25 February 2022

On 31 December 2021, the Finance Act 2021 (“Act”) was published in the Federal Gazette. Most provisions under the Act came into operation on 1 January 2022. The Act prescribes in detail some of the measures under the 2022 Malaysian budget.

The Act amends, among other things, the Income Tax Act 1967, the Real Property Gains Tax Act 1976 and the Stamp Act 1949. This article summarises some of the key amendments made.

Scope of relief under Income Tax Act 1967 expanded

The Income Tax Act 1967 has been amended to expand the scope of tax relief to include costs incurred for examination or consultation relating to mental health and to include the costs of COVID-19 tests. The latter requires the provision of receipts issued by a hospital or medical practitioner registered with the Malaysian Medical Council or receipts for COVID-19 self-detection test kits.

Increase in retention sum under Real Property Gains Tax Act 1976

The Real Property Gains Tax Act 1976 has been amended to require the acquirer of a chargeable asset to retain the whole of the money consideration or 5% of the total value of the consideration, whichever is the less, if such disposal is effected within three years after the acquisition date of the chargeable asset and to pay the sum retained to the Director General of Inland Revenue.

Additionally, the category of transactions in which the disposal price is deemed equal to acquisition price is expanded to include the transfer of assets between spouses or the transfer of assets owned by a nominee or a trustee of an individual, the wife of the individual, or both to a controlled company.

Refund of stamp duty under Stamp Act 1949 only when assessment is final

The Act amends the Stamp Act 1949 to provide that the Inland Revenue Board will not be compelled to refund excess stamp duty. Additionally, any refund of stamp duty will only be made when the assessment is final and conclusive. The period for which duty payers are allowed to apply for relief for misused stamps has also been extended from 12 months to 24 months from the date of instrument or the date of execution.