Review of Income Tax Treatment on Allowances, Benefits-in-kind and Perquisites

Generally, allowances, benefits-in-kind and perquisites received by employees are taxable. Now, in addition to existing tax exemptions, the following would be exempted from tax proposed on 29 August 2008 The 2009 Malaysia Budget.

To be effective from Year Assessment 2008 until Year Assessment 2010

1. Petrol card / allowance or Travel Allowance between the home and work place up to RM24,000 a year;


To be effective from Year Assessment 2008

2. Petrol card / allowance or travel allowance and toll card for official duties up to RM6,000 a year;

3. Allowance or Fees for Parking;

4. Meal Allowance;

5. Allowance or subsidies for childcare of up to RM2,400 a year;

6. Telephone and mobil phone, telephone bills, pager, personal data assistant (PDA) and internet subscription;

7. Employers’ own goods provided fee of charge or at discounted value where the value of the discount does not exceed RM1,000 a year;

8. Employers’ won services provided free or at a discount provided such benefits are not transferable;

9. Subsidies on interest on loans totaling up to RM300,000 for housing , passenger motor vehicles and education. The exemption given to existing and new loans;

10. Medical benefits exempted from tax be extended to include expenses on maternity and traditional medicines such as ayurvedic and acupuncture;

11. Existing perquisites be extended to awards related to innovation, productivity and efficiency such as the Six Sigma Award and the exemption be increased from RM1,000 to RM2,000 a year.

Please take note that the above exemptions are not extended to directors of controlled companies, sole proprietors and partnerships.