TO alleviate financial hardship especially among the poorer segment of the society, the Government has given the green light for a RM500 monthly withdrawal from Account 1 of the Employees Provident Fund (EPF) savings.
The maximum withdrawal is RM6,000 for 12 months.
Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said this withdrawal is to assist EPF members who have lost their jobs, and is expected to lighten the financial burden of 600,000 affected members.
“Taking into account both the i-Lestari initiative as well as the Account 1 withdrawal facility, the total cash withdrawal amounts to RM12,000,” he said when tabling the Budget 2021 at Dewan Rakyat today.
It is projected that the total payment for Account 1 withdrawals will involve RM4 bil. Eligible members can apply starting January 2021.
In a related development, Tengku Zafrul said the EPF contribution rate for workers will be reduced from 11% to 9% starting January 2021 for a 12-month period (this measure would entail RM9.3 bil).
On the income tax front, those earning between RM50,001 and RM70,000 can expect their income tax to be lowered by one percentage point for year of assessment 2021. This is expected to benefit 1.4 million taxpayers.
For a period of two assessment years, Tengku Zafrul said the income tax exemption limit for compensation paid upon job loss will be raised from RM10,000 to RM20,000 for every year of service completed.
He added that employers who hire senior citizens, can expect additional tax deductions. This facility will be extended until 2025.
Also on the income tax front, the limit of the ‘lifestyle tax relief’ has been raised to RM3,000 from the current RM2,500, specifically to cover sports-related expenditure, including entrance participation fees for sports competitions.
“The scope of the relief has also been expanded to include subscription to electronic newspapers,” said Tengku Zafrul.
Elsewhere, he said EPF will allow its members to withdraw from their Account 2 to purchase insurance products for themselves and their family members.
On the same note, the RM3,000 a year tax relief for the Private Retirement Scheme has been extended until 2025.
As a safety net, the Government has also allocated RM24 mil for a Social Security Organisation (Socso) disaster scheme that is expected to benefit 100,000 workers, including delivery drivers and contractual civil service workers. – Nov 6, 2020
