Tax Treatment of Annuities in Malaysia

What tax exemption is granted to annuitants in Malaysia for annuities purchased from life insurance and takaful companies?

What is one of the primary advantages of purchasing an annuity?

Which of the following limitations is associated with annuities?

How can annuities be beneficial for individuals who struggle with money management?

What is the significance of the tax exemption for annuities to individual clients?

Tax Treatment of Annuity in Malaysia

Annuitants are granted an income tax exemption of RM1,000 for annuities purchased from life insurance and takaful companies.
This exemption has been effective since the Year of Assessment 1995.
The tax exemption results in a higher yield for clients compared to other investments that are not tax-exempt.

Advantages of Annuities

Annuities offer a consistent income stream, assisting individuals in planning for a stress-free retirement.
They can provide protection against inflation if the returns exceed the inflation rate.
Suitable for individuals lacking in financial management skills, allowing for easier retirement planning.
Annuities serve as a supplementary source of income in addition to the Employees Provident Fund (EPF) during retirement.
Life insurers and takaful products present tax benefits to clients enrolling in annuity programs.

Limitations of Annuities

Payments from annuities may fall short of matching the inflation rate, potentially reducing purchasing power in retirement.
Variable annuities carry a risk of capital loss, exposing investors to market fluctuations.

This quiz covers the tax treatment of annuities in Malaysia, focusing on the income tax exemption of RM1,000 for annuitants purchasing from life insurance and takaful companies. It also discusses the implications of tax-exempt income on client returns. Understand the effective date and benefits of this exemption.