Further Deduction for Employment of Senior Citizen, Ex-Convict, Parolee, Supervised Person and Ex-Drug Dependant

Further / Additional Deduction for Employment of Senior Citizen, Ex-Convict, Parolee, Supervised Person and Ex-Drug Dependant

Qualifying Person

For the purpose of ascertaining the adjusted income of an employer for the basis period for Year of Assessment 2019 to 2025, an additional deduction is allowed for an employer who employs a Malaysian citizen and Malaysian resident who is:-

1. a senior citizen who shall be sixty (60) years and above;
2. an ex-convict who is a person who had been convicted to any offense by the court and had served his sentence of imprisonment;
3. a parolee as defined in the Prison Act 1995 [Act 537];
4. a supervised person who is a prisoner directed by an officer in charge to work at such labor under subparagraph 47(1)(b)(iii) of the Prison Act 1995; or
5. an ex-drug dependent who:-
   (i) had undergone treatment and rehabilitation pursuant to the Drug Dependants (Treatment and Rehabilitation) Act 1983 [Act 283];
   (ii) had undergone supervision pursuant to Paragraph 38B(1) of the Dangerous Drugs Act 1952 [Act 234]; or
   (iii) had been placed under supervision pursuant to Paragraph 8(3)(b) of the Drug Dependants (Treatment and Rehabilitation) Act 1983;
   and is registered with the National Anti-Drugs Agency (MyAADK system).

Qualifying Condition

The deduction allowed is subject to the following conditions:-

1. the employee is employed on a full-time basis;
2. the remuneration paid by the employer to the employee does not exceed RM4,000;
3. the employer and the employee are not the same people;
4. the employer is not a relative of the employee, that is:-
   (a) a spouse;
   (b) a parent, including a step-parent or parent in law;
   (c) a child, including a stepchild or a child, adopted in accordance with any law;
   (d) a brother or sister, including a stepbrother or stepsister; or
   (e) a grandparent or a grandchild, including a step-grandparent or step-grandchild.

Updates

The further/additional deduction was first introduced during Budget 2019, effective for the Years of Assessment 2019 and 2020. Under the Budget 2021, it was extended to the Year of Assessment 2025. The Proposal has been gazetted under P.U. (A) 47/2021. Kindly refer to our TaxLetter 30 for more information.