Do you want to reduce your income tax further in 2012? With the Private Retirement Schemes (PRS), you can enjoy another RM3,000 (or up to RM780 tax reduction at 26% tax bracket) as personal relief against your personal income for the Years of Assessment 2012 to 2021.
The PRS is a voluntary long-term contribution scheme designed to help individuals accumulate savings for retirement.
The following are some of the benefits of contributing to PRS:
- The funds under PRS will be professionally managed with the purpose of meeting the retirement objective of members.
- Contributions are not bound by any fixed amount or fixed periods.
- Individuals can contribute according to their age and risk tolerance.
- Contributors will have the option to switch funds (subject to terms and conditions) or contribute to more than one fund under PRS.
- Members who made contribution to the PRS funds are allowed to claim for a tax relief of up to RM3,000 per annum for the first 10 years from assessment year 2012 (together with any deferred annuity payment).
- Income distributed from the PRS funds to members will be exempted from Malaysian income tax.
- Employers who made contribution to the PRS on behalf of their employees are allowed to claim tax deduction against their business income on the contribution made up to 19% of the employee’s remuneration (together with contribution made to any other approved scheme) and with the benefit of vesting interest for staff retention.
- However, any withdrawals from a PRS before the age of 55 (other than by reason of death or permanent departure from Malaysia) will be subject to a 8% tax ,which will be deducted by the PRS scheme provider on behalf of the Inland Revenue Board.
To enjoy this personal relief for the Year of Assessment 2012, you only have this couple of weeks (before the year is up) to contribute to the PRS. Remember, this contribution can save you up to RM780 in your taxes! This investment of yours will effectively give you a ROI of up to 26%!
Contact your PRS consultant TODAY!
Note from Malaysian Taxation 101: While the author has highlighted that the personal relief is available for contributions to the Private Retirement Scheme (PRS), it must be pointed out that this relief is available for contributions to either the PRS OR the deferred annuity scheme. The views expressed by the author do not necessarily represent those of this site. Readers are advised to seek specific professional advice before acting on the views.