LHDN Just Updated the Rules for Hospital Welfare Funds, Here's What Changed

A new LHDN guideline dated 4 September 2026 replaces the version issued on 28 March 2023, and several of the changes materially loosen or tighten how Hospital Welfare Funds under Section 44(6) of the Income Tax Act 1967 must operate.

One of the largest changes concerns help for non-citizens. Under the 2023 guideline, only 1 percent of public donations could go toward non-citizens, and only for emergency cases. The 2026 guideline raises this to 20 percent of donations collected, and drops the emergency-only condition altogether, allowing help on humanitarian grounds more broadly. This is a twenty-fold increase in the amount a fund can direct toward non-citizens.

Committee governance has also tightened in a specific way. The 2026 guideline states plainly that board members appointed to sit on a fund's committee cannot receive salary or any allowance tied to their role, and can only claim reasonable reimbursement backed by supporting documents. Fund money is also barred from benefiting any committee member, hospital director, or their family. The 2023 guideline contained no equivalent restriction, so this closes a gap that previously existed.

The approval period itself has also changed. Where 2023 capped LHDN approval at five years, the 2026 guideline extends this to ten years, halving how often a fund needs to reapply.

Reporting obligations for larger donors have tightened in the opposite direction. Under 2023, only donors giving RM20,000 or more needed to be individually reported to LHDN. The 2026 guideline lowers this threshold to RM10,000, meaning more donors will now have their details submitted to the tax authority.

These four changes are only part of a wider set of revisions between the two guidelines, covering funding sources, treatment exclusions, e-Invois requirements, and dissolution procedures, among others. Anyone who wants the complete picture are encouraged to download and read both documents directly, LHDN's Garis Panduan Permohonan untuk Kelulusan Ketua Pengarah Hasil Dalam Negeri di bawah Subseksyen 44(6) ACP bagi Tabung Kebajikan Hospital, dated 4 September 2026, together with the earlier version dated 28 March 2023.

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