LIFE has become a lot more convenient over the past decade.
From shopping and banking to booking holidays and managing our finances, many things that once took time and effort can now be done in minutes, with technology increasingly embedded in our lives.
Tax may never be quite that exciting, but the principle remains the same: as life evolves, our tax system should evolve too.
With Budget 2027 on the horizon, here are a few ideas that could help make personal taxation a little more relevant to everyday life.
Let e-Invoicing work for taxpayers too
Much of the conversation around e-Invoicing has focused on compliance and transparency for businesses.
While these are important objectives, taxpayers should also be able to enjoy the benefits of this digital transformation.
For many taxpayers, filing a tax return still involves going through receipts and keeping track of documents throughout the year. As more transactions move into the e-Invoicing ecosystem, there may be opportunities to simplify the claiming of personal tax reliefs.
Qualifying expenses such as medical treatment, education fees and lifestyle purchases could eventually be pre-populated into tax returns, reducing administrative effort and minimising errors.
This would naturally give taxpayers a good reason to request e-Invoices.
The more visible the benefits, the more natural adoption becomes. Digitalisation should not only make tax collection more efficient. It should also make tax compliance easier for taxpayers.
Making room for the middle
Ask most households what is on their minds today, and financial planning will likely feature prominently in the conversation.
For middle-income earners, balancing housing costs, education expenses, healthcare needs, and family commitments has become an increasingly important part of everyday life.
One area worth reviewing is the personal income tax rate structure. Currently, chargeable income exceeding RM100,000 moves into a 25% tax bracket, with the next major band extending up to RM400,000.
Given the significant gap between these thresholds, it may be timely to review the personal income tax bands more holistically to better reflect today’s economic realities.
This could include widening certain bands, such as the current 19% band, before taxpayers move into higher marginal tax rates, helping to create a more gradual progression of tax rates.
It may also be beneficial to review the RM9,000 individual tax relief, which has remained unchanged for more than a decade.
Periodic reviews can help ensure that this broad-based relief continues to remain relevant over time, something many among the rakyat would undoubtedly welcome.
The discussion is not necessarily about reducing taxes.
Rather, it is about ensuring that the tax system evolves alongside changes in income levels and living costs.
Tax-exempt benefits for today’s workplace
The workplace looks very different today than it did a decade ago. Employers are investing not only in traditional benefits, but also in professional development, mental wellbeing programmes, digital tools, and flexible working arrangements that help employees at work and beyond.
Expanding the scope of tax-exempt employment benefits to include selected mental wellbeing initiatives, workplace wellness programmes, and support for flexible and hybrid ways of working could better reflect the changing priorities of employers in addressing the wellbeing of their people.
This could be in the form of wellbeing allowances, home office equipment and other forms of workplace flexibility support that have become increasingly common in modern organisations.
Recognising them within the tax framework could help employers cater to their employees’ needs more holistically.
Caring across generations
Additionally, for many Malaysians, caring for ageing parents and grandparents is no longer a future concern. It’s already part of everyday life. The government’s move during Budget 2025 to extend tax measures on elderly care and parental care to grandparents was a welcome recognition of this trend.
Looking ahead, there may be merit in building on these measures. This could include extending relief for serious disease treatment to grandparents, recognising that many families increasingly shoulder significant healthcare costs across multiple generations.
There may also be scope to introduce an “active ageing” relief, supporting expenses that help elderly Malaysians remain healthy, active, and independent for longer.
This could include senior fitness programmes, rehabilitation and mobility-related activities, as well as preventive wellbeing initiatives.
Tax reliefs may not remove the challenges that come with caring for elderly loved ones, but they can make the journey a little easier.
A tax that journeys with life
A decade from now, life will probably look different again. Change is inevitable, but paying taxes will always be part of contributing to the society we live in.
A good tax system should make that responsibility as seamless as possible, while ensuring that reliefs and incentives continue to assist people in the things that matter to them.
As Budget 2027 takes shape, it’s an opportunity to ensure that personal taxation continues to evolve alongside the people it serves, remaining meaningful, relevant, and supportive through the different stages of life.
Michelle Chuo is a tax partner with PwC Malaysia. The views expressed here are the writer’s own.
