Tax-exempted Benefits in Kind

Tax-exempted Benefits in Kind

Which Benefits in Kind (BIK) are exempted from tax ?

 

Benefit

Details

Dental benefits

Tax exempt

Child-care benefits

Childcare provided by employers
(e.g. a childcare center) is tax exempt

Food and drink provided for free

Tax exempt

Free transportation (e.g. bus/ van) between pickup points/ home and the workplace (to and from)

Tax exempt

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

Tax exempt

Group insurance premium to cover workers in the event of an accident

Tax exempt

Leave passage

Tax exempt for leave:

in Malaysia (not more than three times a year); or

Overseas (not more than once a year) with a maximum value of RM 3,000

Provided to employee and immediate family only.

Benefits used by employer to perform his employment duties

Tax exempt

Discounts on goods and services provided by the employer

Tax exempt provided that they are:

not convertible into money by the employee even though they have money’s worth;

for the benefit of the employee and are used by the employee personally; and

provided to employees as a whole and not provided specifically to a certain group of employees only.

Note: discounts on goods are only tax exempt up to a value of RM 1,000.

Benefits and monthly bills for fixed line telephones, mobile phones, pagers, PDAs and broadband

The amount to be exempted includes registration cost and installation cost. The exemption given is limited to one unit for each asset.

Benefits for medical treatment

Tax exempt for modern medicine, traditional medicine and maternity. Treatment must be by certified medical doctors or medical practitioners registered with government-approved bodies.

Petrol benefits

Exemption up to RM 6,000 for petrol used for official duty only (this limit also applies to any petrol allowance/travel allowance/toll payment). 

(Note: this tax exemption shall not apply if the employee has “control” over the company.  For simple understanding, if a director or employee holding  shares in the company, mean ‘controlling’ interest exist, he/she will not qualified to the tax exemption on benefit in kind.) 

Example: Mr Ali is a director of ABC Sdn Bhd holding 10% shares in the company.  Company providing unlimited petrol claim/allowance of RM3000/year to him. Since he is director with controlling interest in the company, he is not allow to claim for petrol benefit BIK exemption. RM3,000 petrol claim will be part of his taxable income in EA Form.

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