For decades, the Malaysian government has used the tax system to provide financial assistance to persons with special needs, such as the disabled and those who support them. In illustrating its commitment to ease the financial burden of disabled persons, the government has incorporated numerous tax reliefs in its tax legislation, especially in the Income Tax Act 1967 (as amended), hereinafter referred to as “the Act”. These are discussed below.
5.4.1. Existing Tax Relief for Persons with Disabilities under the Act
Tax relief is basically accorded to a taxpayer as a deduction from his total income in ascertaining his chargeable income. The different types of reliefs granted with regards to persons with disabilities are detailed below.
5.4.1.1. Disabled Individual [Section 46(1)(e)]
Currently, relief of RM9,000 may be claimed by every individual for the basis year (year of assessment). A disabled person, however, can claim an additional RM6,000 and their relief claim would total RM15,000. This additional relief is available to both the husband and the wife in the case of the filing of separate assessments.
107 5.4.1.2. Disabled Spouse [Section 47(1)(b) and Section 45A]
An individual can claim spouse relief of RM3,000 in the year of assessment for either a husband (Section 45A) or a wife (Section 47), provided that the couple are living together in the year of assessment. The concept of living together is not a geographical concept but one of intention: they must not be not be divorced or separated by an order of a court, a deed of separation or a written separation agreement. In addition, a further RM 3,500 may be claimed if the spouse is disabled, for a total claim of RM6,500.
5.4.1.3. Basic Supporting Equipment [Section 46(1)(d)]
A maximum claim of RM5,000 can be made in the year of assessment for the purchase of any necessary basic equipment for use by a disabled individual or his spouse, child or parents.
5.4.1.4. Disabled Child [Section 48(1)(d) and 48(2)(b)]
The parent of a disabled child may claim child relief of RM5,000 as opposed to the relief of only RM1,000 that may be claimed for a non-disabled child. In additional, if the disabled child is receiving full-time instruction at any university, college or other similar educational establishment, or is serving under articles or indentures with a view to qualifying in a trade or profession, the parent is entitled to claim increased relief of RM4,000. This brings the total claim for a disabled child to RM9,000
A child is defined as a legitimate child, a step-child of the husband or wife, or an adopted child provided the Director-General is satisfied that the adoption is in accordance with any law (not necessarily Malaysian law). With effect from the year of assessment 1996, a wife living together with her husband and who is assessed separately
108 on her income, may elect in writing to claim child relief. To claim child relief, the child should be unmarried, maintained by the claimant and the child’s total income for the year of assessment must not exceed the amount child relief claimed.
5.4.1.5. Medical Expenses for Parents [Section 46(1)(c)]
Initially this sub-section provided relief only for medical expenses incurred in respect of a parent; a proposal in the 2011 Budget served to include special needs and carer expenses as well. However, the carer could not be the individual himself, his spouse or child. Other eligibility requirements specified that the parents should be Malaysian residents, the medical treatment and care services should be provided in Malaysia and the medical practitioner should be registered with the Malaysian Medical Council.
The government’s recognition that some individuals had special needs and required the services of a carer was at least a step forward. It also provides encouragement that the proposal suggested by this study would not fall on deaf ears.
5.4.2. Existing Tax Incentives Relating to Persons with Disabilities
In addition to tax relief, the government also provides certain tax incentives or special deductions under the Act to employers of persons with disabilities. These are detailed below.
5.4.2.1. Existing Tax Incentives for Employers of Persons with Disabilities under the Act
The Act provides a series of tax incentives to individuals and businesses that employ persons with disabilities. These incentives are meant to enhance the employment
109 opportunities of the disabled, as well as to compensate employers for any extra expenses arising from employing the disabled as opposed to employing those who are not. The incentives include:
5.4.2.2. Equipment For Disabled Employees – Section 34(6)(e)
Expenditure incurred by the employer for the provision of any equipment, or for the alteration or renovation of premises necessary to assist a disabled employee in the performance of his duties of employment, is deductible for tax purposes. These activities would normally constitute capital improvements, which generally would not qualify for a deduction for income tax purposes.
5.4.2.3. Income Tax (Deductions for the Employment of Disabled Persons) Rules 1982
An employer employing a physically or mentally disabled person qualifies for a double deduction in respect of remuneration of a kind allowable under section 33 of the Act.
This includes any wages, salary, or allowances in respect of having or exercising employment.
5.4.2.4. Income Tax (Deductions for Approved Training) Rules 1992
A double deduction is also provided for any expenditure incurred in training any disabled person registered with the Department of Social Welfare who is not an employee of the company under:
(a) a training program approved by the Minister of Finance, which is conducted in Malaysia; or
(b) a training program conducted by a training institution.
110 However, the training program is for the purpose of enhancing employment prospects of the disabled person.
In addition, a special deduction is also accorded for the provision of facilities that benefit persons with disabilities.
5.4.2.5. Provision of Facilities for the Disabled at Public Places- Section 44(9)
A tax deduction is given to any individual who donates money or makes a contribution in kind (the value is to be determined by the relevant local authority) for the provision of facilities in public places for the benefit of disabled persons.
Although the above relief and incentives are commendable, it is obvious that recognition is given only to persons with disabilities. The only exception to this is the relief provided to parents where payment for a caregiver qualifies. The need to further recognise the contributions of caregivers is emphasised in the next section.