, with the same operational time for stamp duty counters albeit with prior appointments. The deadline for tax submission has been extended to 31 July 2021 for individual taxpayers with business income, CP500 and CP204 submission, and RPGT. No extension is offered for CP204 payments, tax instalments and PCB.

PEMERKASA PLUS ASSISTANCE PACKAGE (PP)

Jason Boey explained to the audience the dynamics of the PP assistance package. “The government announced RM40 billion in economic aid known as Program Strategik Memperkasa Rakyat & Ekonomi Tambahan (PEMERKASA PLUS) on 31 May 2021 to assist people as well as deal with the economic consequences of the twoweek lockdown which begins on 1 June 2021,” says Jason. “The package will also provide support to the healthcare industry during the next phase of the MCO to effectively combat the COVID-19 pandemic and maintain the nation’s healthcare system,” he adds.

The objectives of the PP assistance package include increasing public healthcare capacity, continuing the welfare agenda of the people, and supporting business continuity. Under this programme, the government has allocated RM450 million to increase beds and ICU capacity at all hospitals nationwide; and RM550 million to support COVID-19 related expenses by various agencies.

Additionally, the services of more than 14,000 contract medical officers and nurses will be extended until 2022; while 550 healthcare personnel due to retire will be reappointed on a contractual basis. Under this initiative, the target is to provide 150,000 doses of vaccines per day across Malaysia by December 2021, and complete the vaccination exercises in Selangor, Kuala Lumpur, Johor and Penang.

“Under the Bantuan Prihatin Rakyat Cash Aid programme, households earning below RM2,500 will receive RM500; while households earning between RM2,501 and RM5,000 will receive RM300. Single individuals earning below RM2,500 will receive RM100,” Jason explains.

Jason also touched on the eligibility of moratoriums on bank loans for both individuals and companies, as well as bus and taxi operators, wage subsidies, exemption of levies under HRDF, GKP 3.0, and special assistance initiatives to spur the economy, among others.