KUALA LUMPUR, Oct 10 — For Malaysian taxpayers paying a carer or for care services for their parents or grandparents, the government is proposing to allow them to claim tax relief even if the care is not for medical reasons.

Currently, Malaysians can claim a maximum RM8,000 tax relief for spending on these services in Malaysia for their parents and grandparents, who are required to be living in Malaysia:

• Medical treatment at clinics and hospitals
• Maximum RM1,000: Full medical examination and vaccinations
• Dental treatment (excluding cosmetic dental treatment)
• Treatment and care at home, day care centres and residential care centres

Based on existing Inland Revenue Board (LHDN) rules, claims must be supported by the relevant documents, including receipts and medical certification where required:

• A medical practitioner registered with the Malaysian Dental Council must certify that their medical condition needs dental treatment;
• A medical practitioner registered with the Malaysian Medical Council must certify that their medical condition needs medical treatment, medical examination or care services.

This means that taxpayers currently can only claim for their parents’ or grandparents’ care services if it involves medical care.

Yesterday, in Budget 2027, the Finance Ministry proposed that Malaysians be allowed to claim tax relief on “all types of care expenses” for their parents and grandparents at home, day care centres and residential care centres, instead of limiting it to “medical care”.

Under this proposed change starting from the year of assessment 2027, you will still need a carer’s written declaration or a copy of the carer’s work permit together with receipts, but you can make the tax relief claim without “requiring any verification from a registered medical practitioner”.

Good news for older persons needing care services

In Budget 2027, the Malaysian government also proposes to reduce the current service tax of eight per cent to six per cent for care centre services for older persons, starting from January 2027.

It also proposes to exempt care centre services from service tax if the annual fees for each older person do not exceed RM96,000.

In other words, if an older person is paying RM8,000 or less every month for care centre services, there will be no service tax.

But if the care centre charges more than RM8,000 every month for an older person’s care services, the six per cent service tax could apply, depending on how the exemption is implemented.

Just as an example, if an older person is paying RM8,100 every month for such care services, a six per cent tax on the full fee would mean an additional RM486 per month or RM5,832 per year.

On July 16, 2026, Deputy Finance Minister Liew Chin Tong had in a Dewan Rakyat Special Chamber session noted that the government was carrying out studies to identify categories for care centres for older persons that offer basic or premium care services, in order to determine a targeted service tax collection.

He had said the Finance Ministry would ensure vulnerable groups are not affected by service tax on care services for older persons.