Tax Update-1998 Budget Issues


b. Restriction on Deduction of Bonus

Presently, there is no restriction on the deduction of bonus paid to an employee. To encourage employers to reinvest their profits into the business in order to train their employees and increase productivity, it is proposed in the Finance Bill that tax deduction on bonus paid to an employee be restricted to a sum not exceeding two twelfths of his wages or salary.

This amendment is to have effect on October 17, 1997.

c. Gifts of Paintings

Currently, a deduction is available in respect of the value of any gift of artefacts or manuscripts to the Government or State Government.

It is proposed in the Finance Bill that gifts of paintings to the Government or State Government and National Art Gallery or state art gallery will also qualify for deduction.

The above proposal is to be effective from year of assessment 1998.

d. Gifts to Provide Facilities for the Disabled

To encourage facilities to be set up in public places for the benefit of disabled persons, it is proposed in the Finance Bill that gifts by individuals for providing such facilities be eligible for a tax deduction. Where the gifts are in kind, the value thereof would be determined by the local authority concerned.
The above proposal is to be effective from year of assessment 1998.

e. Contributions to Health Care Facilities

It is proposed in the Finance Bill that a tax deduction not exceeding RM20,000 be granted to individuals in respect of gifts of money or medical equipment to any health care facility approved by the Ministry of Health.

The proposal is to be effective from year of assessment 1998.

[page 8 of 27]

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