U-Turn: Govt maintains education savings fund tax relief until 2024

In an apparent U-turn, Prime Minister Anwar Ibrahim has announced that the government will extend individual income tax relief for net savings in the National Education Savings Fund (SSPN).

This will allow taxpayers to claim relief up to RM8,000 on their contributions to the fund until 2024.

“This was decided after hearing public concerns and complaints made to the government (after yesterday’s announcement).

“This will incur losses of RM250 million per year in the government’s revenue but will benefit approximately 400,000 taxpayers,” Bernama quoted him as saying when tabling the Supply Bill 2023 for its second reading at the Dewan Negara today.

The SSPN measure was among several additional initiatives that Anwar, who is also finance minister, had announced for Budget 2023.

Previously, taxpayers were able to claim tax relief up to RM3,000 on their SSPN savings, before it was raised to RM6,000 for 2012 to 2018, and then up to RM8,000 from 2019 onwards. This was intended to encourage parents to save for their children’s education.

However, Deputy Finance Minister Steven Sim reportedly said yesterday that the tax relief will no longer be continued starting with the 2023 assessment year.

“This is because of additions to the list of individual tax relief and deductions including a tax cut up to 2 percent on individual income tax, an increase on tax relief for medical expenses from RM8,000 to RM10,000, and other relief.

“The National Higher Education Fund Board (PTPTN) also offers facilities for borrowers with monthly income less than RM1,800 to defer repayments,” Nanyang Siang Pau quoted the deputy minister as saying.

The announcement drew brickbats from various quarters including MCA president Wee Ka Siong, Muda president Syed Saddiq Syed Abdul Rahman, and former Bersatu information chief Wan Saiful Wan Jan, who is also PTPTN’s ex-chairperson.

They had demanded the tax relief for SSPN savings to be continued.

Responding to the criticism, Sim posted on Facebook this morning that he has discussed the matter with Anwar yesterday and the latter agreed to extend the tax relief until 2024.

“This government is not infallible but our prime minister is always prepared to listen and prioritises the people’s interests, and most importantly, takes swift action,” he said. - Mkini