Malaysia Income Tax: Section 44 Donations and Deduction Limits

1.Introduction

Malaysia Income Tax Section 44 provides deductions for donations and contributions made to the government, approved institutions, and specific organisations. The eligibility, limits, and forms of donation (cash or in kind) vary depending on the recipient. Understanding these rules helps taxpayers maximise tax benefits while contributing to society.

2. Donations to Government (s.44(6)(i))

• Who qualifies?
  Both residents and non-residents.
• Eligible recipients:
  Federal Government, State Government, Local Authority, or institutions approved by the Director General Inland Revenue (DGIR).
• Deduction limit:
  • Cash : Unlimited
  • Subject to overall 10% of Aggregate Income (AI)

3. Donations to Approved Institutions & Organisations (s.44(6)(ii) & s.44(7))

Approved institutions include:

• Hospitals, public or benevolent institutions
• Universities & educational institutions
• Research bodies (medical, socio-economic, technical, vocational)
• Religious organisations (maintenance/building of places of worship)
• Cultural, arts, heritage, zoo, museum, animal protection organisations
• Environmental conservation organisations
• National unity funds
• ICT acculturation projects approved by Minister
• Benevolent funds for medical aid

     Limit:

• Cash: Unlimited
• Subject to 10% of Aggregate Income (AI)

4. Donations of Artefacts, Manuscripts, Paintings (s.44(6A))

• Donation to: Government or State Government
• Value determined by: Department of Museums Malaysia / National Archives
• Limit: In-kind only, unlimited (value is based on museum valuation instead of cost)
  

5. Public Libraries & Educational Libraries (s.44(8))

• Donation for provision of library facilities accessible to the public
• Limit: Cash up to RM20,000

6. Facilities for Disabled Persons (s.44(9))

• Provision of facilities in public places for disabled persons
• Limit: Cash or in-kind, unlimited (individuals only)

7. Donations to Healthcare Facilities (s.44(10))

• Medical equipment donations to healthcare facilities approved by Ministry of Health
• Limit: Cash or in-kind, up to RM20,000 (individuals)

8. Donations of Paintings (s.44(11))

• Donation to: National or State Art Gallery
• Value certified by: The respective gallery
• Limit: In-kind only, unlimited

9. Zakat Perniagaan (s.44(11A))

• For companies
• Limit: Cash, up to 2.5% of AI

10. Donations to Sports Development (s.44(11B))

• Contribution to: Approved sports activities or sports bodies under Sports Development Act 1997
• From Year of Assessment (YA 2023): Includes grassroots sports development programmes
• Limit: Cash, up to 10% of AI

11. Projects of National Interest (s.44(11C))

• Includes contributions to social enterprises, approved by Minister of Finance
• Limit: Cash or In Kind
  • Companies: 10% of AI
  • Individuals: 7% of AI

12. Wakaf & Endowments (s.44(11D))

• Contribution of Wakaf to religious authorities
• Endowments to public universities
• Limit: Cash, up to 10% of AI

13. Summary Table

14. Key Takeaways

• Most donations are subject to a 10% of Aggregate Income.
• Some donations (e.g., libraries, healthcare equipment) have fixed RM20,000 limits.
• In-kind donations are allowed in certain cases (paintings, artefacts, facilities for disabled).
• Always check that the recipient institution/organisation is approved by the authorities before making a donation claim.

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