Another 1Malaysia poser: tax allowance on donation to religious body

Apparently, there is a big difference between Non-Muslim and Muslim taxpayers:

Example on Taxable Income

When non-Muslims do their religious obligations-- that is NOT tax-deductable unless the Church or temple has applied and obtained the approval for tax exemption, which they are normally very stringent with and is seldom approved.

Even if approved, the donation is restriced to 7% of your aggregate income. (This has been revised to 10% from YA 2009 for company.)

Whereas zakat qualifies for 100% and is deducted from the tax liability.

Example:

Ah Chong pays RM10,000 to the temple.
Annual income is RM100,000-- Personal Relief of Rm23K
Chargable income RM70,000 (after deducting approved donation restricted to RM7000)
Tax payable RM7,125

Ahmad - same income and relief
Chargeable income (RM100K - 23K) RM77,000
Tax payable (Rm7125 + 1680) RM 8,805
Less zakat RM10,000
Tax refundable (RM 1,195)

Ah Chong has the same income paid the same amount for donation, needs to pay tax RM7,125
Yet, Ahmad - is entitled to a tax refund of RM1,195.

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