The Inland Revenue Board of Malaysia (LHDN) has released a new guideline dated 19 March 2026 regarding the approval of Tabung Sumbangan Wang Awam Sekolah (TSUWAS) under Subsection 44(6) of the Income Tax Act 1967.
These guidelines provide clearer requirements and responsibilities for schools seeking approval under Subsection 44(6), allowing donations received by the approved fund to qualify for tax deductions.
What is TSUWAS?
TSUWAS refers to a public donation fund established by schools to collect contributions and donations from the public for educational purposes and school development activities.
Once approved under Subsection 44(6), donors who contribute to the fund may claim tax deductions subject to the provisions of the Income Tax Act 1967.
Key Highlights of the New Guidelines
1. Eligibility Criteria for Schools
The guideline outlines the categories of schools that are eligible to apply for approval under Subsection 44(6). It also explains the objectives and conditions required before a TSUWAS application can be considered by LHDN.
Among the important requirements include:
- Establishment of a proper TSUWAS committee
- Clear objectives for the fund
- Separate bank account for TSUWAS
- Proper governance and financial management
2. Responsibilities of the TSUWAS Committee
Schools that receive approval must comply with several ongoing obligations, including:
- Ensuring donations are used only for approved educational purposes
- Maintaining proper accounting records and financial statements
- Issuing official receipts for donations
- Managing surplus funds appropriately
- Updating LHDN on committee changes
The guideline also emphasizes the implementation of e-Invoice requirements where applicable.
3. Separate Account Requirement
One important clarification under the guideline is that the TSUWAS account must be maintained separately from:
- School accounts
- PIBG accounts
- Board management accounts
This is to ensure better transparency and accountability in the management of public donations.
4. Consequences of Non-Compliance
LHDN has also highlighted that failure to comply with the conditions imposed may result in:
- Revocation of approval under Subsection 44(6)
- Other administrative actions by the authority
Therefore, schools and committee members are encouraged to ensure proper governance and continuous compliance with the approved conditions.
Why This Matters
The updated guideline provides better clarity for schools that intend to establish public donation funds while ensuring stronger governance and transparency in handling donated funds.
For donors, contributions made to approved TSUWAS funds may qualify for income tax deductions, making it beneficial for both educational institutions and contributors.
Need Assistance?
If your school or organization requires assistance on:
- Application for Subsection 44(6) approval
- Compliance requirements
- Governance structure for TSUWAS
- Tax implications and documentation
Feel free to contact us for further guidance.
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