Tax relief for loan repayment

KUALA LUMPUR: Employers who help settle their employees’ National Higher Education Fund Corporation loans will receive a tax exemption Jan 1 onwards.

But the employers must not impose any condition or bond on their employees, said PTPTN chairman Wan Saiful Wan Jan, adding that details were being finalised.

“Employers are eligible for tax relief on any repayment amount made, whether it is monthly instalments or a lump sum,” he said when announcing PTPTN’s new policy mechanisms yesterday.

He added that employers could use this mechanism as a way to incentivise their high-performing employees or to attract new recruits.

“It can also raise an employer’s reputation.”

Another repayment method, starting Jan 1, announced by Wan Saiful was borrowers will see their monthly loan instalments being deducted from their salaries via an Income-Contingent Loan Repay­ment.

He said the system was already in place in countries such as Australia and New Zealand.

It would only apply to those earning above RM2,000 and would deduct between 2% and 15%, depending on the salary bracket, he added. (See table)

“PTPTN will work together with all the relevant agencies to obtain the income data and borrowers’ employers’ details in order to bring this method to reality,” he said.

Among the agencies are the Employees Provident Fund, the Inland Revenue Board and the Companies Commission of Malaysia.

“Based on the information, PTPTN will issue instructions for the salary deductions based on percentage system to employers.

“It will then be employers’ responsibility to deduct their employees’ salaries for the PTPTN loan repayment,” he added.

Wan Saiful said that the system ensured that those who could not afford the (current) monthly instalments would not be burdened and that the rich could not take advantage of the system.

For self-employed borrowers, those without fixed incomes and those earning below RM2,000 a month were required to fill their income details on PTPTN’s online portal in order to repay their loans based on the same percentage system, he said.-Star