Malaysia individual tax deduction – Broadband subscription fee for YA2010 to YA2012


broadbandMalaysia Inland Revenue Board (IRB) on 12 April 2011 issued a Technical Guideline on personal tax relief or deduction on the broadband subscription fee. It clarifies that individual (employee) who receives benefit on using the broadband (1) registered under the name of employer and (2) the fee is paid by employer is exempted from tax. Such benefit in kind received by the said employee is exempted from tax. 

However, it is unclear whether the benefit in kind received by the employee is subject to tax or not, if the broadband is registered under the employee’s name and the fee is paid and reimbursed by the employer. Pursuant to IRB Public Ruling No. 2/2004 on Benefits-In-Kind (Third Addendum) issued on 17 April 2009, monthly bills paid by the employer for fixed line telephone, mobile phone, pager, PDA or subscription of broadband is fully exempted from tax. The amount to be exempted includes registration cost and installation cost.

What is Internet broadband?

The Technical Guideline explains Broadband is an internet connection via cable or DSL (Digital Subscriber Line) with a download/upload (or both) speed of more than 256kbps.

  • Examples of cable broadband – include ADSL, SDSL, VDSL, ADSL2+, FTTH, ETTH, High Speed Broadband (HSBB).
  • Examples of wireless broadband – include 3G/HDSPA, WiMAX, Satelite, Iburst, EV-Do.

It appears that TM Streamyx and UniFi (HSBB) fall under cable broadband category, and a number of telco wireless internet packages may fall under 3G/HDSPA category and P1 & Yes4G should be fall under WiMAX category.

Tax Treatment

Dialup internet fee does not entitle to personal tax relief/deduction.

Personal tax relief/deduction of up to a maximum RM500 per year is allowed for broadband subscription fee incurred and registered under the individual tax payer’s name.

Broadband Fee Tax Relief for YA2010 to YA2012

Broadband fee tax relief/deduction is only effective for year of assessment 2010, 2011 and 2012 only. Hopefully this relief will be extended in the upcoming Malaysian Budget 2012 to be tabled on 7 October 2011.

Some other Q & A published by IRB include:-

Q: Can I claim for payment for 3G services on smartphones?

A: Yes. But on broadband usage only.

Q: My smartphone bill is registered under my mother’s name but I am paying the monthly bill. Can I claim for deductions for broadband?

A: No. The broadband expenses must be expended under the individual’s name.