Paying a carer for your parents or grandparents? Budget 2027 proposes tax relief even for non-medical care

Malaysia's Finance Ministry has proposed allowing taxpayers to claim tax relief on non-medical care expenses for their parents or grandparents, starting from the 2027 tax year. Currently, Malaysians can only claim up to RM8,000 in tax relief for medical care services for parents and grandparents living in Malaysia. The proposed change would extend this tax relief to non-medical care services offered at home, daycare centers, and residential care centers.

To claim the tax relief, taxpayers would still need to provide a carer's written declaration or work permit, along with receipts. However, they would not need verification from a registered medical practitioner, unlike the current rules. The government also plans to reduce the service tax from eight percent to six percent for care centers catering to older persons, starting in 2027.

Care centers charging up to RM96,000 annually for older persons' services would be exempt from service tax. If the monthly fee exceeds RM8,000, a six percent tax would apply, depending on the exact implementation of the exemption.