Deloitte Malaysia says there are already various measures in place by the government to assist homebuyers in purchasing properties and help those struggling to keep their homes, such as real property gains tax and stamp duty exemptions on sales and purchase agreements as well as loan agreements. However, they say that several more items could be considered.
“The Home Ownership Campaign (HOC) which is available until December 31, 2021 may be extended to boost the property market. The current HOC only applies to new properties registered under the campaign by specific developers. The Government could consider extending this campaign to the secondary markets, thereby providing a wider range of properties for homebuyers to choose from.
“For those struggling to repay their home loans, the Government could consider providing income tax relief on interest accrued on these loans after the moratorium period ends. For those in the B40 category, the Government could consider incentivising financial institutions to waive the interest accrued by providing additional tax deductions.”
To provide financial relief for individual taxpayers, experts say that the government can consider additional tax reliefs for expenses incurred during the pandemic such as COVID-19 self-test kits, PCR or ANTIGEN tests, “working from home” set up costs, or a one-off special tax relief of RM2,000 which was introduced in the Year of Assessment 2015.
“We also hope the Government will give due consideration to exempt employee allowances or benefits received, where employers provided financial aid to employees or their family members on the costs of COVID-19 treatment and medical supplies for virus prevention purposes,” they say.
More Wishlists
They add that should the government wish to revisit insurance tax relief, one possibility is widening the life insurance tax relief to grant parents relief when they buy insurance for their children.
“Currently the relief is only given to the taxpayer and spouse. This is in line with the Government’s goal towards expanding insurance protection for the public. It is also timely to consider splitting the tax relief for medical and education insurance into separate reliefs to encourage better take-up of medical coverage. As such, they won’t have to choose between protecting their health and saving for their children’s education.”
The pandemic has reaped a toll on businesses and as businesses shutter, the credit taken turns bad and banks are saddled with the loss. Banks cannot recover the capital they have employed and this has a knock-on effect on future lending.
The Deloitte experts add that the Government should look at how tax rules can help cushion this blow, perhaps by incentivising business rescue financing, similar to how the financial rescue of abandoned housing projects was incentivised several years ago, and perhaps giving a special tax credit equal to the losses suffered as a result of debts going bad.
They say that tax incentives can also be used to encourage lending and investment in specific projects and market segments in line with the Government’s objectives such as tax breaks for investors in strategic infrastructure projects that improve internet connectivity, environmentally sustainable projects, and projects that support the B40 community.
