Christmas is coming to town, but before that, it was also the time when many people are rushing to enroll/top up their Private Retirement Scheme (PRS). Why? Main reason is they want to enjoy the tax relief given of up to Rm3,000 per year. However, social media has over-took the whole atmosphere with the purported 25% tax on PRS. Is this true?
All I want for Christmas is Tax-Free...
Why suddenly got 25% tax? It was all started with the below video...
Anyway, some people had misunderstood the meaning and translated into such chaos in social media with more than few thousand likes and comments. Well, it seems like the respond garnered already impacting the PRS contributions for many people.
Since then, the Private Pension Administrator (PPA) which was set up to monitor and administer the whole PRS scheme, had issue a statement to clarify on this matter. Likewise, Inland Revenue Board (LHDN) also issue a statement on this matter. (Click here to view)
To summarize:
- NO tax on PRS withdrawal when contributor reaches the official retirement age set (currently at age 55)
- As per previous terms, 8% tax penalty will be imposed if contributor withdraw before retirement age.
- However, the 8% tax penalty will be exempted if:
- In the event of Death;
- Permanent departure from Malaysia;
- Permanent total disablement (New addition);
- Serious disease (New addition); or
- Mental disability (New addition)
Gone are the so called bad news. Indeed, there is more good news with the 3 NEW pre-retirement withdrawal conditions. PRS contributors should feel relieve now.
Take the opportunity to invest before the closing date for respective PRS providers. You may refer to our previous article on PRS below:
- What is Private Retirement Scheme (PRS) ?
- How Private Retirement Scheme (PRS) actually works ?
- What Are the Tax Benefits for PRS ?
Indeed, there is more good news with the 3 NEW pre-retirement withdrawal conditions. PRS contributors should feel relieve now.
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