In Malaysia, the Private Retirement Scheme (PRS) offers an annual personal tax relief of up to RM3,000. This incentive, managed by the Private Pension Administrator (PPA) Malaysia, is designed to encourage individuals to save more for their retirement on top of mandatory EPF contributions.
Key Features of PRS Tax Relief
- Maximum Amount: You can claim up to RM3,000 each year for contributions made to any PRS fund. This amount is inclusive of premiums paid for deferred annuities.
- Extended Validity: This tax relief has been officially extended until the year of assessment 2030.
- Tax Savings: Depending on your income tax bracket, this RM3,000 relief can result in actual cash savings of up to RM840 annually.
- Eligibility: Open to all individuals aged 18 and above, including both employees and self-employed persons.
How to Claim
- Filing: During your annual income tax filing (e.g., using the MyTax LHDN portal), you can declare your PRS contributions under the designated section for personal reliefs.
- Documentation: Ensure you obtain a Contribution Statement from your PRS provider or download a consolidated statement from the PPA Member Portal as proof for tax purposes.
- Gross Contribution: The relief is based on your gross contribution, meaning it includes any sales charges or account opening fees paid.
Important Restrictions
- Sub-Account Withdrawals: Contributions are split into Sub-account A (70%) and Sub-account B (30%). Pre-retirement withdrawals from Sub-account B for general purposes incur an 8% tax penalty.
- Withdrawal Exemptions: No tax penalty is applied for withdrawals due to death, permanent departure from Malaysia, total permanent disability, or for specific housing and healthcare purposes.
- Employer Contributions: While individuals get the RM3,000 relief, employers contributing on behalf of employees can claim a separate tax deduction of up to 19% of the employee's remuneration.