Seven mistakes fund investors make most

There's a difference between trying to do the right thing and actually getting it done. The biggest mistakes mutual-fund investors make fall right in the middle, where an investor trips over the fine line that separates good investing tactics from bad ones.

In talking to financial experts and fund specialists, as well as reviewing industry statistics about ownership and asset flows, it's clear that the investing public keeps trying to do the right thing, it just doesn't always get the best results.

Here are the biggest mistakes fund investors make. If they describe the way you have been investing, it might be time to check your portfolio and your mindset:

The 7 fund stats that mislead investors the most

My friend Keith works for a big mutual fund company and assumes I hate mutual funds because, he says, I "always write about the things we do wrong."


He insists that fund companies don't actually do much wrong, because they follow the rules and regulations and they'd get in trouble if they violated those standards.

While he's right from a legal standpoint, Keith ignores the simple truth that the rules leave fund companies a lot of ways to fudge the statistics, and the meaning of the numbers. What's more, industry practices let fund companies and research firms hype red herrings, information that's attractive but not necessarily meaty and important.

In our recent discussion, I laid out for Keith what I considered the most misleading statistics and data in the fund world. The longer the conversation ran on, the more I realized that most fund investors don't necessarily know how this information can be used against them.
If these points factor into your investment decisions, you may want to look more closely at their meaning:

How to invest in gold

HISTORICALLY, gold is perceived to be a safe haven during uncertainties and economic crises as it is considered more stable than other asset classes. It is generally an effective hedge against inflation and fluctuations in the US dollars.

Gold is an investment tool for preservation of wealth and a store of value in times of market volatility. It is an asset diversifier that could lower the overall risk in an investment portfolio.

In the previous article, we discussed the benefits of investing in precious metals and particularly gold. This article will focus on different ways to invest in gold.

Updates: Do We Lose Out in Budget 2010?

Let's revisit some of the Budget 2010 goodies that were announced last Friday that have direct financial impact on the working population:

• Increased personal tax relief from RM8,000 to RM9,000
• Reduction of maximum tax rate from 27% to 26% for chargeable income of RM100k or more
  
• Broadband subscription fee tax relief of up to RM500
• Service charge of RM50 per credit/charge card and RM25 per supplementary card
  
• RPGT tax of 5% for property disposition
  

A Layman's View of Budget 2010

Budget 2010 has been revealed by our Prime Minister this afternoon and many measures have been announced. In this article, I will focus on the measures to be implemented next year that have direct impact on the welfare and financial health of normal working people:

1. Maximum income tax rate has been reduced from 27% to 26% for chargeable income of more than RM100,000
2. Personal tax relief has been increased from RM8,000 to RM9,000
3. Tax relief for broadband subscription fee up to RM500 from year 2010 to 2012
4. 5% real property gain tax (RPGT) from Jan 1, 2010, except the house gift from parent to child, husband to wife, and grandparent to grandchild.
   
5. RM50 service charge for every principal credit/charge card, including free for life card. RM25 service charge for each supplementary card from Jan, 2010
   
6. RM10,000 tax for each approved permit (AP) issued to open AP holders
7. New fuel subsidy management system by early 2010
8. New EPF scheme to use current and future savings in Account 2 to purchase higher value house or additional house
9. New 3 billion 1Malaysia sukuk with 5% returns for Malaysians age 21 and above
10. 1Malaysia retirement scheme for self-employed, to be run by EPF. For every RM100 contribution, the government will subsidize 5%, up to RM60 per year, for a maximum of 5 years
    
11. Netbook with free Internet subscription will be available for tertiary students for a fee of RM50 for 2 years
12. Civil servants are eligible to apply for computer loans once in every three years and up to a maximum of RM5,000 from the government once in every five years
13. Employees EPF contributions will be raised again to 11 per cent on a voluntary basis with immediate effect. However, from Jan 1, 2011 employees' EPF contribution will revert to 11 per cent.
14. Personal tax relief for EPF contribution and life insurance premiums to be increased from RM6,000 to RM7,000. The 1k increase can be only use for retirement annuity insurance premiums.
    
15. For tertiary students with PTPTN loan, the loan will be converted to scholarship if the students secure first class degree
16. Local and foreign knowledge workers in Iskandar Malaysia will be subjected to only 15% income tax
    

Should I Review My Insurance Coverage Amount After Retirement?

In the previous article, I talked about reviewing our insurance coverage plans/riders after our retirement. In this article, I'm going to talk about reviewing our insurance coverage as well, but the focus in on reviewing the coverage amount.

Let's look at each of our insurance plan/rider as below:

• Life/Permanent Disability (TPD) - If you have stand alone life/TPD insurance, by all means reduce the coverage amount to a bare minimum. Why do i say so? As mentioned before, life insurance is for you to provide for your family. Assuming that your children are all financially independent, the need of having large life coverage has diminished. If you have medical/critical illness rider attached to a life policy, reduce it to an amount that can sustain the cost of insurance for having these riders.
• Critical Illness - Please maintain or even increase the amount covered so far as dreaded illnesses might hit you in the old age and critical illness plan/rider will provide you with a good sum for treatment.
• Hospitalization & Surgery - You should NOT reduce the insurance coverage for this plan/rider as the chances of hospitalization are much higher when we grow older.
• Personal Accident - You should think of increasing the sum assured for personal accident since the likelihood of having accidents/body injury are much higher when we are old. Besides, personal accident plan/rider is rather inexpensive.

In short, we can reduce the coverage amount for life/TPD insurance but MUST maintain/increase the coverage amount for any plan/rider that is related to critical illness/hospitalization/accidents.

Do I Still Need Insurance Coverage After Retirement?

By the time we reach our retirement age, most of or children would have graduated from school or at least reaching tertiary level. Then some of us might wonder, do we still need insurance coverage? Speaking from personal experience, my dad terminated all his insurance coverage a few years after his retirement. I dont have the chance to ask him on why he terminated all his coverage, but i would assume that by then he doesn't see the need for having insurance coverage anymore.

So, the question is: do i still need insurance after my retirement? First of all, review what coverage you have in your insurance policy. Then, decide on which part of insurance that you still think that is critical for you post retirement.

New Launch: Hwang-DBS Global Allocation Fund Series

Hwang-DBS Investment Management has just introduced a new unit trust series, Global Allocation Fund (GAF), which consists of Global Growth Allocation fund and Global Balanced Allocation Fund. This asset allocation fund series intend to gain exposure to money markets, bonds, equities, real estate and commodity markets via exchange traded funds (ETF) and other financial instruments, such as exchange traded notes (ETN) and listed securities.

Below is some of the summary information for Global Growth and Global Balanced Allocation series:

Philip Master Equity Growth Fund relaunched

Philip Mutual Bhd (PMB) has relaunched its Philip Master Equity Growth Fund (PMEGF), amid improving investors’ sentiment and optimism in the recovery of the global economy.

In a press release yesterday, it said the fund, which was first launched in 2003, would have a refined investment strategy where its portfolio would comprise three components: core stocks, high-growth stocks and trading stocks.

Currently, PMEGF is managed by Philip Capital Management Sdn Bhd chief investment officer Ang Kok Heng. Philip Capital Management and Philip Mutual is the local unit of Singapore-based Philip Capital Group.

AmIslamic Fund Management declares distribution for 2 funds

AmIslamic Fund Management Bhd has declared income distribution of 1.5 cents per unit and 1.5 cents per unit, for AmIttikal and AmBon Islam funds for the financial year ended September 2009.

AmIslamic also declared interim distribution of 2 cents per unit for AmBond fund.

Asset Allocation - End of September

Portfolio review has been missing for a few months. This is a deliberate decision from myself due to lack of investments for these few months. As witnessed, stock markets around the world have rocketed since the lows in mid March until end of September. Some of the most encouraging returns came from Asia Pacific ex Japan and emerging markets.

During the month of September, I've taken profit for some of the funds in my portfolio,  added Hong Leong Global Bond Fund into my stable of funds, and bought extra units in OSK-UOB Cash Management fund. In this review period, I've sold of some units from my Hwang-DBS Global Emerging Markets Fund (HGEMF) and Hong Leong Global Value Fund as well as took profit from OSK-UOB KLCI Tracker and Pheim Income Fund. The star performers during this month are HGEMFand Public Smallcap which have generated returns of 8.4% and 4.6% respectively.

OSK-UOB declares distribution for 3 funds

OSK-UOB Unit Trust Management Berhard (OSK-UOB) has declared interim distribution of 5.666 cents per unit for OSK-UOB Kidsave Trust fund, 5.6275 cents per unit for OSK-UOB Emerging Opportunity fund, and 9.7815 cents per unit for OSK-UOB Smart Treasure fund based on the NAV of the funds on September 30, 2009.

Pacific Mutual declares distribution for 5 funds

Pacific Mutual Fund Bhd has declared income distribution of 4 cents per unit for Pacific Premier Fund, 3.3 cents per unit for Pacific Income Fund, 3 cents for Pacific Focus18 Fund, 0.38 cents per unit for Pacific Cash Fund, and 0.1 cents per unit for Pacific Protected Islamic Cash Fund, for the year ending September 30, 2009. These distributions represent a yield of 5.58%, 5.8%, 5.48%, 0.75%, and 0.1% respectively, based on the NAV per unit.

Subscription allocation of AS1M extended

Permodalan Nasional Bhd (PNB) has extended the subscription allocation of AS1M to ethnics group until December 31, 2009. As of September 27, 2009, 2.5 billion units out of 10 billion units have been sold to 165,661 investors.

AS1M is opened for purchased by all Malaysians with 50% quota allocated to Malays, 30% for Chinese, 15% for Indians, and 5% for other ethnic groups.

Income distribution for RHB Bonds

RHB Investment Management has declared income distribution of 3.00 cents per unit and 5.00 cents per unit for RHB Islamic Bond and RHB Bond respectively on September 30, 2009

PRUequity Income Fund Distribution - 3.18 cents per unit

Prudential Fund Management Berhad (PFMB) declared 3.18 cents per unit distribution for PRUequity income fund. This distribution is equivalent to 5.39% based on the NAV on 28 September 2009.

The fund has charted a YTD return of 26.67% and recorded a return 33.67% since its inception in October 2004. For full press release statement of the distribution news, please click the link here.

Why Should You Invest in Amanah Saham 1Malaysia (AS1M)?

Continuing from previous article, we talked about some of the reasons for the poor response to AS1M from the public. Let's look at the reasons again and here's why i think these reasons are not very important deterrent factors for you to invest in AS1M:

Top 3 Reasons for Amanah Saham 1Malaysia (AS1M) Poor Response

Amanah Saham 1Malaysia (AS1M), a 10 billion fixed price unit trust fund, launched by Permodalan Nasional Berhad (PNB) in August, has received very poor response from Malaysians. As of current date, the fund is only 30 - 40% sold out, as compared to some other fixed price unit trust funds like ASM and ASW 2020, when the funds were sold out in a matter of hours.

Based on the feedback that I've gathered, here's the top 3 reasons why Malaysians are not responding well to the AS1M fund:

How to calculate tax on rental income for joint name property?

Assume that you have a joint name property with your wife and this property is rented out. So how do you declare tax on the rental income for this property? Is it based on:

• Both names in the land/strata title of the joint name property? OR
  
• The name(s) listed in the tenancy agreement? OR
  
• The name you filled in the form when you stamp your tenancy agreement with the Inland Revenue Department?
  

Based on the response from Yong Siew Chuen in the Tax Planning section of Personal Money magazine August 2009, the nett rental income should be split according to the respective shares listed in the land/strata title. Following is the exact wordings in the magazine:


"When the respective shares of the co-owners are not indicated in the title, then under the land laws, the co-owners shall be assumed to have equal shares. Where spouses co-own a rental property, each spouse is entitled to a half share of the rental income. Therefore, each spouse should declare his/her half share of the rental income.......It does not matter if the tenancy agreement cites only one spouse as the landlord. As each spouse is legally entitled to a half share of the property, each spouse is entitled to a half share of the income from the property"

Putting your child through university can be a big financial strain

By IZWAN IDRIS

PAYING for tertiary education is a major expense and parents do need to plan ahead if they want to help their offsprings avoid running into debt right after getting their scrolls. With Hari Raya just around the corner, I’m thinking we should encourage the children to put their duit raya stash into funds for their education.

Just remember that every bit counts. It pays to start early if you are hoping to have a healthy pile by the time the children finish school and are ready for higher learning.

But putting the extra cash into bank deposit accounts may not yield the best returns, especially in the current low interest rate environment. To beat inflation, your savings need to work harder.

Get Daily Unit Trust Price Direct to Your Website!

Want to get your unit trust price directly from your web site? Now, you can display all unit trusts prices directly in your blog or web site or only your selected favourite funds from here.

Favourite fund prices can be displayed if you sign up and login to the Fundprice.my web site.

ING IMPlus Medical Card Schedule of Benefits & Premium - V1

Updates: ING has revised its MediPlus medical plans in 2010. For updated info on this revised medical plans, please read this article.

IMPlus is the medical plan from ING Insurance which can be bought as a standalone medical card or as a medical rider in other insurance policy. This medical plan which covers the patient up to 70 years old, only charge RM50 for any hospitalization within the annual limit and can be considered the leading medical card in the market nowadays. Below is the schedule of benefits for this medical card and its premium table. The information presented below is correct as of time of publish:

How Much Insurance to Buy?

As discussed in the previous article, a complete insurance should consist covers you against the risk of life/total permanent disability, critical illness, hospitalization & surgery, and personal accidents. We've also talked about the type of insurance that one can purchase. The next question is how much to buy?

I'll elaborate about my personal opinion on the quantum of insurance coverage to buy according to the basic components of a complete insurance:

What Type of Life Insurance to Buy?

Following up from the previous posting, you may have decided to buy a life insurance for yourself. But wait a minute...there are tons of life insurance out there by so many companies! Which one is the best life insurance policy, you might ask?

Well my dear, there is no such thing as the BEST life insurance policy. To me, a good insurance policy is the one which fulfills 70-80% of your and your dependencies life protection needs, and the one which is affordable to you at that point of your life.

Since most of the insurance companies are regulated by Bank Negara Malaysia, most of the insurance policies have very similar coverage. Generally, life insurance can be categorized to the following categories:

When Do You Review Your Insurance Coverage?

Like most of the young and innocent fresh university graduates, we were approached by many insurance agents and bombarded with tons of insurance jargons. And most of us obliged by buying insurance without knowing in details what we bought. To make it worse, most of us would just buy and never look at it ever since. Many don't realize that once you've purchased an insurance, it is like a life contract, i.e. hard to get out of the contract if you make the wrong decision initially.

Over the years, with more financial literacy, I've picked up quite some knowledge on investments and in particular, insurance. From my personal experience, one should proactively review their protection needs based on these two factors:

Survey: Cash bonus is most valuable job benefit

Generation-Y employees rate cash bonuses, job flexibility and mobility as their top wants in their line of work.

A PricewaterhouseCoopers (PWC) survey titled "Malaysia's Gen Y unplugged", found that 49 per cent of those polled said cash bonuses was the most valuable job benefit.

About 91 per cent said they would work across geographic borders while 58 per cent desired flexible working hours.

The survey polled Gen Y employees on their career expectations now and in 2020. Gen-Y refer to individuals born from 1980 onwards and entered the workforce after July 1 2000.

Gen-Y, who are sometimes misunderstood, may be difficult to manage.

"However, they make up a sizeable portion of today's workforce and have the potential to help organisations take on the upswing fully prepared," PWC said in a statement issued yesterday on its survey.

PWC advisory service Malaysia executive director Lim Chin Han said the talent war was alive and thriving in Malaysia.

"Due to the downturn, employers have an opportunity to bring in new talent which previously might not have been available to them and try out different hiring strategies," he said.

The survey found that Gen-Y employees also value coaching and mentoring and on-the-job training over formal training mechanisms.

This indicates a departure from traditional reward and development methodologies.

Meanwhile, corporate responsibility is high on Gen-Y's agenda as 86 per cent of the respondents look for employers with social responsibility values that reflect their own.

Roughly 77 per cent would consider leaving an employer whose values no longer reflect their own.

Gen-Y is also big on gender diversity, as 66 per cent feel future income streams would come equally from themselves and their partners.

Asset Allocation - End of April

April has been a good month for my portfolio. Most of the equity funds have shown gains in the range of 3 - 10% for the month of April. The most significant gains came from Public Far East Select Fund and Public Smallcap Fund which improved 11% and 10% respectively. With the recent gains, there are some funds that have out-grown the allocation in my portfolio. However, the over allocation percentage is still too small for me to take profit as yet. Here's the asset allocation for my portfolio in April as well as the March asset allocation for comparison purpose.

Recession-proof your money

"ECONOMIC crisis" or "recession" - these are words you have heard of over and over, be it on the television or the radio and read in the papers. The financial headlines and where the economy is headed are things beyond our control. However, it isn't all bad! There are steps we can take that are well within our control to weather the bad times. All you need is just a little bit of foresightedness to prepare yourselves for the worst case scenario.

How to keep your head above water

Many of you out there have been asking this question, or variations of it. People are interested in the ways of surviving hardships that they foresee await them. Here, we list some of the things you can do; things that are definitely within your control to weather such hardships.

* Manage your expenses - watch what is going out of your pocket!

* Manage your expenses - watch what is going out of your pocket!To start with, scrutinise your expenses; identify your fixed and variable expenses. Variable expenses will include meals at your regular eateries, gourmet coffee breaks, shopping trips, which can be reduced and adjusted with a just a bit of self discipline and restraint.

How about fixed expenses then? These are the regular expenses that you cannot avoid or immediately reduce with your changing financial situation. Items that fall under this category are usually the big ones on your spending list.

Examples of fixed expenses include:

* Mortgage payments for your house, car loan or student loan

* Mortgage payments for your house, car loan or student loan* Insurance payments

* Insurance payments* Utility bills and service contracts, such as water, electricity, phone and internet services

* Utility bills and service contracts, such as water, electricity, phone and internet services

While you cannot really eliminate these expenses, there certainly are ways to reduce the spending in this category.

* Be an intelligent consumer!

* Be an intelligent consumer!During an economic down turn, what a government typically does is to take stimulus actions, such as reducing interest rate to encourage public spending. You can certainly benefit from this by shopping around for cheaper rates and better deals to refinance your mortgages. A variety of packages are offered by commercial banks and all you need to do is to choose the best deal, one that can cut down your interest payments. This move alone can save you quite a bit of money in the long run.

The same goes for other items. As the business environment gets more competitive, you will find an array of special deal packages and promotions being introduced in the market. You need to mould yourself into an intelligent consumer. Practice scouting around for the best deals available and make sure that every ringgit you spend is worth it.

* Resist! Resist! Resist!

* Resist! Resist! Resist!While you're busy trying to cut down on interest payments and looking for value for money alternatives, make sure you resist the temptations of further spending. Any efforts made to help you save will be meaningless if you deplete your cash and land yourself with additional commitments. So, Resist! Resist! Resist! Remember! Only spend on what is necessary and delay those that can be delayed!

* No More Credit Card Mania!

* No More Credit Card Mania!If you are one of those people famous for saying "Charge it!" with no qualms whatsoever, then it's high time you drop that habit.

As the market is flooded with credit card offers, it is quite common for a person to own a handful of credit cards. While credit cards provide convenience, it can work against you if you lack discipline.

Charging purchases to your credit card is basically spending future money. The more you spend and owe the bank, the more you have to pay as the interest builds up. Therefore, in order to manage your expenses more effectively, limit yourself to just a card or two and keep track of your monthly balances. Refrain from letting your credit card debt build up and, if possible, clear all your card balance every month at one go.

Failing to settle your credit can lead to dire consequences. If you look at the number of people who have filed for bankruptcy in Malaysia, you will discover that the number is rather alarming with many of the younger adults contributing to the statistics.

* Build up your reserve - keep the money in your pocket!

* Build up your reserve - keep the money in your pocket!Once you are able to manage your expenses, you will find a pleasant surprise - all of a sudden, you have extra cash! Use this to build up a reserve. This reserve needs to support you for at least 6 months of living expenses. If you have been laid off recently, don't use the compensation to renovate your house or buy a new car. It is meant to be your reserve. So keep it for the rainy days! If you have extras from the savings, then you can move on to the next step.

* Generate additional income - make your money grow!

* Generate additional income - make your money grow! "Inside of every problem lies an opportunity" - Robert Kiyosaki

If you are no stranger to the world of investing, then you can relate to what Kiyosaki is saying. Most people fail to see the silver lining behind a crisis; it is during the bad times that you will find plenty of good deals in investment, be it in the stock market, real property or other investment products.

As such, if you have the extra money, make it a point to study the market and look for investment opportunities within your risk tolerance level.

The bottom line is, you have to be more careful with your investment decisions, especially when dealing with your hard-earned money in times like these.

With careful planning and self discipline, you should be able to keep yourself afloat regardless of the economic situation.

Easy guide to tax filing - Part 1

Q: As a sales and marketing executive with a financial institution, I am paid a basic salary and sales commission and am not entitled to any claims (petrol, toll, parking and car maintenance). I use my own car to do my job. My average monthly expenses for sales and marketing activities are about RM500.

I understand that with the new provisions under Budget 2009, the employee is entitled to tax exemption for certain benefits. Since my company does not provide such benefits, can I claim marketing and travelling expenses under “Perbelanjaan Keraian”?

A: The actual amount you incurred can only be deducted provided that you received either entertainment or travelling allowances from your company. In your case, the amount you incurred is not deductible.

I understand that meal allowances can only be claimed for tax relief for outstation travel or overtime. I am being transferred to a branch in Klang next month from my present workplace in Puchong, and my employer has agreed to give me an additional monthly amount of RM800 as meal allowance.

Can I deduct my meal allowances since I reside in Subang Jaya and don’t do overtime? My working hours are 9am-5pm and I work six days a week.

Your meal allowance for employment in the Klang branch will not be eligible for deduction as it is not in respect of working overtime or travelling outstation.

What are the tax exempt employee benefits in relation to employees who have been given a fully-expensed company car and a company petrol card? I know that I will be assessed on the Scale Car and Fuel benefits for the use of the company car. For YA2008, am I entitled to the relief of RM2,400 for the tax exempt petrol card?

If so, can this RM2,400 be deducted from the Scale Fuel charge in YA2008 so that the Scale Fuel benefit assessed in the tax year will be lowered by RM2,400?

If (1) above is allowed and my actual petrol card expenses for the year exceed RM2,400, can the balance of actual petrol bills spent under the petrol card be deducted from the Scale Fuel benefit up to the maximum of exhausting the amount of the Scale Fuel benefit?

The benefits in kind with regards to the car benefit and fuel benefit are to be taxed. These cannot be deducted as additional tax exempt benefits.

Monthly parking claims and fixed mobile-phone allowances are submitted to my company at the end of the month and these will be reimbursed into our salary in the following month. These claims are subject to EPF contribution. Therefore, are they tax-exempt for YA2008 and do they need to be disclosed under the tax-exempt benefits in the EA form?

Both parking and phone allowances up to the actual amounts incurred which are borne by the employer are tax exempt with effect from YA2008. The amount is to be disclosed as tax exempt benefits in the EA Form.

Can interest on housing loans and car loans be deducted from gross salary on the EA form? Are medical expenses such as maternity expenses deductible?

Interest on housing and car loans are deductible only if paid by the employer on a total loan amount of up to RM300,000. Similarly, medical expenses are only deductible if the amount incurred has been paid by the employer and this benefit is extended to maternity and traditional medical expenses. However, should these expenses be paid personally by the employee, they are not tax deductible.

My organisation is a resident company and our expatriate Japanese director and technical manager has two types of income – salary from Malaysia and salary from Japan. Please advise whether we have to declare our Japanese director’s income in total (i.e. Malaysia and Japan) or just Malaysia-derived income to the Malaysian government?

All employment income derived by the Japanese expatriate for exercising employment in Malaysia is subject to income tax, including the amount paid in Japan, if it is related to the exercising of employment in Malaysia.

Is the tax benefit on childcare allowance up to RM2,400 a year to be deducted directly from the EA form? Is this applicable if there is no such benefit from the company I work for?

The childcare allowance is only tax exempted if you receive such an allowance from your employer; otherwise the exemption will not be applicable to you.

In the event you do receive the childcare allowance, the amount (the lower of the actual amount received or RM2,400) is to be excluded from the employment income and disclosed in section C1 of the Form BE.

I bought a comprehensive insurance policy (life + medical + investment) and the insurer is unable to split the premium payment into life insurance and medical insurance. Can I treat this totally as a medical premium as I have already disclosed RM6,000 for my life insurance premium and EPF deduction?

In the event that the amount cannot be segregated, the amount is to be disclosed either as life or medical insurance premiums based on the description stated in the insurance premium receipt.

Source: TheStar

How to accumulate enough money for retirement

Wealth for retirement, How to earn 30-year investment returns with different savings amounts and rates

ON Jan 28, we have written an article on We all need to become millionaires. That article explained that we need to have cash reserves of about RM1mil to be able to maintain our current lifestyle 20 years after retirement.

Some readers responded and would like to know more on how to accumulate enough money for their retirement.

In this article, we will look into 30-year investment returns with different savings amounts and rate of returns. Our computation is based on the assumption that we start investing at the age of 25 and intend to retire at 55.

·Based on how much rate of returns you can achieve

The table shows that if we save RM100 per month and invest the money into fixed deposits (FD), assuming the FD can provide about 3% return over the next 30 years, our investment portfolio will reach RM58,274 when we reach 55.

However, if we can generate 5%, 7% and 10% returns, our investment portfolio will achieve RM83,226, RM121,997 and RM226,049 respectively.

The EPF may be able to provide us about 5% whereas unit trust investments may be able to give us 7% to 10% returns over a very long-term period.

Assuming that we treat the 3% FD return as our risk-free rate, any extra returns above this rate will be the risk premium for the additional risk that we are prepared to face.

Therefore, we need to understand our risk tolerance level before considering any type of risky investment.

We should ask ourselves whether we are willing to accept the uncertainty of return that is inherent in those investments.

Besides, we need to understand whether we can afford to have our savings tied up for a long period before we can achieve our investment targets.

·Based on how much you save and not how much you earn

We agree that when you earn more money, you should have more money for your investments. Unfortunately, some investors are unable to save even though they earn high salaries.

From the table, we can see that if we are able to save RM500 per month in FD, assuming a 3% return per annum, our investment portfolio will reach RM291,368 when we retire at age 55, five times higher than the savings of RM100 per month.

Hence, if we can cut down on our expenses and live below our means, we should have more money to save.

We should always ask ourselves whether we want to spend money on unnecessary luxury items to keep up with the Jones or be more frugal and spend less to achieve financial freedom earlier.

The question on how to generate high returns is frequently asked by readers. Unfortunately, there is no straight-forward answer to this.

We can equip ourselves with strong financial and investing knowledge which helps us in making better investment decision that will eventually translate into better returns.

To do so, we need to be interested in the economic and business activities around us.

For those who are beginning to learn about investing, you can go to any bookstore to look for investment books that you can comprehend to build up the foundation.

Remember that there is no point in buying books written by top investment gurus in the world if you cannot understand what it is trying to tell.

Once you have built up your knowledge, you should be able to digest the financial information and do your own research in investment.

Source: TheStar

PNB Offers 3.33 Bil ASM Units, 2 Bil ASW 2020 Units

Permodalan Nasional Bhd (PNB), the country's biggest fund manager managing RM76 billion worth of funds, will offer 3.33 billion new units of Amanah Saham Malaysia (ASM) and two billion Amanah Saham Wawasan 2020 (ASW 2020) units, Prime Minister Datuk Seri Najib Tun Razak announced on Monday.

He said the units would be sold from tomorrow at all the 1,500 agents and Amanah Saham Nasional Bhd offices country-wide while the ASW 2020 units can bought from April 27.

Each investor can buy a maximum of 20,000 units in the two schemes.

The announcement on the new unit trusts offer, which would enable more Malaysians to participate in the capital market, was made by the prime minister when launching the 2009 Malaysian Unit Trust Week here.

The unit trust week, an annual event, is to boost awareness and understanding on investment and importance of planning one's finances.

Najib said the unit trust week hosted consistently every year over the past 10 years had yielded positive results in educating the people on the importance of savings and investment.

"If during the Asian financial crisis in 1997-98 saw investors withdrawing close to RM1 billion from unit trust schemes run by PNB like ASB, the situation is much better now," said Najib, who is also Finance Minister.

The prime minister said last year PNB enjoyed more than RM10 billion in net inflow into funds it was managing.

"I'm very happy PNB has succeeded in pooling more than RM87 billion from more than 9.3 million investors," he said.

Najib said the net inflow of PNB unit trusts was RM5 billion so far this year.

He said the dividend distributed to investors has exceeded RM65 billion, thus contributing to improve the socio-economic well-being of the people.

"This means PNB's unit trust funds have educated the people to be more efficient and prudent in managing their finances," he said.

Najib said the introduction of ASN and other unit trust schemes through PNB had changed the people's paradigm on investing in unit trusts to an unexpected level.

"Before ASN was introduced, Malaysians, especially Bumiputeras, were very alien to the investment world," he said

The prime minister said the unit trust industry became synonym with the people through PNB's continuous aggressive efforts until now besides efficient implementation of investment educational programmes.

"In fact, it is not too much if I say the PNB unit trusts have succeeded in developing a own brand in the country's unit trust industry by galvanising solid support from Bumiputeras and non-Bumiputeras," he added.

Source: Bernama

CIMB launches China fund, targets RM150m

CIMB-Principal Asset Management Sdn Bhd is targeting RM150million investments from customers for its CIMB-Principal China Recovery Structured Fund on improved economic climate in the third-largest economy in the world, said its chief executive J. Campbell Tupling.
"The stimulus plan by Chinese government has seen change in sentiments. Positive developments are visible in major sectors -- infrastructure, housing, innovation, health and education-- that would enable China to chart high growth potential," Tupling said at the launch of the fund on April 20.

The five-year close-ended fund has an approved fund size of 300 million units with an initial offer price of 50 sen per unit. Minimum investment for the fund is RM10,000. The fund, based on the CIMB-Isovol China Index, could see potential gains of 7%.

Tupling also said the fund would appeal to low risk investors as the fund offered capital protection if held to maturity.

It would also reduce investor's dilemma in terms of entry to the Chinese market as the fund would automatically select and lock-in investments at lowest entry level to enhance potential gains after a six-month observation.

The firm's chief investment officer Raymond Tang estimates China's GDP growth at 7.6% this year on stimulus spending by the Chinese government.

"Investors can expect better outlook for China this year as consensus view is the nation will be one of first economies to recover," Tupling said.

Source: TheEdge Malaysia

Frequently Asked Questions of Sukuk Simpanan Rakyat (SSR) 01/2009

The following information is to help you understand better the features of SSR 01/2009:

1. Who is eligible for the SSR 01/2009?
Malaysian citizens who are 21 years old and above

2. When is the offer period for the SSR 01/2009?
The SSR 01/2009 is offered to the public from 14 April to 13 May 2009.

3. When is the SSR 01/2009 application form made available to the public?
The SSR 01/2009 application form will be made available to the public before the sales period at branches of the agent banks, and can be downloaded from www.treasury.gov.my and www.bnm.gov.my/sukuksimpanan.

4. Can agent bank accept application and payment for SSR 01/2009 from the public before the sales period?
No. Agent banks can only accept application and payment for SSR 01/2009 from the public during the sales period commencing from 14 April 2009.

5. What is the basis of the allocation of the SSR 01/2009?
The allocation of SSR 01/2009 to the applicant is based on a first-come first-served basis and is subject to such terms and conditions specified. The payment for the application of the SSR 01/2009 during the sales period does not imply that the applicant would be successful in the allocation of the SSR 01/2009.

6. What is the frequency of issuance for the SSR in 2009?
There will be two issuances of the SSR in 2009.

7. What is the tenure of the SSR 01/2009?
The SSR 01/2009 will have a maturity of three years.

8. What will the minimum and maximum amount of subscription be?
The minimum amount of holding per SSR 01/2009 holder is RM1,000 per application and in multiples of RM100, e.g. RM1,100, RM1,200, etc. The maximum aggregate holding per SSR 2009 holder for the two series is RM50,000.

9. Why is the maximum holding per SSR 2009 holder fixed at RM50,000 only?
The maximum holding of RM50,000 per SSR 2009 holder is to allow a wider distribution of the SSR 2009, so that more citizens can benefit from it.

10. Would profit be paid on the applicant’s investment from the date of application to the date of issuance of SSR 01/2009?
* For SSR 01/2009 holder who chooses to open or maintain a savings account with agent bank for the purpose of receiving quarterly profit payment, early redemption and final redemption:
o The agent banks will pay the SSR 01/2009 holder the prevailing savings account rate for the period between the date of application and the date of issuance of SSR 01/2009.
o For example, if you apply for the SSR 01/2009 on 14 April 2009, you will receive the savings account rate from 14 April to 13 May 2009.
* If however, for SSR 01/2009 holder who chooses to open or maintain a current account with agent bank for the purpose of receiving quarterly profit payment, early redemption and final redemption, the SSR 01/2009 holder will not be receiving any profit for the period between the date of application and the date of issuance of SSR 01/2009.


11. What is the profit for the SSR 01/2009?
The profit for the SSR 01/2009 is 5% per annum. This means the profit is approximately 1.25% (5% divided by 4) of the holding amount at the end of each quarter.

12. When and how will profit be paid to the SSR 01/2009 holder?
Profit will be paid on a quarterly basis. The profit from the SSR 01/2009 will be credited directly into the SSR 01/2009 holder’s savings or current account maintained with the agent banks.

13. Will the returns on SSR 01/2009 be subject to tax?
No, returns on the SSR 01/2009 are exempted from tax.

14. Can the SSR 01/2009 holder exercise early and partial redemption of the SSR 01/2009?
* The SSR 01/2009 can be redeemed early at the nominal value and including the profit amount due before the maturity date but after the first profit payment. The profit payment will be apportioned based on the number of days the SSR 01/2009 is held. Minimum redemption amount allowed is RM100.
* SSR 01/2009 holder may redeem the SSR 01/2009 in multiples of RM100.


15. When and how can SSR 01/2009 holder redeem the SSR 01/2009 at maturity?
Redemption proceeds (including the last profit payment) will automatically be paid by crediting directly into the SSR 01/2009 holder's account maintained with the agent bank at maturity.

16. Is the SSR 01/2009 transferable?
The SSR 01/2009 is non-negotiable, non-transferable and non-assignable. In the event of the demise of the SSR 01/2009 holder, the SSR 01/2009 held by the deceased SSR 01/2009 holder shall form part of his estate.

17. What documentation is required when applying for subscription of the SSR 01/2009?
An original or a certified copy of the Identity Card (I.C.).

18. Where can the SSR 01/2009 be subscribed?
The SSR 01/2009 can be subscribed at all agent banks, i.e. commercial banks, including Islamic banks, Bank Kerjasama Rakyat Malaysia Berhad, Bank Simpanan Nasional and Bank Pertanian Malaysia Berhad.

The application form for Sukuk Simpanan Rakyat is available here.

CIMB AirAsia Savers Account

CIMB Bank launched a new savings account in partnership with AirAsia yesterday, which provides high interest rate (up to 2% p.a.), free prepaid Tune Card with first year annual fee waiver as well as privileges for AirAsia promotions.

For more details, please see here.

AmConstant Extra Bond Fund

AS INTEREST rates globally continue to fall and are expected to stay low at least this year, AmInvestment Bank Group is starting a bond fund aimed at "preserving wealth".

"Amid the turbulent financial times and falling interest rates, investors prefer bonds and bond funds as safe haven investment tools," chief executive officer at the funds management division Datin Maznah Mahbob said in Kuala Lumpur yesterday. The division manages RM16 billion at the end of March.

"Bonds had overtaken equities as the preferred asset class amid the current volatile market," Maznah said, citing a recent poll by a regional online unit trust portal which has a presence in Malaysia, Singapore and Hong Kong.

Central banks around the world are likely to keep slashing interest rates this year to boost the weak economy and chances are high that interest rates will remain low next year, head of Asian Fixed Income at the bank, Julian Chow said.

With a RM200 million approved size, the AmConstant Extra is benchmarked against the current fixed deposit (FD) rates and aims to provide investors with regular income throughout the tenure.

Up to 99 per cent of the fund will buy debt papers issued by the Malaysia government and local corporates rated "BBB" and above. It may also invest in foreign papers and US dollar convertible bonds that are rated or unrated. The fund adopts a buy and hold strategy where investments are held to maturity.

"We have a strong credit team with a track record in picking up quality papers. All our funds have never experienced a credit default before," Maznah said.

The new fund is targeted at risk-averse investors who seek potentially higher returns than the FD, but less risky unit trust compared to equity funds.

Source: BusinessTimes

For more details about the new fund, click here.

Comments: For a bond fund that intends to beat the fixed deposit rates and yet charge 2% sales charge, i guess this fund is not worth the investment, in my opinion. The fees alone are probably enough to offset the difference between the gain of the fund and the FD rates.

Bank Negara To Issue RM2.5 Billion Sukuk Simpanan Rakyat

The Finance Ministry today announced the issuance of Sukuk Simpanan Rakyat 01/2009 amounting to RM2.5 billion on May 14, 2009.

This is the first issue of the two series of three-year RM2.5 billion sukuk each and it will be issued by Bank Negara Malaysia on behalf of the government, the ministry said.

The sukuk, which will be scripless and based on Syariah principles, is an additional investment instrument for Malaysian citizens who are 21 years and above, it said in a statement.

The sukuk offers a return of 5.0 percent per annum and provides the flexibility for early redemption before the maturity date, the ministry said.

It is available for subscription during the sales period from April 14 to May 13, 2009.

The minimum investment is RM1,000 with a maximum of RM50,000 per investor and the maximum aggregate holdings per investor for the two sukuk series is RM50,000, the ministry said.

It can be subscribed at all commercial banks, including Islamic banks, Bank Kerjasama Rakyat Malaysia Bhd, Bank Simpanan Nasional and Bank Pertanian Malaysia Bhd.

Allocation for the sukuk is based on a first-come first-served basis, and successful applicants will be notified by their agent banks.

Profit payments will be made on a quarterly basis via the sukuk holders' accounts with their agent banks.

Those seeking further information can contact Bank Negara's Telelink at 1300-88-5465 or by visiting the websites www.treasury.gov.my and www.bnm.gov.my/sukuksimpanan.

Source: Bernama

Asset Allocation - End of March

As mentioned in the previous post, my initial target allocation of my unit trust funds is as follow:

However, on end of March, I've modified my target allocations to increase the percentage of Public Far East Select Fund (PFES) from 7% to 10% and on the same time, reduce the weight age of OSK KLCI Tracker (Tracker) fund to 10%. This is due to expected positive outlook of returns for Asia Pacific markets and rather subdue performance of Bursa Malaysia of late. The new target asset allocation of my portfolio is as below:

Below is the asset allocation of my unit trust funds portfolio as of end of March.

As you can see, most of my funds are still underperforming and below my target asset allocation percentage, except for fixed income funds. As for Pheim Income Fund, I have yet to reduce the weight age of this fund in my portfolio since this fund has been holding up well to act as a performance buffer to my overall portfolio and also due to the volatility of stock markets. PFES and HGEMF are also performing well in March by gaining 6% and 8% respectively in my portfolio.

I do foresee more investments in those funds which are below the targeted allocation in the coming months especially when the market corrects heavily. I am looking at the window of opportunity sometime in April or May which had seen very selloff for the past two to three years.

The RM1 solution to job losses

That RM1 may not buy a glass of teh tarik but it could go a long way to help those laid off.

AmResearch economist Manokaran Mottain has suggested raising RM11 million for a retrenchment fund if every worker in Malaysia gives RM1.

"The government could match the amount with another RM11 million," he said in a report.

The fund would be similar to the S$20 million (S$1 = RM2.37) fund being considered by the labour movement in Singapore with the help of its cooperatives, affiliated unions and unionised companies.

It could help the jobless in the short term, say up to six months, and this could be used to cover utility bills or children's school expenses.

The government plans to create 163,000 training and job placement opportunities in the public and private sectors as announced under its mini-Budget on March 10.

AmResearch argues that the mini-Budget is not enough and it proposed a third stimulus of RM15 billion by September. The government said the economy could expand or shrink by 1 per cent this year but Manokaran thinks the fall could double. In its worst case scenario, the gross domestic product, the sum total of goods and services, could fall by 4.5 per cent.

Factories in Malaysia have been hit hard by weak demand for the country's key technology exports.

"Given larger losses in export earnings and weakening consumer and business confidence amid rising unemployment following closures of manufacturing concerns and increasing voluntary separation schemes in the financial industry, we maintain our view that private sector demand, especially private consumer spending, will remain weak for next couple of years."

Since October 2008, 25,000 workers have been retrenched, 30,900 temporarily laid off, 23,900 had pay cuts, and 100,000 were not given overtime.

As orders continue to fall, retrenchment for 2009 alone could easily exceed 100,000 (including temporary layoffs and termination of contract workers).

In January, 15,000 jobs were lost in Malaysia, mostly in the electronics industry.

Last month, Flextronics International, one of the world's largest contract manufacturers, shut down an assembly plant in Shah Alam and laid off 1,382 workers.

Public Select Alpha-30 Fund

High quality stocks at low prices – it’s the perfect combination. And you can zoom in on 30 of them through the Public Select Alpha-30 Fund, and look forward to potentially good capital growth over the medium to long term.

• Aims to achieve capital growth by investing in up to a maximum of 30 stocks primarily listed on Bursa Securities.
• To achieve increased diversification, the fund may invest in selected foreign markets such as Singapore, Taiwan, South Korea, Japan, Australia, New Zealand, Hong Kong, China, Thailand, Indonesia, Philippines and other markets.
• Equity exposure: generally range from 75% to 95% of its net asset value (NAV).
• Initial Issue Price is RM0.25 per unit during offer period (7 – 27 April 2009).
• Suitable for investors with aggressive risk-reward temperament.
• Fund objective: To achieve capital growth over the medium to long term period by investing in up to a maximum of 30 stocks primarily listed on Bursa Securities.
• Service charge: Up to 5.5% of NAV per unit (after promotion period)
• Minimum initial investment: RM1,000
• Additional investment: RM100

Source: Public Mutual

TA Investment declares distribution for TA High Growth Fund

TA Investment Management Bhd (TAIM) has declared a 2.5 sen gross income distribution per unit for the TA High Growth Fund (TAHGF), for its financial year ended 31 March 2009. The distribution of 2.5 sen per unit is equivalent to an income return of 4.3% (source: Lipper Hindsight).

"Despite the global market downturn, we managed to maintain our distribution for the fund. We believe that the market will continue to be very volatile in the first half of year 2009." says TAIM's deputy chief investment officer, Ms. Vivien Loh. "The global markets have shown some signs of recovery with the concerted effort of the global central banks to help their respective economies. However, we believe the initial impact should be to restore market confidence through a sustainable market recovery. The real economy needs to show some signs of recovery in the employment and trade market". Our strategy for the fund is to accumulate on weakness for an expected market recovery towards the end of year 2009. In the mean time we are to trade cautiously, while awaiting the actual signs of economic recovery."

TAHGF, which was launched in June 2004, is a unique fund that offers investors an opportunity to invest in high earnings growth companies listed on the Bursa Malaysia. The investment objective of the fund is to provide investors with above average capital growth over a medium to long-term period by investing mainly in companies that offer higher growth prospects.

For more information, please call 1-800-38-7147 or visit our website at www.tainvest.com.my.

Source: TA Invest

HwangDBS declares 3 sen distribution for EDF

HwangDBS Investment Management Bhd today announced the seventh income distribution of three sen for its Enhanced Deposit Fund (EDF) for the financial year ending April 30, 2009.

As at end of February 2009, EDF has registered a total growth of 13.7 per cent on its net asset value per unit, HwangDBS said in a statement.

The fund since its inception has outperformed its benchmark, the Maybank three-month fixed deposit rate, by a total of 12.45 percent and has distributed a total of 8.95 sen since inception, it said.

HwangDBS chief executive officer and executive director, Teng Chee Wai, said EDF has been charting strong growth due to its active management strategy and team-based approach.

Teng said the interest rate cut by Bank Negara Malaysia recently had benefited local money market funds over the immediate term.

“As our money market funds managed to extend their duration late 2008, the cut also implies that, moving forward, money market yield will trend lower,” he said.

Source: Bernama

Distribution for Pacific Mutual's funds

Pacific Mutual Fund Bhd has declared RM9.25 million income distribution for five of its funds for the financial year ended March 31.

It said on April 1 the funds involved were the Pacific Pearl Fund, Pacific Dana Aman, Pacific Dana Murni, Pacific Cash Fund and Pacific Asia Brands Fund.

For the Pacific Pearl Fund, the income distribution is 2.5 sen per unit while for Pacific Dana Aman (0.5 sen), Pacific Dana Murni (1.5 sen), Pacific Cash Fund (0.4 sen) and Pacific Asia Brands Fund (1 sen).

The distribution yields for investors based on the net asset value (NAV) per unit prior to the distribution is 4.42% for Pacific Pearl Fund, Pacific Dana Aman (1.4%), Pacific Dana Murni (2.84%), Pacific Cash Fund (0.79%) and Pacific Asia Brands Fund (3.17%).

Pacific Mutual general manager, business development and marketing Gary Gan said last year was truly a tumultuous year for investors as global markets capitulated, in some cases, wiping out the entire gains from the previous five-year bull run in a single year of economic distress amidst an unprecedented financial crisis.

Gan said despite the obvious tough investment conditions, Pacific Mutual could be able to offer consistent payouts to its investors.

Pacific Mutual manages 19 funds, including six global funds and two wholesale funds. It also manages private funds under its asset management business.

Source: TheEdge Malaysia

Public Mutual declares distributions for 2 funds

Public Bank's wholly-owned subsidiary, Public Mutual declares distributions for two of its funds. The total gross distributions declared are for financial year ended 31 March 2009:

Fund	Gross Distribution / Unit
Public Aggressive Growth Fund	5.00 sen
Public Regular Savings Fund	3.50 sen

Public Mutual's Chairman Tan Sri Dato' Sri Dr. Teh Hong Piow commented that Public Mutual is pleased to be able to declare distributions on these two funds despite these trying times.

Public Aggressive Growth Fund which was launched in 1994, aims to seek high capital growth over the medium- to long-term period through investments in situational and high growth stocks.

Meanwhile, Public Regular Savings Fund which was also launched in 1994, aims to achieve consistent capital growth over the medium- to long-term period and to achieve a steady growth in income.

Public Mutual is Malaysia's largest private unit trust company with 67 funds under management. It has over 2,000,000 accountholders serviced by over 40,000 unit trust consultants. As at 28 February 2009, the total net asset value of the funds managed by the company was RM23.5 billion.

Source: Public Mutual

More tips on filing taxes

IF I am paid a fixed monthly travel allowance (with EPF contribution) which covers fuel for travel within Peninsular Malaysia, parking and toll, am I allowed to take advantage of tax exempt benefits? – GOH C.H.

A. YES, with effect from year of assessment 2008, tax exemption is given on petrol card, petrol allowance or travel allowance and toll card for official duties provided by the employer. The tax exemption is up to RM6,000 per annum.

ARE dentures for parents eligible for tax rebate? – Lii

THE tax deduction for medical expenses for parents is up to a maximum of RM5,000.

Medical expenses that qualify would cover medical treatment for the parent evidenced by a receipt issued by a medical practitioner. It also includes dental treatment but this is limited to tooth extraction, filling, scaling and cleaning and does not include cosmetic dental treatment expenses such as teeth restoration and replacement involving crowning, root canal and dentures.

Therefore, the expense for your parent’s dentures would not qualify for the tax deduction.

On a separate note, it is important to differentiate that the RM5,000 maximum claim is for a tax deduction (i.e. to be deducted against your total income to arrive at your chargeable income) and not a rebate (i.e. a rebate is deducted from your income tax charge to arrive at your tax payable).

I HAVE two questions: 1) The RM3,000 rebate for purchase of computers every three years. I last purchased a computer in August 2006. Can I purchase a new computer now (March 2009) to enjoy the rebate again or do I have to wait after August 2009 or some other date?

2) My wife and I jointly own two commercial properties which are rented out. My wife is a full-time housewife and has no income. I am at the maximum tax rate currently and on combined assessment filing. Can my wife take up the full rental income or at least 50% of the income and file for separate assessment?

If only 50% of rental income is allowed, do we need to split the property expenses like quit rent, insurance and assessment 50/50 also? – William Tan

FIRSTLY, it is important to differentiate a tax deduction from a tax rebate. The RM3,000 maximum claim for the purchase of a personal computer for non-business use is for a tax deduction (i.e. to be deducted against your total income to arrive at your chargeable income) and not a tax rebate (i.e. a rebate is deducted from your income tax charge to arrive at your tax payable).

Prior to year of assessment 2007, a RM500 rebate was given for the purchase of a personal computer used for non-business purposes on a household basis once in every five years of assessment.

Currently, the relief given is a tax deduction for the purchase of a personal computer for non-business use up to a maximum of RM3,000 given on an individual basis once in every three years of assessment.

Since your claim for the RM500 tax rebate was in year of assessment 2006 under the old tax provisions, you will be entitled to claim the RM3,000 tax deduction for another computer purchase anytime after the new tax provision took effect from year of assessment 2007. Therefore, you may purchase a new computer now (March 2009) and claim the RM3,000 tax deduction. Provided the existing law on the tax deduction does not change, your next qualifying purchase would be in year of assessment 2012.

2) Since your two properties are jointly owned, each of you would declare half the rental income equally in your respective tax return. Any expenses expended to generate the rental income from the jointly-owned properties (for example, property quit rent and assessment, insurance and repair and maintenance) must also be split equally to be deducted against the rental income.

Your wife may elect for a separate assessment to report her half share of the net rental against her personal tax relief.

UNTIL last year, taxpayers could claim back excess tax paid on dividends received in 2007. Is this still possible in 2009? – Taxpayer

WHETHER you are still able to claim back the excess tax paid on dividends in year of assessment 2008 and 2009 would depend on the type of dividend that you receive from the company i.e. whether it is a franked (or tax deducted) dividend or exempt dividend.

With effect from year of assessment 2008 under the single-tier system, there is no further need for the company to deduct tax when paying dividends and any dividends distributed by the company will be exempt from tax in the hands of the shareholders.

However, transitional provisions in the tax legislation allow two options for companies with a credit balance in their section 108 accounts as of Dec 31 2007 when they want to pay dividends to the shareholders:

>The company can continue to use such credits in the section 108 account to pay franked dividends to shareholders up to Dec 31, 2013 or until the section 108 credits are exhausted, whichever comes earlier.

>Alternatively, the company may at any time make an irrevocable election to forgo the right to distribute franked dividends and pay dividend under the single-tier system.

The company, upon paying the dividend, is required to furnish the shareholders with a certificate warrant which will state whether tax has been deducted from the dividend or whether it is tax exempt pursuant to the single-tier system. If it is franked dividends, you can continue to claim back the excess tax paid, if any.

I AM a sole proprietor. I draw a monthly salary from my business net EPF deduction of 11%. My business pays the employer’s portion of EPF contribution (12%). I understand the 12% EPF contribution for its proprietor is not a tax-deductible expense for the business. For my personal computation of tax payable, can I utilise the 11% deduction as a tax relief lumped together with my insurance premium giving a maximum relief of RM6,000? – Lim Jun Kean

THE 11% employee portion of EPF contribution is considered as part of your gross salary and subject to income tax (in addition to the sole proprietor business profit) on you. You are however entitled to claim the 11% EPF deduction as part of the maximum RM6,000 together with the life insurance premium tax relief in your personal tax return.

I GET newspapers delivered to my home for which I get a monthly bill. Can I claim this as a deduction under reading materials?

Also, my mother has undergone ayurvedic treatment. Can I claim deduction under parents’ medical expenses? The expense is supported by official bills and receipts – S.Thiruchelvam

AN amount of up to a maximum of RM1,000 is deductible in respect of the purchase of books, magazines, journals or other similar publications (in hard copy or electronic form) for the purposes of enhancing knowledge of the individual, spouse or child. However, newspapers and banned reading materials are specifically excluded. Therefore, you cannot make a claim on your newspaper bills.

Medical expenses that qualify for the tax deduction for medical expenses for parents of up to a maximum of RM5,000 would include medical treatment evidenced by a receipt issued by a medical practitioner registered with the Malaysian Medical Council.

Unless the ayurvedic practioner is registered with the Malaysian Medical Council, the medical expenses will not qualify.

I AM a retiree with no regular source of income except for dividends on investment in shares. Since the amount of yearly dividends I receive is less than RM30,000, I regularly claim RM4,000 to RM5,000 tax rebate under section 110 (dividends). Lately, I have received many Tier 1 dividends which do not indicate the amount of tax paid on behalf of the shareholders. Being a retiree, can I claim the tax rebate? If not, then all shareholders including retirees are paying the corporate tax of 25% on their dividends received. With the banks’ savings and FD interest rate of 2% to 3% per annum, how are the retirees going to survive? I hope you can assist by bringing up the plight of the retirees during the next budget dialogue. – Lim

WITH effect from year of assessment 2008, the single-tier system took effect. Under this system, there is no need for the company to deduct tax when paying dividends and any dividends distributed by the company will be exempt from tax in the hands of the shareholders.

However, transitional provisions in the tax legislation allow two options for companies with a credit balance in their section 108 accounts as at Dec 31, 2007 when they want to pay dividends to the shareholders:

>The company can continue to use such credits in the section 108 account to pay franked dividends to shareholders up to Dec 31, 2013 or until the section 108 credits are exhausted whichever comes earlier.

>Alternatively, the company may at any time make an irrevocable election to forgo the right to distribute franked dividends and pay dividend under the single-tier system.

If the dividends you receive indicate that no tax has been deducted, these dividends would be either exempt dividends or dividends paid under the single-tier system. In both cases, the dividends are exempt from tax in your hands and you are not entitled to claim the section 110 tax credits on such dividends.

You are correct in saying that retirees are one of the most-impacted group as a result of the single-tier system since under the previous full imputation system, you are able to get tax refund from claiming the section 110 tax credit due to your lower personal tax rate compared to the company tax rate. This has been brought to the attention of the relevant authorities in the dialogues and discussions by the professional bodies.

I READ in the papers that the recent mini budget has increased the current RM6,000 tax relief per year of service to RM10,000 for retrenched workers. Is there a limit on the number of years and does it apply for voluntary separation and early retirement? – Worried Worker

THE tax exemption on compensation for loss of employment received by employees (including payment pursuant to a separation scheme where employees are given an option for an early termination of an employment contract) is increased from the current RM6,000 to RM10,000 per completed year of service with the same employer or with companies in the same group. It covers the voluntary separation scheme but does not cover early retirement.

There is no limit on the number of years of service. However, please note that the RM10,000 exemption is applicable on the number of completed years of service.

In addition, the increased tax exemption is only applicable on payments made in respect of individuals who have ceased employment on or after July 1, 2008. If the individual has ceased employment on or after July 1 2008, and tax clearance has been issued by the IRB with the RM6,000 tax exemption (prior to the mini budget announcement on March 10 2009), the individuals can make an appeal to the IRB for a reduced assessment.

MY wife and I have a combined assessment. However, my wife was retrenched from her company on Dec 7. She has not found a new job and has had no income since then. Do I still continue to submit the combined tax assessment for 2008 and subsequent years despite her not earning any income? – Ismail

YOU should fill code 4 – “Diri sendiri, isteri tiada punca pendapatan” under Part A5 – “Jenis Taksiran” in your tax return. If your wife has received the year of assessment 2008 tax return, she should complete and file a “Nil” return to the IRB, together with a cover letter stating that she has no income in 2008.

I OWN five units of properties with three units in joint names with my spouse and the others solely owned by me. My question is, every month my spouse will collect the rental on my behalf, and she also troubleshoots if there are problems with the houses. Since she uses her own transport, makes telephone calls, pays parking and toll fees, goes to the bank etc. can I pay her a salary for her help? My spouse is a housewife – Sam

THE tax law allows you to claim a deduction for expenses that you have expended to generate the rental income from your properties. These may include quit rent, assessment, insurance, repairs and maintenance, housing loan interest taken on the properties and rent collection fee paid to an estate agent.

As your wife is a “related party” and not a registered real estate agent, there could be more scrutiny by the IRB on the claim for the fee paid to her. For example, whether the fee payment is at market rate, whether the fee is commensurate with the services provided or is it excessive, etc. If a fee is paid to your wife, she will have to report the income in her tax return.

I WRITE academic books and earn a few thousand from the payment of royalty. Actually, I am not selling the books or doing any business from the sale of the books. The publisher does all the marketing and selling. I just do the writing. Every year I report the income from the royalty together with my salary from the Government minus some of the expenses. My questions are:

(a) Presently I am given the OG or the B form. Should I be using the SG form instead because I am not doing any business?

(b) How is the RM20,000 exemption considered in a case like mine? – Anonymous

THE IRB have treated your royalty income as a business source and issued you a Form B (under an OG tax reference number). On the basis that you receive the royalty income and presumably claim some direct expenses against it, the tax treatment of your royalty income would essentially be the same whether it is reported under a Form B or Form BE. The tax filing deadline if the royalty is treated as a business source under Form B is June 30 whereas if it is a non-business source, the deadline is April 30.

There is a specific provision in the tax legislation to exempt RM20,000 royalty income or payment in respect of the publication of, or the use of or the right to use any literary work. You should exclude the RM20,000 exempt royalty income and declare the net (after deducting related expenses) balance of royalty income in your tax return.

I WAS told by the officers at IRB that filling the HK-3 forms this year will be simple. I only have to fill in according to what is required by that form. Firstly, I don’t have to submit the dividend vouchers to the Income Tax office, together with the Borang BE.

Secondly, according to the instructions accompanying the borang BE, I have to correct/adjust for the Z, X and Y column. Is this correct? – K T KHOO

YES, you need to only submit worksheet HK-3 and are not required to submit the dividend vouchers in order to claim a tax refund on your dividend income.

If you are submitting your tax return via e-Filing, the computer system will calculate the re-grossing of the net dividends automatically. However, if you are submitting the hard copy of your return, you will need to compute the re-grossing yourself and complete the worksheet accordingly.

YOU mentioned about investing in the National Education Savings Scheme (SSPN). What is this, and how does one apply for it? I’m a single father with two school-going boys. What can I do to reduce my tax deduction? – Andrew

FULL details regarding the National Education Savings Scheme (SSPN) can be found at www.ptptn.gov.my website for National Higher Education Fund Corporation (see box above for details).

Source: TheStar

Your tax queries answered

Yes to golf balls and shuttlecocks but no to swimsuits and sports shoes. These are among many specifications related to tax exemption. What makes the cut and what doesn’t, who qualifies and who doesn’t are among the many questions from our readers in response to Sunday Star’s stories last week on how to maximise one’s claims when filing tax returns.

THANKS to the assistance of tax consultant company PremierOne, our readers’ questions have been answered. Below are some of the e-mailed questions. Due to space constraints, the rest will be answered next week.

Q. I AM really confused as to what type of insurance premiums are deductible for life insurance and medical insurance reliefs. I noticed that insurance policies nowadays have both life insurance and medical rolled into one. What is the Inland Revenue Board’s (IRB) new guidelines dated June 6, 2005, on this matter? Where can I get these guidelines? – JOHN LIM

A. THE total tax deduction for life insurance premiums and contribution to an approved pension/employees provident fund is up to a maximum of RM6,000. The total tax deduction for insurance premium for education and medical benefits is up to a maximum of RM3,000.

If you are holding a policy that provides both life insurance and medical coverage, you can request from your insurance company (through the agent that services you) a statement that will show a breakdown of the premium paid in respect of each of the coverage. From these breakdown amount, you may claim a tax deduction for the life insurance premium (together with your EPF contribution) up to a maximum of RM6,000. The medical premium may be claimed (together with the education policy premium, if any) as a tax deduction up to a maximum of RM3,000.

The IRB has issued two Public Rulings and two addenda on the computation of income tax for individuals, including the one you mentioned dated June 6, 2005 (Public Ruling no. 2/2005). The public rulings set out the IRB director-general’s interpretation on the particular tax matters and are issued to provide guidance for the public and IRB officers. All the public rulings can be found and downloaded from the IRB website at www.hasil.org.my under Law and Regulations/Public Rulings.

MY wife and I each bought a personal computer last year and would like to claim the RM3,000 rebate for each computer under our individual names.

However, we were told that we are only allowed to claim one personal computer as the rebate is based on family usage and not individual usage.

Can you please clarify this point?

Are my wife and I allowed to claim the rebate totalling RM6,000 for both of us as we each bought a new personal computer last year? Our taxes are filed separately. – FAN TEN YAU

THE current tax deduction for the purchase of a personal computer for non-business use of up to a maximum of RM3,000 is given on an individual basis once in every three years of assessment.

It is important to note that the RM3,000 maximum claim is for a tax deduction (i.e. to be deducted against your total income to arrive at your chargeable income) and not a rebate (i.e. a rebate is deducted from your income tax charge to arrive at your tax payable). Prior to year of assessment 2007, the relief given was a RM500 rebate given on a household basis once every five years.

In your case, where you and your wife elect for a separate assessment, each of you are eligible to claim a maximum deduction of RM3,000 for your respective purchase to be evidenced by a receipt for the respective claim.

DUE to the increase in petrol/diesel price, other things also increase in price. In order to lighten our expenses, our company pays a monthly allowance, called child transport allowance, for those who have school-going children. This allowance varies depending on the number of children going to school.

Can we claim tax exemption on this allowance? – JENNY

PURSUANT to the Budget 2009 announcement last year, allowance or subsidies received by employees from their employer for childcare in respect of children will be exempted from income tax with effect from year of assessment 2008. The exemption is restricted to RM2,400 per annum.

Although the relevant statutory order on the allowance is yet to be gazetted to date, the IRB has issued a second addendum to Public Ruling no. 1/2006 (dealing with perquisites from employment) which states that the child must be 12 years of age and below and must be a legitimate child, stepchild or legally adopted child.

The examples given in the ruling sets out situations where the allowance was given to employees for childcare centre, hiring a helper and employing a household domestic maid. Whilst the examples given may not be exhaustive, it is uncertain whether an allowance for child transportation would qualify, until further clarifications from the IRB.

EFFECTIVE from year of assessment 2008, taxpayers are given a relief of up to RM300 yearly for the purchase of sports equipment.

Equipment that are entitled to this relief are those used for sporting activities as defined under the Sports Development Act 1997. I would be pleased if you could provide some examples of the sports equipment that will be entitled to this relief.

It is interesting to note that in the guidebook for the year of assessment 2008 (Buku Panduan Borang B 2008 – pdf version), it is mentioned that sports shoes are excluded.

This may seem as an anomaly as a pair of running shoes may be a major “equipment” used in athletics, a sport defined under the Sports Development Act 1997. – FOOK

A TAX deduction is allowed for an amount limited to a maximum of RM300 in respect of expenses expended for the purchase of sports equipment for any sports activity as defined under the Sports Development Act 1997, as evidenced by receipts issued.

The term sports activity is listed in the First Schedule of the Sports Development Act 1997 and ranges from athletics, badminton, canoeing, fencing, golf, recreational, sepak takraw, table tennis to watersport, etc.

You are correct to point out that whilst equipment with short lifespan e.g. golf balls and shuttlecocks have been accepted by the IRB in the Buku Panduan, certain sports attire have specifically been excluded e.g. swimsuits and sports shoes.

MY company, X Sdn Bhd, was formed some time in mid-2006. There are only two directors in the company with equal sharing of the company shares. No profit was made in 2006. However, there was profit at the end of financial year 2007 and dividend was declared and distributed to the shareholders in July 2008.

I would like to know if I am eligible to claim for the difference in the taxed amount as my personal marginal tax is lower than the company tax, which is 20%. Or is it that the dividend distributed is under single-tier tax system of which I don’t even need to declare in the EA and BE form?

My accountant informed me that since the company is new, it should directly be under the new tax system. Is this true? – DARREN

IT is not correct to say that since the company is “new”, it would automatically be under the single-tier system.

The single-tier system took effect from year of assessment 2008 onwards. Under this system, there is no need for the company to deduct tax when paying dividends and any dividends distributed by the company will be exempt from tax in the hands of the shareholders.

However, transitional provisions in the tax legislation allow two options for companies with a credit balance in their section 108 accounts as at Dec 31, 2007 when they want to pay dividends to shareholders:

The company can continue to use such credits in the section 108 account to pay franked dividends to shareholders up to Dec 31, 2013 or until the section 108 credits are exhausted whichever comes earlier (subject to certain conditions e.g. dividends must be paid in cash and in respect of ordinary shares.) For small and medium companies, the tax on dividends paid to the shareholders is deducted from the section 108 credit balance based on the highest tax rate for the year of assessment (e.g. 27% for year of assessment 2007).

Alternatively, the company may at any time make an irrevocable election to forgo the right to distribute franked dividends by filing a Form R50 to the IRB and pay dividends under the single-tier system.

Since your personal marginal tax bracket rate is lower than the company tax rate, provided you have sufficient tax credits in the company section 108 accounts, it is more beneficial for the company to declare and pay franked dividends under the transitional provisions, instead of paying single-tier exempt dividend.

Please note that the company, upon paying the dividend, is required to furnish the shareholders with a certificate stating the gross dividend, tax deducted from the dividend and net dividend paid out.

I SEEK further clarification on my following concerns:

i) Travel allowance from home to work place of up to RM2,400: Does this apply to all employees who drive to work daily or only to those provided with such an allowance by the company? If I drive a company car, am I entitled to this exemption?

ii) Telephone and mobile usage: Does this again apply to all who use their mobile phone for company business? Totally or partly?

iii) I drive a company car and use company registered mobile phone. These are translated into income of RM3,000 and RM600 respectively as taxable income. Am I entitled to these extra exemptions? – C.C. YAP

THE tax exemption for travel allowance of up to RM2,400 a year is only applicable if you receive such travel allowance from your employer i.e. if your employer provides you such travel allowance, the allowance is not taxable to you. It does not apply to employees where no travel allowance is provided by their employers, though they drive to work.

Similarly, the tax exemption applies where your employer provides you the telephone and mobile phone or pays the bills for the telephone or mobile phone registered in the name of the employee or employer.

You are entitled to the tax exemption on the RM600 mobile phone benefits provided by your employer.

In relation to the company car, we understand that the IRB is currently considering whether to include the benefit value of motor vehicle (in your case the RM3,000) as part of the exempt allowance of up to a maximum of RM2,400 per annum. We anticipate the IRB to issue further guidelines on this.

I WOULD like to know which column in E-filing to fill in details of parking allowance, purchase of own company goods at discounted price and handphone/Internet/phone bills. Are those exempted from tax in YA2008? If so, where do I fill them in as I can’t seem to find an appropriate column to put those in? – ERIC

WITH effect from year of assessment 2008 parking allowance, telephone and mobile phone bills, and Internet subscription paid by employers are exempted from income tax.

The purchase of the company’s own goods at discounted price is also an exempted benefit-in-kind, up to a maximum of RM1,000 per year.

Such exempted allowances and benefits-in-kind are not required to be reported in your Form BE or under e- Filing.

Please note that Part G of the Form EA for year ended Dec 31, 2008 provided by your employer would specify the total amount of such exempted allowances/benefits-in-kind/ perquisites.

HOW could we in the private sector cut on our taxes as we fall in the maximum taxable bracket as compared to our peers in the government sector who earn the same and pay less tax as lots of the allowances are non taxable?

PURSUANT to the 2009 Budget announcement, with effect from year of assessment 2008, the Government has allowed tax exemptions on various allowances and benefits provided by employers to their employees.

Some examples include subsidised interest given by employers for housing, education or car loan up to RM300,000; travel and petrol allowance for travelling from work to home of up to RM2,400 per year; travel and petrol allowance and toll rate for official duties of up to RM6,000 per year; and allowance for meal, parking and childcare, etc.

I WISH to know whether I can claim on the following:

i) I spent a total of RM7,820.50 for both check-ups and delivery at a hospital for the birth of my son under Section D7 up to maximum RM5,000; and

ii) Cukai Seksyen 110 (lain-lain) dividend received from public listed shares. – CHONG SAU CHAN

THE deduction claim under Part D7 is in relation to expenses expended for a complete medical examination which is up to a maximum of RM500. The total deduction for medical expenses on serious diseases under Part D6 is limited to a maximum of RM5,000 and this includes the RM500 for complete medical examination (under Part D7).

The expenses you incurred for check-ups relating to your pregnancy and delivery of your son is not claimable since it does not fall within the two categories of expenses.

If the dividend warrant that you received from the public listed shares shows a gross dividend amount, tax deducted from the dividend and net dividend paid out, it means that the company has to opt to continue using its section 108 tax credits balance to pay franked dividends under the transitional provisions instead of electing to pay exempt dividends under the single-tier system.

Therefore, you should declare the dividend at gross in your tax return: for example, if in 2008 you received net dividend of RM74, you should declare RM100 (and not RM74) as dividend income in your return. However, you can deduct the section 110 tax credits of RM26 against your total tax. Any excess credit will be refunded to you.

I RETIRED in 2007. I have no employment income for YA 2008. My wife is still working. I have a child currently receiving college education. My questions are:

i) Since I have no income for YA 2008, can I elect for combined assessment so that my spouse can claim additional RM3,000 personal relief? Do I have to file separate forms officially to inform the IRB?

ii) Can my spouse claim the child relief as well as all the insurance premiums paid for life and medical policies?

iii) I understand that retirement gratuities received due to medical reason is exempted from income tax. Where do we disclose the amount received as there is no mention in the Borang BE?

iv) Will the retirement gratuities received due to medical reason be taxed if the person later decides to take up a new employment or start a business? – FRANCIS

SINCE you have retired and have no income for year of assessment 2008 and if you have received your tax return Form BE from the IRB, you should complete and file a “Nil” return to the IRB, together with a cover letter stating that you have no income for 2008. Your wife should fill code 4 = “Diri sendiri, suami tiada punca pendapatan” under Part A5 – “Jenis Taksiran” in her tax return. Your wife can claim the additional RM3,000 relief for you (as husband).

ii) Yes, your wife can elect to claim the child relief. Your wife is also entitled to a claim up to a maximum of RM3,000 for insurance premium paid for her and/or your medical policies as well as a claim up to a maximum of RM6,000 (together with her EPF contributions) for insurance premium paid for her and/ or your life policies.

iii) Sum received by way of gratuities on retirement from an employment, if the director-general of the IRB is satisfied that the retirement is due to ill-health, is exempted from income tax. In practice, your employer would have issued you a Form CP22A (notification of cessation of employment) and you should have obtained a tax clearance from the IRB before your employer released the gratuity sum to you.

There is no requirement to declare the exempted gratuity amount in your Form BE.

iv) There is no specific provision in the tax legislation to cover this position. However, the legislation clearly provides that the director-general of the IRB must be satisfied that the retirement is due to ill-health. Where this criterion has been met, the gratuity would not be taxable. Whether the subsequent taking up of another employment or starting a business may lead to a review by the IRB will depend on the prevailing facts and circumstances.

MY company is giving fuel card worth RM300 per month and mobile phone benefit of RM120 per month. This will not be included in the salary slip, so how do I fill up the EA form?

Also, how do I fill up for goods that I buy at discounted value for RM1,000?

And what is the tax relief for EPF Annuities scheme? – ANG

i) The fuel card of RM300 per month and mobile phone of RM120 per month provided by your company is exempted from income tax with effect from year of assessment 2008. There is no requirement to declare the exempt income in the Form EA or the Form BE.

ii) The purchase of company goods at discounted value up to a maximum of RM1,000 is exempted and not required to be disclosed in the Form EA or Form BE.

iii) The tax relief for EPF Annuities scheme is up to a maximum of RM1,000 per annum.

I HAVE two questions. Can I claim maternity expenses in 2008 if the expenses were borne by myself and not by my company? I have a parent in a nursing home. Can I claim the nursing home expenses borne by myself? It is the monthly sum paid to the nursing home for the care of my parent – LINDA

TAX deduction for medical expenses expended on own self, spouse or child of up to a maximum of RM5,000 is available only if it is in respect of treatment of serious diseases (see box for definition).

Since maternity expenses do not fall within this definition, it is not claimable as a tax deduction.

For your second question, tax deduction for medical expenses expended for own parents is up to a maximum of RM5,000.

Medical expenses that qualify for deduction would include medical care and treatment provided by a nursing home for your parents. You must keep the receipt(s) from the nursing home certifying that nursing home care was provided to your parents as evidence for your claim.

ONE of the points you highlighted in your article “How to pay Less Tax” (Sunday Star, March 15) was that medical benefits exempted from tax include expenses on traditional medicines such as ayurvedic and accupunture. And you mentioned that it is for the year of assesment 2008.

I would appreciate it if you could elaborate on this a little more. As I am taking my son for ayurvedic treatment, can I put it in?

My husband and I are paying for the treatment from our own savings and we are not asking our employer to cover it as a benefit. So, can we put it in our income tax form? What is the maximum amount we can claim and where do we put it? – TAX QUERY CITIZEN

MEDICAL benefits which include expenses on traditional medicines such as ayurvedic and acupuncture that are exempted from tax for employees applies only where such benefits are provided by employers.

In your case, since you (and not your employer) are paying for your son’s ayurvedic treatment, this exemption is not applicable to you.

In order to claim the tax relief for medical expenses for your son of up to a maximum of RM5,000, the expenses have to be expended on “serious diseases” (see definition in box). In addition, you are required to obtain a receipt or certificate from a medical practitioner who is registered with the Malaysian Medical Council.

Unless your son’s ayurvedic treatment is for a serious disease and the ayurvedic practitioner is registered with the Malaysian Medical Council, the expenses will not be deductible.

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PremierOne is a tax consultant firm that offers a high level of personal attention and service. Together, the group of partners, originally from one of the biggest international accounting firms, has many years of experience and expertise.The executive directors of PremierOne Tax Consultants Sdn Bhd are Elizabeth Peter of Human Capital Services, Lim Kean Teong of Corporate Services and Antony Tong of Advisory Services. For professional consultation, e-mail info@premierone.com.my

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What is serious disease?

Serious diseases is defined to include AIDS, Parkinson’s disease, cancer, renal failure, leukaemia and other similar diseases such as heart attack, pulmonary hypertension, chronic liver disease, fulminant viral hepatitis, head trauma with neurological deficit, brain tumour or vascular malformation, major burns, major organ transplant and major amputation of limbs.

Source: TheStar