Forum Announcement

Is it true that there's a RM1,000 tax relief for Contribution to an Annuity fund on top of the RM6,000 tax relief for EPF contribution? Is the RM1k valid if contribute to any insurance companies, or must be specific pre-approved funds only?

The following is the answer provided by Deloitte in one of the Q&As

How does the proposed additional relief of RM1,000 for premium paid on annuity scheme work and what annuity scheme will it encompass?

A: The additional relief of RM1,000 is in respect of premium paid on annuity scheme from insurance companies contracted from Jan 1, 2010 or additional premium paid on existing annuity scheme from Jan 1, 2010. This is on top of the existing relief for premiums paid on life insurance or annuity scheme and contributions to the Employees Provident Fund (EPF) of RM6,000. Where the premium paid on the new annuity scheme or the additional premium paid on existing scheme exceeds RM1,000, the excess can be claimed against any unutilised amount for the existing relief of RM6,000, subject to a cap of RM7,000 for the aggregate amount claimed.

The annuity scheme for the purposes of the above relief under Section 49(1) of the Income Tax Act 1967 (ITA) is an annuity scheme contracted for with an insurance company for securing on death a deferred annuity and not the existing annuity purchased through EPF Annuity Scheme. Currently, a separate relief of RM1,000 is given for the premium paid on the EPF Annuity Scheme under Section 49(1C) of the ITA.

In most of Najib's stimulation packages, you need to spend more in order to get the benefits. This case is no different.

You need to buy additional annuity scheme in 2010 and pay the additional premium to get the deduction. You can get some info in this link

However, I asked my insurance agent friend but he is clueless how to buy this insurance.

This tax cut is purely academic now since annuity products are no longer available in our local market.

Xuzen

what the ... why is it no longer available in the market? And if it's not available, why give this kind of tax relief?

To encourage the insurance co to reintroduce this package lah!

This tax relief was given somewhere in 2000 and it was available via KWSP withdrawal scheme only. The scheme was only available for one year. Why do they stop the scheme? I have no idea.

I can speculate perhaps:

i) Morale Hazard?

ii) Not profitable?

Xuzen

Bcos the agents were charging too much commision. MTUC complained and KWSP withdrew the scheme. Annuities are available but not popular in Malaysia. Investors too greedy-

This link is referring to the EPF Annuity Scheme (which has been discontinued since 2001).
You are right in that there has been no proper details on the deferred annuity scheme; which will increase the max relief to RM7000, as announced in Budget 2010.

I also have not seen any insurance company announcing their current annuity scheme is eligible for the additional RM1000 relief. But is already Jan 2010 !!

Yes, sorry to say that annuity products are no longer available in our local market. Maybe we can use some similiar plan to deduct it. Just to say that "some one" offer plan always not benefit to us, my Touch & Go monthly use more then RM200 but I never receive any discount at all..

The government is providing tax incentive to encourage insurance companies to introduce similar plans and individuals to adopt it when they're introduced.

Tax relief for EPF & Insurance has been increased from RM 6,000 to RM 7000.

My question is very simple.

I do not buy insurance, can I claim RM 7000 solely for EPF contribution tax relief ?

Can somebody answer my question ? Thanks !!

^No. the additional RM1,000 tax relief is for Contribution to an Annuity fund only (fr 2010 onwards).

So, the max amount for EPF tax relief is RM6000 ?

the problem is in Malaysia, we don't have any annuity plans....so the so called "tax benefit" is not applicable

W.e.f from YA2010 yes. The RM 7,000.00 deductible is for either EPF employee's contribution or any other approved investment scheme (whatever that means) or any Life Insurance products on your own life, spouse or child. NB: previous year was only RM 6,000.00

Xuzen

sorry if I ask silly question, I'm confused with this deferred annuity thing... so meaning to say that those savings plans come out by those insurance companies e.g. Great Eastern, are not categorized under deferred annuity category?

Those are called Endownment plans...

We have an Annuity plan . . . the major purpose of annuity is to have a consistent income when retire


You can only claim RM6,000. The RM1,000 is solely for annuity product

This post has been edited by Colaboy: Apr 24 2011, 06:29 PM

just to mention, if you want to enjoy the tax relief, your policy must have "retire" wording on it. The criteria is similar to "edu" policy.

Check out PruRetirement Reward, its an annuity product release this year for income tax relief
The plan is simple & straight forward. I'll post the details here later hope you guys get a clear picture.

Well i believe the minimum commitment for this is RM100. Can you quote for me on Pru Retirement Reward?

Thanks

Well our tax relief is:
RM6000 for Insurance + EPF contribution
RM3000 for medical insurance
RM1000 for Annuity (retirement plan some may call it)

I'll put a general quote here k, of a age 30male non smoker
Yearly premium 1200, policy term is 35

Guaranteed income is RM2160X10 = RM21,610
Non Guaranteed at the age of 65 = RM22,888
Total tax relief for 25 years = RM30,000
TOTAL = RM74,498

Total premium paid for
25 years is RM30K


This post has been edited by Colaboy: May 15 2011, 03:41 PM


Attached thumbnail(s)

Is this plan for Pru Retirement Reward? My DOB is 6 Nov 1974 and a non smoker. How much is the minimum monthly commitments?

Thanks

some corrections here:
Guaranteed income is RM2160X10 = RM21,610
Non Guaranteed at the age of 65 = RM22,888
Total tax relief for 25 years x RM1K = RM 6,500 (RM 1,000 x 26% x 25 years)

TOTAL = RM50,998



This post has been edited by Colaboy: Mar 20 2012, 09:05 AM

Salesman maths :
Tax relief maybe RM 25,000 but the tax deduction enjoyed depends on each individuals' tax rate. ie max is 26% so max savngs only RM 260 pa. not RM 1000

---

Added on May 16, 2011, 8:56 pmTotal premium paid = RM 30,000
Total income = 21610 + 22888 + (25000 x 26%) = RM 50998

To get 50998-30000 =RM 20998 u need to take for 35 years (65years old - 30 years old)

My godness....correct me if I m wrong!

This post has been edited by firee818: May 16 2011, 08:56 PM

Hi Colaboy,

I bought the product you mentioned in 2011, and agent told me that I am not eligible for the tax relief because I am below 40 years old. Is that correct information, or am I being mislead?

Thanks,
Tricia.

You need to make sure it's mention in the policy is PRURetirement reward, than you are eligible for tax relief regardless you are age 30, 40 or etc. All the savings cant be witdraw until you are minimum age 50.

There's an option for tax relief annuity, double check with your agent weather it's included for you or not in the 1st place.

PM me if you need more information

This post has been edited by Colaboy: Jan 13 2012, 04:10 PM

Yes, you are right......
It is make more sense if your tax bracket yearly chargeable income falls into the 26% category, but savings is RM260 per annual...
Take note that there is non-guarantee portion which depends on company performance.

is Prudential the only insurance company selling annuity plans?what about other insurance companies?

Assume 3% inflation per year
30 years = 90% inflation (simple calculation)
The RM2160 paid at that time could be worth as much as RM216

This happened if you keep your money in the box under your bed for 30 years. . .
So do something about it.

How can this scheme qualify for the Annuity tax relief? An annuity is paying consistent income perpetually. Your scheme has a limit amount to its payment. So it is not an annuity. If it is not an annuity, then how can you claim the Annuity tax relief? If IRB want to challenge the taxpayer who claims it, I think the taxpayer will lose.

no one can answer this???

It have consistent income in the plan & in the quotation we have the option for
"Claim Annuity Tax Relief / Menuntut Pelepasan Cukai Anuiti"
Policy owner cant surrender the policy unless the obtain the age of 55, once they
commit to this plan because it's for the retirement purpose.

True indeed.... somehow they don't know or they try to mislead others...

Just to share, since i dug out the details already and bought Uni.Asia's annuity:

For a scheme to be deductible under Annuity (if i'm not mistaken):
1. Up to $3K per annum tax relief
2. Tax relief is for tax year 2012 to 2021 (10 years) <-- watchout!
4. Annuity must NOT pay out for 10 years or until 55, which ever is LONGER <-- watchout!
5. Insurance company needs to provide "proof of contract" for both the above.

See MIA's B7 attached (http://www.mia.org.my/new/downloads/circularsandresources/budget/2012/SECTION_B/B7.pdf)
+ snapshots specifically of the B7.pdf for Annuities



Hope these help clear the air a bit
Please correct me if the data / above is wrong yar. My interpretation may be flawed (as usual )

This post has been edited by wongmunkeong: Mar 20 2012, 12:37 PM


Attached File(s)
 B7.pdf ( 106.73k ) Number of downloads: 89

Hi,

Is Uni Asia an approved Private Retirement Scheme (PRS) provider by Securities Commission (SC)? My understanding is only contribution to PRS approved by SC will be allowed for the max RM3K tax relief.

I read the star newspaper today that SC approved only 8 provider, ie. AmInvestment Management Sdn Bhd, American International Assurance Bhd, CIMB-Principal Asset Management Bhd, Hwang Investment Management Bhd, ING Funds Bhd, Manulife Unit Trust Bhd, Public Mutual Bhd and RHB Investment Management Sdn Bhd.

Link to the Star's article: http://biz.thestar.com.my/news/story.asp?f...00&sec=business

Referring to pg 12-13 of the attached PDF, the 3K tax relief is applicable for both PRS approved by SC and deferred annuity premium.
The PRS is run by unit trust company and annuity is by insurance company.

This post has been edited by wongmunkeong: Apr 6 2012, 06:55 PM


Attached File(s)
 2012_budget_commentary.pdf ( 187.91k ) Number of downloads: 233

Either one, same category of tax relief.
eg. like EPF/Life Insurance tax relief, your EPF & Life Insurance added together max tax relief $X,XXX
thus, PRS/Annuity, total max relief $3K