For income tax filed in Malaysia, employees are entitled to certain tax exemptions that can reduce our overall chargeable income. Tax exemptions either reduce or entirely eliminate your obligation to pay tax.
Most taxpayers are entitled to an exemption on their tax return that reduces their tax bill in the same way a deduction does.
A. Benefits-In-Kind
Benefits-in-kind is a type of benefit received by employees which are not included in their salary, such as cars, furniture, and personal drivers. Below are some of values of Benefits-in-kind prescribed (value per year):
1. Household furnishings, apparatus and appliances:
Semi-furnished with furniture in the lounge, dining room and bedroom - RM840
Semi-furnished as above and with air-conditioners or carpets or curtains - RM1,680
Fully Furnished - RM3,360
Service charges and other bills (e.g. water, electricity) - Charges and bills paid by Employer
2. Prescribed value of other benefits
Driver - RM7,200 per driver
Domestic servants - RM4,800 per servant
Gardeners - RM3,600 per gardener
Corporate recreational club membership - Membership subscription paid by Employer
3. Leave Passages*:
one overseas leave passage up to a maximum of RM3,000 for fares only; or
3 local leave passages including fares, meals and accommodation
4. Employers' goods provided free or at a discount*:
Exemption is available up to RM1,000 per annum. Any benefit exceeding RM1,000 will be subjected to tax
5. Employers' own services provided full or at a discount* (Fully exempted)
6. Maternity expenses & traditional medicines* (Fully exempted)
7. Telephone (including mobile phone), telephone bills, pager, personal data assistant (PDA) and broadband subscription (Fully exempted, limited to one unit for each asset)*
* Exemptions are not extended to directors of controlled companies, sole proprietorship and partnerships
B. Perquisites
A perquisite is a perk or benefit given to you by your employer, like travel and medical allowances. Below are some examples of perquisites:
Total amount paid by employer. Exemption available up to RM6,000 per annum if the allowances/perquisites are for official duties*. Records pertaining to the claim for official duties and the exempted amount must be kept for a period of 7 years for audit purpose.
2. Childcare subsidies/allowances (in respect of children up to 12 years of age):
Total amount paid by employer. Exemption available up to RM2,400 per annum*.
3. Parking fees/allowances* (Fully exempted)
4. Meal allowances* (Fully exempted)
5. Interest on loan subsidies:
Loans totalling RM300,000 for housing/passenger motor vehicles and education*
6. Income tax borne by employer:
Total amount paid by employer
7. Award:
Total amount paid by employer. Exemption available up to RM2,000 per annum for the following types of award*: long service (more than 10 years of employment with the same employer), past achievement and service excellence, innovation or productivity award
8. PTPTN (Perbadanan Tabung Pendidikan Tinggi Nasional) loan repayment borne by employer:
Total amount paid by employer (payments made during the year 2019)
*Exemptions are not extended to directors of controlled companies, sole proprietorship and partnerships
Reference: PWC 2018/2019 Malaysian Tax Booklet
For a more in-depth view on these exemptions (Benefits-in-kind), you can visit this article on our blog, Vox of Talenox: https://blog.talenox.com/defining-the-benefits-in-kind-in-form-ea/