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Section 4b EMPLOYMENT INCOME - Coggle Diagram
Section 4b
EMPLOYMENT INCOME
SECTION 13(1)(a)
Cash & Cash Equivalent
1. Salary
2. Leave pay
3. Commission
4. Gratuity
FULL EXEMPTION
Non- Government Staff
Normal retirement (age 50-55 or more 55)
10 years in the sane group of company
Gratuity payment is in the employment contract
retire due to ill health
Government staff
retire / terminate of contract
payment is made from public fund
PARTIAL EXEMPTION
when does not fulfill any of the condition above
5. Perquisite / allowance
payment due to job
Share option and share incentive scheme
market value at time option was granted (exercisable vs exercised
(TAKE LOWER)
(Market value price - share option price) x units
PERQUISITE = TAXABLE
example: clothing, travelling, entertainment, individual membership in recreation clubs (annual, entrance, term fees)
gift voucher
6. Travelling allowance HOME > OFFICE
PERQUISITE = TAXABLE
7. Travelling allowance OFFICE > CLIENT
RM 6,000 EXEMPTION
exclusive expenses to the max. travelling allowance received after deduction of RM 6,000 exemption
8. Inducement payment
9. Loan to employee
Internal fund = NOT TAXABLE
External fund : Interest incurred by employer
Less: Nominal iterest paid by employee
Waiver of loan = PERQUISITE = TAXABLE
10. School / tuition fees
children education paid by employer (direct or reimbursement) (local or oversea) = PERQUISITE = TAXABLE
course paid by employer and attended by employee to enhance skill and education related to work = NOT TAXABLE
course not related to work = TAXABLE
11. Insurance premium
employer pay insurance on life of employee where the employee and and its families as beneficiaries = PERQUISITE = TAXABLE
insurance not related to work/employment = EXEMPTED
12. Professional subscription
directly for work/employment = TAX EXEMPT
not directly related to work = TAXABLE
13. Excellent public service award given to employee of public sector in monetary form
PERQUISITE = TAXABLE
Cash awards less RM 2,000 = EXEMPT
Gift e.g. watch (has the option to sell) LESS RM2,000 EXEMPTION
14. Pecuniary liabilities
employer pay / reimburse e.g. income tax, utilities bill, car charges (insurance, road tax parking, maintenance)
15. Credit card facilities
CC for official duty & private purchase = TAXABLE
(include annual membership fees & amt paid for private purchases
solely to perform duties = NOT TAXABLE
16. Scholarship
NOT INCOME = NOT TAXABLE
salary paid during study leave = TAXABLE
17. Assets provided by employer FOC or at discounted price
e.g. house, car
TAXABLE
market value - amount paid by employee = TAXABLE AMOUNT
18. Individual recreation club membership paid by employer
TAXABLE
19. Reimbursement of driver, gardener, domestic servant, gurad from employer
TAXABLE
EXEMPTION 13(1)(a)
petrol card, petrol allowance, travelling allowance, toll card for official duties
up to RM 6,000/year
allowance/fees for parking
meal allowance (include OT, outstation / oversea work)
allowance / subsidies for childcare (child age <12)
up to RM 2,400
Telephone, telephone bill, pager, personal data assistant, internet subscription
discounted price for consumable business product of the employer
max RM 1,000/year
discounted prices for service provided by the business of the employer and for the the benefit of the employee, spouse and child of the employee
subsidies on interest of house, education or car loan
A X B/C
A) difference between the amt of interest to be borne by the employee and the amt of interest payable by the employer in a basis period of a year of assessment
B) the total aggregate of balance of the principal amt of the house, edu, / car loan taken by the employee on a basis period of a year / RM 300,000 (whichever lower)
C) total aggregate of the principal amt of the house, edu / car loan taken by the employee
SECTION 13(1)(b)
Benefit in kind
1. Utilities bills under employer's name
2. Corporate recreation club membership (annual fees)
3. Motor, f&f, kitchen equipment. entertainment & recreation : prescribed vs formula method
4. Motor vehicle
Prescribed method
based on value of car when new / market value
interest cost, omsurance premium, road tax not included
car age >5y ; value of car usage /2
apportion the amt of car provided not full 12 mths
employee use 30% of car private usage; 30% x value
employee contributes to the cost of the car; deduct the value
Formula method
(Cost of car / Prescribed car lifespan: 8y) x 80%
5. Fuel provided with the car: prescribed method based on value of car
fuel only and for private usage: TAXABLE
6. Furniture & fittings
semi-furnished at lounge, dining / bedroom RM70/mth
semi-furnished + air condition, curtain, carpet RM140/mth
fully furnished + kitchen equipment, crockery, utensil RM280/mth
7. Paid by employer
Gardener; RM300/mth
Driver; RM 600/mth
Driver: disregards if driver comes from pool of drivers provided by employer for the use of other employees solely for business purposes
Domestic servant; RM400/mth
Guard; RM400/mth
time apportion based on mth usage
reduced the amt if entertained clients at his residence place
8. Monthly corporate recreation club membership paid by employer and extended to the company's senior officers to achieve company's business objective / used by employees for private benefit
Entrance fee paid by employer is not taxable
9. Hotel and meals provided during overseas vacation
NOTE: gift attributable to personal quality of employee is NOT RELATED TO EMPLOYMENT INCOME e.g. wedding gift, cash award due to being best student
13(1)(b) EXEMPTION
Medical / dental treatment for self & family
childcare benefit for children
leave passage include meals and accommodation for travel in Msia, not exceed 3 times/year
hotel and meals for local EXEMPTED
1 leave passage outside Msia/year
max; RM3,000
RM3,000 for each person of employee, spouse, children
leave passage: air fares, insurance, transit costs, NOT hotel accommodation
benefit / amenity used solely for job
eg business trip for site, client, supplier visit
free transport for workers from certain pick-up points / from home to factory
eg carter bus (bas kilang)
food and drinks provided for free / subsidised by employer
relocation package
freight, winter clothing, moving allowance
SECTION 13(1)(c)
Living Accommodation
House
Rental value vs 30%(Section 13(1)(a) - share option)
TAKE LOWER
<12mths; apportion to months of usage
shared; ratio to personal usage
employee contribute to rental; remains but less in whole and exclusive exp
if includes furniture
(rental/mth - furniture rental/mth) x months
vs
30% (S13(1)(a) - share option)
Hotel / Hostel
3% (S13(1)(a))
<12 mth apportion to months of usage
SECTION 13(1)(d)
Unapproved pension fund
SECTION 13(1)(e)
Compensation on loss of employment
1. Salary in lieu of notices
2. Compensation for breach of contract of services
3. Payment for the release of the employer's obligation under contract of service
4. ex-gratia eg retrenchment payment, severance pay, gratuity made to employees who have become redundant
5. restrictive covenant (agreement)
Section 13(1)(e) EXEMPTION
FULL EXEMPTION
: due to ill health
PARTIAL EXEMPTION
: RM10,000 X each completed year of service with same employer with same group