It is proposed that with effect from year of assessment 1999, the approving authority for deduction be no longer the relevant authority but the Minister of Finance.
   
 
Presently, individuals are entitled to certain tax exemptions in respect of interest income from banks and finance companies.

To promote unit trusts as a collective investment vehicle, it is proposed that from year of assessment 1999, income of a unit trust in respect of interest derived from Malaysia and paid or credited by any bank or financial institution licensed under the Banking and Financial Institutions Act, 1989 or the Islamic Banking Act, 1983 be exempt from tax.

Such income may also be distributed to unit holders free of tax.
   
 
Currently, the benefit of leave passage enjoyed by an employee and members of his immediate family not exceeding 3 times within Malaysia or 1 passage overseas in a calendar year is tax exempt to the employee.

As a measure to curb the outflow of funds, it is proposed that the tax exemption in respect of the overseas leave passage be limited to a maximum of RM3,000 with effect from October 24, 1998.
   
 


By virtue of Paragraph 30 of Schedule 6 to the Income Tax Act, 1967, tax exemption is accorded in respect of pensions derived from Malaysia and paid to a person resident on reaching the age of 55, or on reaching the compulsory age of retirement, or if the Director General is satisfied that the retirement was due to ill health :

  1. in respect of services rendered in exercising a former employment in Malaysia; and

  2. where the pension is paid other than under any written law, from a pension or provident fund, scheme or society which is an approved scheme
   



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