PETALING JAYA: Tax consultants see both opportunities and limitations in the expanded lifestyle tax relief under Budget 2027, with broader eligibility expected to help more taxpayers maximise their claims even as the unchanged RM2,500 ceiling limits additional savings for others.
While the inclusion of artificial intelligence (AI) subscriptions and pet-related expenses could benefit those who have yet to fully utilise their allowances, they said taxpayers already claiming the maximum amount may see little difference.
They said the expansion reflects changing spending habits, although benefits would depend on individual circumstances.
ALSO READ: Calls for a higher claim threshold
Tratax executive director Thenesh Kannaa said the government’s approach was more inclusive as more taxpayers could make full use of the RM2,500 relief.
He cited an individual paying RM120 monthly for broadband, amounting to RM1,440 annually, who would previously have been unable to exhaust the allowance without other qualifying purchases.
“If the AI subscription costs about RM80 per month, the entire RM960 can be claimed along with the RM1,440, as the aggregate is still within the RM2,500 limit,” he said.
Thenesh said the expanded relief could indirectly subsidise AI subscriptions and encourage Malaysians to adopt the technology.
However, he stressed that only AI subscription expenses incurred from Jan 1, 2027 would qualify.
“Of course, each taxpayer’s profile is different. The approach taken in the Budget balances the need to incentivise AI adoption while being fiscally prudent,” he said.
Meanwhile, Owen KLCA PLT managing director Datin Christine Koh said the expansion might offer no additional savings to taxpayers who had already exhausted their lifestyle relief.
She said the RM2,500 ceiling already covered broadband subscriptions, books, electronic newspapers, laptops and smartphones, leaving little room for the new eligible expenses.
“Many taxpayers would have already fully utilised this relief.
“Therefore, adding AI subscriptions and pet vaccinations without increasing the ceiling may not result in any additional tax savings for them,” she said.
She proposed doubling the lifestyle relief ceiling to at least RM5,000, arguing that a single smartphone or laptop could already exceed the existing limit.
“If AI is the future of work and productivity, why should AI subscriptions compete with everyday lifestyle expenses under the same limited ceiling?” she said.
Koh suggested introducing a separate AI subscription relief or dedicated digital productivity allowance to support the government’s digital transformation agenda.
She also said middle-income taxpayers could enjoy greater savings than lower-income earners because the actual benefit depended on their marginal tax rates.
Meanwhile, she said the inclusion of sports shoes, capped at RM300 within the RM1,000 sports relief, was a positive development.
She also highlighted the reclassification of self-enhancement courses under education relief, subject to a RM2,000 sub-limit within the RM7,000 ceiling, which could provide additional room for eligible taxpayers.
