In the PCB/MTD calculation, a payment is treated as either normal remuneration (Saraan Bulan Semasa) or additional remuneration (Saraan Tambahan). This article explains how Talenox treats overtime by default and how to process overtime as normal remuneration if it applies to your employees.
Talenox is not LHDN. The classification of your overtime is decided by LHDN, so please confirm it with LHDN if you are unsure.
How Talenox treats overtime by default
For monthly-paid employees, overtime processed through the Overtime pay item, or keyed in through Attendance, is calculated under additional remuneration in the PCB/MTD calculation.
Normal vs additional remuneration
Normal remuneration (Saraan Bulan Semasa): fixed, recurring monthly payments, such as basic salary.
Additional remuneration (Saraan Tambahan): variable, non-fixed payments, such as casual overtime, bonuses and commissions.
Which one applies to your overtime
Based on what we know of LHDN's guidance, overtime that is paid every month as a fixed amount is treated as normal remuneration. Overtime that is not paid every month, or that skips a month, is treated as additional remuneration.
How to process overtime as normal remuneration
If your overtime is fixed every month and you need it calculated under normal remuneration, create a recurring custom pay item for it.
Go to Payroll > Process Payrun > Custom Pay Item.
Create a new custom pay item, for example "Monthly OT".
Set the Category to Recurring.
Set the Item Type to Salary/Wages.
Set Tax to Yes.
Save the pay item.
In the payrun, key in the amount under the Monthly Payment/Deduction tab. It is remembered every month.
For more details on custom pay items, see How To Create Custom Pay Items for Payroll Processing? (Malaysia).
Things to note
Do not key in the same overtime again through the Overtime pay item or Attendance, as it will be counted twice.
If you enter this pay item as a one-off (ad hoc) amount in a month, it is still treated as additional remuneration.
Recurring pay items are still subject to your company's proration settings.
If your PCB/MTD is different from LHDN's calculator
Check whether the overtime was entered under normal remuneration or additional remuneration in the LHDN calculator. The same overtime amount gives a different PCB/MTD depending on which one it is entered under.
To see how Talenox calculated the amount, see How to Download PCB/MTD Report?.