Stimulus budget brief commentary

The economy is growing at a slower pace now. As the Government has promised to fulfill its mission, providing short-medium proposals to heal the country’s fiscal condition, a number of tax incentives have been introduced in the current stimulus package in order to face the economy crisis currently in progress. As a mission to ease the burden of Rakyat, the RM60billion Second Stimulus Package is significantly larger than the first one that was announced last year, and the RM3 billion in tax incentives is hoped to successfully shelter the burden of the economic sectors and individuals.

 

Have you looked at the 2008 income tax return and assess the liability for 2009?

In Budget 2009, several tax changes went into effect during tax year 2008.  Several tax exemptions were given on employees’ allowances, benefits-in-kind and perquisites received from employers.  The Government was fast enough to make the impact realized in the immediate taxing year, in 2008 instead of 2009.

Under the current announcements, various new incentives applicable to the individuals are added to those already generously announced in the 2009 Budget.

For example, tax deduction on housing loan interest and exemption on compensation received for loss of employment. These are the simple but direct measures that enlighten the individual taxpayers.

For corporate sector, we welcome the interesting tax measure that is the carrying back of tax losses to the immediate preceding year.  This is a new ruling that is not currently provided in the tax practice as losses are normally allowed to be carried forward but not backward.

In the Economic Stimulus Bill passed in the United States on 17 February 2009, there were large packages of tax changes in the bill for businesses, one of it being a five-year carry back period for net operating losses for companies with less than US$15 million in annual receipts.  We are pleased that the Malaysian Government is also adopting a very aggressive approach during this important moment to accord fair tax treatment to the businesses in the country.

In actual implementation and administration of the claim, let us hope that the Revenue Office will not be stern in carrying out a tax audit before a refund is allowed under this new tax measure. Otherwise, it will defeat the purpose of Government granting the incentive that is to promote the improvement of business cash flow.
With adoption of more liberal approach by all enforcement parties, the Government’s steps to overcome these increasing difficult times should not be impossible.

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Ms. Seah Siew Yun
Director, Tax Advisory & Compliance,
SJ Grant Thornton (pix)