The
Income Tax (Deduction for Payment of Care Allowance of Parents and Grandparents) Rules 20261 (“
Rules”) were gazetted on 26 June 2026. The Rules have effect from the year of assessment 2025.
Section 33 of the Income Tax Act 1967 (“
Act”) provides for the deductions which can be made to a person's gross income, including deductions as may be prescribed, to determine that person’s adjusted income.
The Rules prescribe for a deduction for any expenses incurred by an employer to his employee in relation to care allowance for the employee’s parents, adoptive parents or grandparents. While the Rules do not prescribe a specific monetary limit on the deduction, the Director General of Inland Revenue may disallow the deduction of an amount which in his opinion exceeds the amount that would be reasonably expected to be incurred in the ordinary course of the company’s business.
The deduction under the Rules is in addition to any deduction under Section 33 of the Act.
Comment
The incentive under the Rules carries into effect one of the measures announced by the Prime Minister and the Minister of Finance of Malaysia, Dato’ Seri Anwar Ibrahim, in the 2025 Malaysian Budget Speech.
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Alert by Sheba Gumis (Partner) of the Tax Practice and Sarah Aida binti Mohammad Ali (Associate) of the Corporate Practice of Skrine.