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Analysis and Commentary on Budget 2024

The Malaysian 2024 Budget, which covers a wide range of sectors and segments in the economy, was recently announced. This article shares the views of one licensed financial planner.


By Rafiq Hidayat Mohd Ramli


As the world continues to navigate through economic challenges and uncertainties, the unveiling of a national budget holds immense significance. In Malaysia, the budget for the year 2024 was highly anticipated, as it lays the foundation for the country’s financial trajectory for the coming year. With its far-reaching impact on individuals, businesses, and the nation as a whole, the Malaysia Budget 2024 has been a subject of great interest and debate.


This article delves into the key aspects of the Malaysia Budget 2024, shedding light on the government’s priorities, policy changes, and their potential implications. From subsidies and financial support to taxation and deductions, we’ll explore the most critical elements of this budget, offering insights and analysis from a financial planner that will help you better understand its significance in your financial and economic landscape.

#1. Subsidies and Financial Support


Main Highlights

  • Targeted Subsidies: The government plans to implement a targeted subsidy program in stages, commencing in 2024.

  • Rahmah Cash Aid: The allocation for Rahmah Cash Aid is expected to increase from RM8 billion to RM10 billion.

  • Price Controls: Price controls on chicken and eggs will be lifted to allow the local market to function freely in ensuring a guaranteed supply.

  • Electricity Bill Rebate: A rebate on electricity bills, up to RM40 per month, for hardcore poor households is to continue with an allocation of RM55 million.

  • PTPTN Loan Repayment Discounts: Discounts for PTPTN (Perbadanan Tabung Pendidikan Tinggi Nasional) loan repayments will be provided from October 14, 2023, until March 31, 2024.

  • Payung Rahmah Initiatives: An allocation of RM200 million is provided to continue the implementation of Payung Rahmah initiatives.

Personal View on Subsidies and Financial Support

The move from blanket subsidies to targeted subsidies, set to begin in 2024, marks a significant shift in government policy. The decision to extend PTPTN Loan Repayment Discounts until March 31, 2024, is a commendable move for those who can take advantage of this opportunity before it potentially disappears in the future.

#2. Taxation


Main Highlights

  • Capital Gains Tax: A capital gains tax of 10% for unlisted shares is set to take effect from March 1, 2024.

  • Service Tax Increase: The service tax rate will be increased from 6% to 8%. This increase will not apply to services such as food & beverages and telecommunications.

  • Luxury Goods Tax: A new Luxury Goods Tax at rates ranging from 5% to 10% will be introduced, primarily applying to high-value goods like jewelry and watches.

  • Excise Duty on Sugary Beverages: Excise duty on sugar-sweetened beverages is proposed to increase from RM0.40 per liter to RM0.50 per liter starting January 1, 2024.

  • Excise Duty on Chewing Tobacco: Excise duty will be levied on chewing tobacco at a rate of 5% + RM27/kg, effective January 1, 2024.

  • Stamp Duty on Property Ownership: A flat rate of 4% stamp duty will be imposed on the transfer of property ownership executed by non-citizen individuals and foreign-owned companies, excluding Malaysian permanent residents, from January 1, 2024. However, the instrument for transfer of property ownership by renunciation of rights from an eligible beneficiary to another eligible beneficiary in accordance with a will/faraid or the Distribution Act 1958 which is executed from 1 January 2024 will be subject to a nominal stamp duty of RM10.

Personal View on Taxation

The introduction of a capital gains tax for unlisted shares and the increase in service tax are notable changes. However, a more comprehensive Goods and Services Tax (GST) might be a preferable approach, as it can help close loopholes present in the current SST system. The increase in excise duties on sugary drinks and chewing tobacco is expected to impact consumers, although it may not entirely deter their consumption. The removal of stamp duty for transfers between beneficiaries in accordance with a will or the Distribution Act 1958 is a positive step toward expediting estate distribution.

#3. Taxation and Deductions for Individuals


Main Highlights

  • Tax Deductions for Medical Expenses: The scope for medical treatment expenses and care expenses for parents will be extended in YA 2024.

  • Tax Deductions for Lifestyle Expenses: The scope for lifestyle expenses will be expanded in YA 2024, covering self-skills enhancement courses, while the purchase of sports equipment and gym membership fees will be moved to a separate relief category.

  • Tax Deductions for Sports Equipment and Activities: A new category for sports equipment and activities will be introduced in YA 2024, covering expenses related to sports equipment, sports facilities, sports competitions, gym memberships, and sports training fees.

  • Tax Deductions for Up-Skilling Courses: Deductions for up-skilling and self-enhancement course fees are extended for three years from YA 2024 to 2026.

  • Tax Deductions for EV Charging Facilities: Deductions for expenses related to electric vehicle (EV) charging facilities will be extended for four years from YA 2024 to YA 2027.

  • Childcare Allowance Tax Exemption: Tax exemption on childcare allowances received by employees or paid directly by employers to childcare centers will increase from RM2,400 to RM3,000 in YA 2024.

Personal View on Taxation and Deductions for Individuals

The absence of an increase in personal tax rates for Budget 2024 is a positive aspect. The extension of tax deductions for medical expenses, coupled with the rising cost of healthcare, is a welcomed move. The revision of lifestyle expenses to include skill enhancement courses is also a positive step. The reintroduction of tax deductions for sports equipment and activities is an added benefit to encourage more to take up sports. However, the benefits of tax deductions for electric vehicle (EV) charging facilities might not be realized to the fullest extent in 2024.

Conclusion


In conclusion, Budget 2024 brings significant changes to subsidies, taxation, and deductions for individuals. The shift from blanket subsidies to targeted subsidies, the introduction of new taxes, and the revision of tax deductions provide a mixed bag of financial implications. Each individual’s response to these changes will depend on their unique financial situation and priorities.

What do you think about the latest Budget 2024 announcement? Share your thoughts with us in the comments.

About the Author


Rafiq Hidayat is the Managing Director of Wealth Vantage Advisory Sdn. Bhd. (WVA). He is a Certified Financial Planner (CFP). He holds a Capital Markets Services Representative Licence (CMSRL) from the Securities Commission of Malaysia and a Financial Advisor Representative License (FAR) from Bank Negara Malaysia. With a background in engineering and human resources, he then ventured into the financial services industry in 2014. Rafiq provides fee-based financial planning and advisory services, with a focus on prospects committed to improving their financial situations and achieving their life goals.





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