Tax Incentive for Employers Who Provide Child Care Centre
Tax Incentive for Employers Who Provide Child Care Centre
Definition of childcare centre
A centre to take care of:
• At least 4 or more children;
• Aged below 4 years old;
• From more than one household
Qualifying childcare centre
• Registered with the Department of Social Welfare (DSW);
• Subjected to Child Care Centre Act 1984 (Act 308);
• Governed by the Ministry of Women, Family and Community Development
Existing Tax Treatment
(i) Provision and maintenance of childcare centre
Expenses incurred for the provision and maintenance of a child care centre are allowed for tax deduction. [Paragraph 34(6)(i) of the ITA 1967]
Examples:
Rental
• Salaries
• Food and beverage
• Cleaning fee
(ii) Child care allowances
Employer – Provider
• The child care allowance paid to employees who have children is allowable for tax deduction under Section 33(1) of the ITA 1967.
Employee – Receiver
• Employee has to declare the allowances received as part of gross income, which subjects to tax. [Paragraph 13(1)(a) of the ITA 1967]
• Enjoy tax exemption up to RM2,400.
Additional Tax Incentives
A 100% further deduction will be given in respect of:
• The provision and maintenance of child care centre; and
• Child care allowances paid to employees
Industrial Building Allowance (IBA)
An employer is entitled to claim a 10% IBA of the capital expenditure of the building, where it is:
• Built or purchased by the employer;
• Served as a child care centre for his employees' children; and
• In operation
Qualifying Capital Expenditure (QCE)
Only cost attributable to the building is entitled, which include:
• Purchase price
• Legal fee
• Stamp duty
• Other incidental expenditure
Sources:
Public Ruling No. 5/2016: Tax Incentives For Employers Who Provide Child Care Centres
https://phl.hasil.gov.my/pdf/pdfam/PR_5_2016.pdf
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