“To achieve this aim, LIAM proposed that the tax deduction be made separately available for EPF contributions and life insurance premiums, ie RM6,000 tax relief for EPF contributions and a separate RM6,000 for life insurance premiums,” said president of LIAM
Vincent Kwo Shih Kang in a statement yesterday.
Vincent Kwo Shih Kang in a statement yesterday.
In addition, LIAM is proposing a tax relief for medical and education insurance premiums to be increased from the current RM3,000 to RM6,000 as the current amount of tax relief is insufficient in most circumstances.
LIAM noted that the current taxation system which provides a RM6,000 tax deduction on combined
EPF contributions and life insurance premiums was last revised in 2005 and has suffered from inflation erosion.
Apart from inflation erosion, the current tax incentive system also does not differentiate the two important elements of financial planning, ie savings and protection where EPF is for meeting long-term savings needs while life insurance is primarily for the purpose of financial protection with a secondary aim of long-term savings.
LIAM noted that the current taxation system which provides a RM6,000 tax deduction on combined
EPF contributions and life insurance premiums was last revised in 2005 and has suffered from inflation erosion.
Apart from inflation erosion, the current tax incentive system also does not differentiate the two important elements of financial planning, ie savings and protection where EPF is for meeting long-term savings needs while life insurance is primarily for the purpose of financial protection with a secondary aim of long-term savings.
LIAM is also proposing a separate deduction so people can use the extra money to invest in financial protection plans to address the protection gap issue especially as the Economic Transformation Programme has set the objectives to increase the insurance penetration rate to 75% of the population by year 2020. Currently, the penetration rate of life insurance and takaful is at 54%.
“The life insurance industry plays a very important role in financial protection, financial accumulation and healthcare funding.
With proper advanced planning and the right tax structure, the private sector and the rakyat can be incentivised to play a bigger role and form a public-private sector partnership with the government in sharing the cost of various social economic benefits as our country progresses towards a developed nation,” added Kwo
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