Which perquisites are tax exempt?

Benefit

Details

Child care allowance in respect of children up to 12 years of age

Tax exempt up to RM 2,400 per year.

Includes payment by the employer directly to the child care.

Parking rate or parking allowance

Tax exempt as long the amount is not unreasonable.

Includes payment by the employer directly to the parking operator.

Petrol allowance, petrol card, travelling allowance or toll payment or any combination

Tax exempt up to RM 6,000 per year, if used for official duties.

More than RM 6,000 may be claimed if records are kept for 7 years.

Meal allowance

Tax exempt as long as the amount is not unreasonable and is:

provided to the employee on a regular basis, and provided to all employees at the same rate; or

provided to the employee to cover their meals during overtime or overseas travel or other similar purposes. Such meal allowance is paid according to the employee’s position, duties or place where the employment is exercised.

Utility bills in name of the employee

Monthly bills for subscription of broadband, fixed line telephone, mobile phone, pager and PDA registered in the name of the employee or employer, including cost of registration and installation, are tax exempt.

Limited to 1 line for each category of asset.

Subsidised Loans (internal funds)

Fully tax exempt when the loan comes from internal company funds.

Subsidised Loans (external funds)

Subsidised interest for housing, education or car loan is fully exempted from tax if the total amount of loan taken in aggregate does not exceed RM300,000.

If the total amount of loan exceeds RM300,000, the amount of subsidized interest to be exempted from tax is limited in accordance with the following formula: (A x B) / C

where:

A = the difference between the amount of interest to be borne by the employee and the amount of interest payable by the employee in the basis period for a year of assessment;

B = the aggregate of the balance of the principal amount of housing, education or car loan taken by the employee in the basis period for a year of assessment or RM300,000, whichever is lower;

C = the total aggregate of the principal amount of housing, education or car loan taken by the employee.

Insurance premiums

Tax exempt provided they are:

Insurance premiums which are obligatory for foreign workers as a replacement to SOCSO contributions.

Group insurance premiums to cover workers in the event of an injury or accident.

Insurance premiums on insurance policies under the Aviation Travel Insurance for employees for coverage of employees for travelling on official duty.

Contributions by employer to the health care management organisation for payment of the medical and treatment costs of employees.

Professional subscriptions

Tax exempt, provided that membership to that professional body is essential to the business of the employer in terms of enhancement of knowledge for the employee to facilitate him in carrying out his duties.

Scholarship

Any sums paid by way or in the nature of a scholarship or other similar grant or allowance to an individual, whether or not in connection with an employment of that individual are tax exempt.

However, the salary paid to an employee during the study leave period is taxable as income from employment as the employee is regarded as having an employment, even though he is not exercising his employment.

Assets provided free of charge or sold at discounted prices

A gift of a fixed line telephone, mobile phone, pager or PDA which is registered under the name of the employee is fully exempted from

tax. Cost of registration and installation are included in the amount to be exempted. The exemption given is limited to 1 unit for each asset.

Gift vouchers

Tax exempt unless they are of a recurring nature and are provided in the circumstances where the employee expects such gifts as part of his remuneration.

Pure gifts

Pure gifts or testimonials received by an employee from his employer or third parties purely for personal appreciation or for specific personal reasons are not taxable as such gifts are not related to having or exercising the employment, eg:

Wedding gifts

Prizes for foiling bank robberies

Prizes for extraordinary feats, e.g. climbing Everest

Rewards related to employment

Tax exempt in the following cases:

For past achievement

Service excellence

Long service - employee must have worked with the same company/group of companies for more than 10 years.