Malaysia proposes wider uses for tax-deductible school donations

Broader spending, not unrestricted donor relief

Appendix 10 would extend Tabung Sumbangan Wang Awam Sekolah (TSUWAS) spending to administration, operations, repairs, maintenance, equipment and student programmes. Its existing-position statement excludes administration, operations, repairs and maintenance. However, the March school-fund guideline already covers approved projects and programmes: the proposal should not be read as making every equipment purchase or student activity newly eligible.^[1][2]

The Budget envisages applications to the Inland Revenue Board of Malaysia with Ministry of Education endorsement, and administration involving the school, parent-teacher association or alumni association under ministry monitoring. Further guidelines are to determine the arrangements. This is a proposal for the fund’s permitted expenditure and governance, not an enacted general deduction for school payments.^[1]

Cash gifts and approval remain distinct

The existing donor route is subsection 44(6) of the Income Tax Act 1967, Act 53. In the Attorney General’s Chambers text updated to 1 January 2026, qualifying money gifts to approved institutions, organisations and funds are deductible, subject to a 10%-of-aggregate-income ceiling. That dated text expressly states that it is not an authentic reprint. The March 2026 school-specific guideline independently confirms the cash requirement and ceiling for individual and corporate donors; donated goods may be accepted but do not qualify for this deduction.^[2][3]

The same guideline requires education-authority permission and cost estimates for the project or programme, followed by IRBM approval. A separate bank account must be used for the approved purpose. Collections made before approval do not count towards the permitted collection. The approval’s amount and duration therefore matter alongside the donor’s tax limit.^[2]

Implications for multinational donors

Malaysian group companies considering school support should distinguish a cash gift to an approved fund from donating inventory or equipment directly. Retain the fund’s approval and the prescribed donation evidence, and check the authorised project and collection period. The proposed wider spending scope does not itself waive those controls or convert donated goods into deductible cash gifts.^[1][2][3]