Prime Minister Datuk Seri Najib Razak, who is also Finance Minister, unveiled 2014 budgets in the Parliaments on Friday 25th October 2013. The 2014 Budget is formulating based on the theme “Strengthening Economic Resilience, Accelerating Transformation And Fulfilling Promises”.
There are five main thrusts in 2014 budget.
First Thrust :- Invigorating Economic Activity
Second Thrust :- Strengthening Fiscal Management
Third Thrust :- Inculcating Excellence in Human Capital
Fourth Thrust :- Intensifying Urban and Rural Development
Fifth Thrust :- Ensuring Well-Being of the Rakyat
The following are 2014 Budget highlights for Personal Finance and Investment.
|223,000 units of affordable houses to be built by government and private sector in 2014
|RM1 billion for PR1MA to provide 80,000 housing units at prices 20 per cent lower than market prices.
|SPNB to build 15,122 units of affordable houses, 3,000 units of Rumah Idaman Rakyat and 8,000 units of Rumah Mesra Rakyat.
|New category of Rumah Mesra Rakyat introduced with sales price from RM45,000 to RM65,000 and subsidy of RM15,000 to RM20,000 per unit.
|Private Affordable Ownership Housing Scheme (MyHome) introduced with subsidy of RM30,000 to private developers for each unit built.
|National Housing Council to be set up to further strengthen real estate market and increase opportunities for rakyat to own houses.
|Real Property Gain Tax (RPGT)
|RPGT increase to 30% for property disposed within 3 years, 20% between 3 to 4 years & 15% between 4 to 5 years. After that no RPGT.
|Increase transparency in property sales price, where property developers will have to display detailed sales price including all benefits and incentives offered to buyers such as exemption of legal fees, stamp duty, sales agreements, cash rebates and free gifts.
|Prohibit developers from implementing projects that have features of Developer Interest Bearing Scheme (DIBS).
|Increase the minimum price of property that can be purchased by foreigners from RM500,000 to RM1,000,000.
|For non-citizens, RPGT is imposed at 30% on the gains from properties disposed within the holding period of up to 5 years and for disposals in the sixth and subsequent years, RPGT is imposed at 5%
|Valuecap to allocate RM1 billion to invest in companies that score high on the Environmental, Social and Governance Index Index.
|Bumiputera equity holdings and property ownership to be increased through Skim Jejak Jaya Bumiputera, Skim Amanah Saham Bumiputera 2 and strengthening of Bumiputera real estate institutions.
|Goods & Services Tax (GST)
|Sales tax and service tax to be abolished, to be replaced by Goods and Services Tax (GST) effective April 1, 2015 at rate of 6%.
|GST will not be imposed on piped water and first 200 units of electricity per month for domestic consumers.
|Transportation services such as bus, train, LRT, taxi, ferry, boat, highway tolls as well as education and health services are exempted from GST.
|Sale, purchase and rental of residential properties as well as selected financial services are exempted from GST.
|Individual income tax rates to be reduced by one to three percentage points for all tax payers.
|Chargeable income subject to maximum rate to be increased from exceeding RM100,000 to exceeding RM400,000. Current maximum tax rate at 26 per cent to be reduced to 24 per cent, 24.5 per cent and 25 per cent. This will be effective from 2015.
|Special tax relief of RM2,000 for tax payers with monthly income of up to RM8,000 received in 2013.
|To encourage more people to participate in 1Malaysia Pension Scheme (SP1M), the Government will increases its contribution from 5% to 10%, or from a maximum of RM60 to RM120 per year. This scheme is for the self-employed without fixed income to contribute voluntarily to the Employees Provident Fund (EPF). This will be effective from 1 January 2014 to end-2017
|One-off incentive of RM500 to youth who participate in the PRS scheme with a minimum cumulative investment of RM1,000 within a year .