Prime Minister Najib Razak tabled the 2017 Budget last Friday. There was one particularly interesting announcement: the new Lifestyle Tax Relief.
What exactly does it entail and is it a better deal than previous tax reliefs for electronics and sporting goods? We look at the numbers and past year tax reliefs.
A lot more flexibility, simplicity
The new Lifestyle Tax Relief basically allows a sum of up to RM2500 in total for tax relief for the following items:
- Reading materials (unlike previous years, it now includes printed newspapers)
- Computer, tablet and smartphone purchases
- Internet subscriptions
- Sports equipment purchases
- Gym memberships
Gym memberships are a new tax relief added this year, where previously they weren't included, neither were smartphones. In previous years, Internet subscriptions were claimable until the tax relief for them was discarded from 2013 onwards.
Tablets were once claimable under computer purchases, until that also changed in 2013. The previous tax relief for computer purchases was a maximum of RM3000, claimable every three years.
The good news is that with the new tax relief, you can buy electronic devices every year and claim them. The downside is that the maximum is now RM2500 instead of the previous RM3000 for computers, and once you claim that sum, you can no longer claim tax relief for the other items listed under the tax relief.
You could say that the new tax relief is more flexible: people who would not ordinarily utilise the previous RM1000 tax relief for books would now be able to put that money towards claiming their broadband subscriptions and buying electronics instead. You can also get tax relief for your computer purchases each year, instead of waiting every three years.
The ones who would lose out (arguably) are people who would spend on all the items listed in the Lifestyle Tax Relief: they would only get a maximum relief of RM2500 and would have to choose which of their purchases they would claim. Still, it does lessen the complexity of claiming the relief now they're under one umbrella and some would welcome the return of tax relief for Internet and tablets.
In essence, the new Lifestyle Tax Relief will likely benefit some more than others such as those who buy smartphones/devices on a yearly basis but might disappoint people who were counting on that RM3000 relief for an upcoming computer purchase. Disappointing for the latter but definitely cause for celebration for the former.