Inland Revenue Board of Malaysia: Perquisites From Employment

INLAND REVENUE BOARD OF MALAYSIA
PERQUISITES FROM EMPLOYMENT
PUBLIC RULING NO. 2/2013
Translation from the original Bahasa Malaysia text
DATE OF ISSUE: 28 FEBRUARY 2013

PERQUISITES FROM
EMPLOYMENT
Public Ruling No. 2/2013

INLAND REVENUE BOARD OF MALAYSIA Date of Issue: 28 February 2013
Published by
Inland Revenue Board Of Malaysia
Published on 28 February 2013
First edition on 28 February 2013
(This Ruling replaces the Public Ruling No. 1/2006

dated 17 January 2006, Addendum to Public
Ruling No.1/2006 dated 30 August 2007, Second
Addendum to Public Ruling No. 1/2006 dated 25
February 2009 and Third Addendum to Public
Ruling No.1/2006 dated 30 July 2009 issued by
Inland Revenue Board Of Malaysia.)
© Inland Revenue Board Of Malaysia
All rights reserved. No part of this publication may

be reproduced or transmitted in any form or by
any means, including photocopying and recording
without the written permission of the copyright
holder. Such written permission from the publisher
must be obtained before any part of this
publication is stored in a retrieval system of any
nature.
PERQUISITES FROM
EMPLOYMENT

CONTENTS Page
1. Objective 1
2. Summary Of Changes 1
3. Related Provisions 1
4. Interpretation 1
5. The Distinction Between Perquisites And Benefits In Kind 3
6. Perquisites 4
7. Types Of Perquisites And The Tax Treatment 8
- Employee’s pecuniary liabilities 9
- Credit card facilities 11
- Loan interest 11
- Recreational club membership 14
- Tuition or school fees of child 14
- Insurance premiums 15
- Gardener, driver, domestic help or guard 15
- Scholarship 17
- Waiver of loan or advance 17
- Assets provided free of charge or sold at discounted prices 18
- Gift vouchers
18
- Gift of personal computers
19
- Excellent public service award
19
- Professional subscriptions
19
8. Tax Exemption On Perquisites Received By An Employee 19
- Innovation or productivity award - Paragraph 25C Schedule 19
6 of the ITA 1967
- Allowances 22
- Subsidies on interest 27
- Gifts and monthly bills for fixed line telephone, mobile 31
phone, pager, personal digital assistant (PDA) and
subscription of broadband
PERQUISITES FROM
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- Gift of a new personal computer 32

- Non-application 33
9. Employer’s Responsibilities 33
10. Employee’s Responsibilities 34
11. Monthly Tax Deduction (MTD) 34
12. Deduction Claim By Employers 35
DIRECTOR GENERAL'S PUBLIC RULING
A Public Ruling as provided for under section 138A of the Income Tax Act 1967 is
issued for the purpose of providing guidance for the public and officers of the Inland
Revenue Board Of Malaysia. It sets out the interpretation of the Director General of
Inland Revenue in respect of the particular tax law, and the policy and procedure that
are to be applied.
A Public Ruling may be withdrawn, either wholly or in part, by notice of withdrawal or

by publication of a new ruling.
Director General Of Inland Revenue,

Inland Revenue Board Of Malaysia.
PERQUISITES FROM
EMPLOYMENT

1. Objective
The objective of this Ruling is to explain –
1.1. The distinction between perquisites and benefits in kind (BIK)

1.2. The meaning of perquisites in relation to an employment
1.3. Types of perquisites and the tax treatment
1.4. The employer’s responsibilities upon the granting of perquisites to the
employee, and
1.5. The employee’s responsibilities on receiving such perquisites.
2. Summary Of Changes
This Ruling is published to merge Public Ruling No.1/2006 issued on 17 January

2006 with –
(a) Addendum to Public Ruling No.1/2006 dated 30 August 2007

(b) Second Addendum to Public Ruling No. 1/2006 dated 25 February 2009, and
(c) Third Addendum to Public Ruling No.1/2006 dated 30 July 2009.
3. Related Provisions
The provisions of the Income Tax Act 1967 (ITA 1967) related to this Public Ruling
are sections 2, 7, 13, 25, 77, 82, 82A, 83, 112, 113, 119A, 120, subsection 4(b) and
Schedule 6.
4. Interpretation
The words used in this Ruling have the following meaning -
4.1. “Resident”, in relation to an employee, is an employee resident in Malaysia

for a basis year for a year of assessment by virtue of section 7 of the ITA
1967.
4.2. “Document” means –
(a) Statement of income and expenditure, and

(b) Invoices, vouchers, receipts and such other documents as are
necessary to verify the particulars in a income tax return form (ITRF).
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4.3. “Individual” means a natural person.
4.4. “Employer” in relation to an employment, means –
(a) Where the relationship of master and servant subsists, the master,
(b) Where the relationship of master and servant subsists does not
subsist, the person who pays or is responsible for paying any
remuneration to the employee who has the employment,
notwithstanding that that person and the employee may be the same
person acting in different capacities.
4.5. “Market value”, in relation to anything, means the price which that thing would
fetch if sold in a transaction between independent persons dealing at arm’s
length.
4.6. “Employee”, in relation to an employment, means –
(a) Where the relationship of servant and master subsists, the servant,
(b) Where that relationship of servant and master does not subsist, the
holder of the appointment or office which constitutes the employment.
4.7. “Reimbursement”, in relation to any perquisite received by the employee,

means an expense incurred by the employee which is subsequently
reimbursed by the employer.
4.8. “Employment’ means -
(a) Employment in which the relationship of master and servant subsists,
(b) Any appointment of office, whether public or not and whether or not
that relationship subsists, for which remuneration is payable.
4.9. “Perquisites”, in relation to an employment, means benefits in cash or in kind

that are convertible into money received by an employee from the employer
or third parties in respect of having or exercising the employment.
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4.10. “Records” include –
(a) Books of account recording receipts and payments or income and

expenditure
(b) Invoices, vouchers, receipts and such other documents as in the

opinion of the Director General are necessary to verify the entries in
any books of account, and
(c) Any other records as may be specified by the Director General under
statutory order.
4.11. “Basis year”, in relation to a year of assessment for an employment source, is

the basis period for that year of assessment.
4.12. “Year of assessment” means the calendar year.
4.13. “Basis period”, in relation to gross income from employment, is as

ascertained by section 25 of the ITA 1967.
4.14. “Not resident”, for a basis year for a year of assessment in relation to an
employee, means an employee other than a resident employee.
5. The Distinction Between Perquisites And Benefits In Kind (BIK)
5.1. Perquisites and BIK (including the value of living accommodation (VOLA))
are benefits arising from an employment. These benefits are gross income
from employment under subsection 13(1) of the ITA 1967 and is taxable
under subsection 4(b) of the ITA 1967. However, there are differences
between these benefits.
5.2. Perquisites are benefits in cash or in kind which can be converted into money
received by an employee from his employer or from third parties in respect of
having or exercising an employment. Perquisites are taxable under
subsection 4(b) of the ITA 1967 as part of the gross income from
employment under paragraph 13(1)(a) of the ITA 1967.
5.3. BIK are benefits which are not convertible into money provided for the
employee by or on behalf of the employer. These benefits are categorised as
gross income from employment under paragraph 13(1)(b) of the ITA 1967.
The tax treatment on BIK is explained in detail in the Public Ruling No.
3/2013: Benefits-In-Kind dated 15 March 2013.
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5.4. VOLA is living accommodation benefit provided for the employee by or on

behalf of the employer. VOLA is gross income from employment under
paragraph 13(1)(c) of the ITA 1967. The tax treatment on VOLA is explained
in detail in the Public Ruling No. 3/2005: Living Accommodation Benefit
Provided For The Employee By The Employer dated 11 August 2005.
5.5. It is important for the employer to determine and categorise correctly whether
a benefit otherwise than in money provided to the employee is a perquisite
under paragraph 13(1)(a) of the ITA 1967 or a BIK under paragraph 13(1)(b)
of the ITA 1967. The distinction is important as the gross income from
employment under paragraph 13(1)(a) of the ITA 1967 will affect the
computation of the value of living accommodation enjoyed by the employee
under paragraph 13(1)(c) of the ITA 1967.
6. Perquisites
6.1. Paragraph 13(1)(a) of the ITA 1967 provides that the gross income of an
employee in respect of gains or profits from an employment includes any
wages, salary, remuneration, leave pay, fee, commission, bonus, gratuity,
perquisite or allowance (whether in money or otherwise) in respect of having
or exercising the employment. This means that the gross income of an
employee from an employment under paragraph 13(1)(a) of the ITA 1967
comprises of not only wages, salary, leave pay, fee, commission, bonus and
gratuity, but also includes any perquisite or allowance, whether in money or
otherwise, received by an employee in respect of having or exercising the
employment.
6.2. All perquisites are gross income under paragraph 13(1)(a) of the ITA 1967
and are chargeable to tax under subsection 4(b) of the ITA 1967.
6.3. Perquisites have the following characteristics:
6.3.1. Perquisites can be received regularly or casually.
6.3.2. Perquisites received can be in cash or in kind. If it is received in

kind, such items must have money's worth and are convertible into
money. The phrase convertible into money means that when the
items are provided to the employee, they can be sold, assigned,
transferred or convertible into cash.
6.3.3. Perquisites can be received by an employee in respect of an

employment contract entered into by him or is given by the
employer or a third party voluntarily. In the case of perquisites
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received from third parties, the employee must declare such income
in the ITRF BE or B.
6.3.4. Notwithstanding the above, a perquisite is subject to tax only if it

arises in respect of having or exercising an employment.
Example 1
On 1.4.2010, Alfred, an employee of a company, was granted 1,000 units of

ordinary shares of that company free of charge. The price of the shares at
the date of grant was RM4.50 per unit. All the shares were subsequently sold
by Alfred on 1.9.2010 at the price of RM4.80 per unit.
The tax treatment on Alfred in respect of the receipt and sale of shares is as
follows:
As the shares –
(a) Have money's worth, and
(b) Are received from the employer in respect of having or exercising the
employment,
they are perquisites to Alfred and form part of his gross income from
employment. As the perquisites arose on 1.4.2010, when Alfred received
them (subsection 25(1) of the ITA 1967), the amount that is chargeable to tax
for the year of assessment 2010 is RM4,500 (RM4.50 X 1,000).
However, subsequent profits arising from the sale of shares on 1.9.2010 are
capital gains and are not subject to tax.
(Note: The tax treatment in respect of the shares offered to the employee
free of charge by the employer is explained in detail in Public Ruling No.
11/2012. - Employee Share Option Scheme Benefit dated 31.12.2012)
Example 2
Mei Hwa is employed as a waitress in a restaurant. She often assists the

customers at menu selection. Due to her pleasant, warm, friendly and helpful
attitude, she often receives tips from customers who patronise the restaurant.
In 2010, Mei Hwa received tips amounting to RM10,000.
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The tax treatment on Mei Hwa in respect of tips received by her is as follows:
Tips amounting to RM10,000 is perquisite even though they are received

voluntarily from third parties and not from Mei Hwa's employer. The
perquisite is Mei Hwa's gross income from employment being reward for
services rendered by reason of having or exercising an employment as a
waitress. Mei Hwa has to declare the tips received and the tips would be
taxed in the year of assessment 2010 (subsection 25(1) of the ITA 1967).
6.4. The phrase having an employment means an employee can be taxed in

respect of a perquisite received by him purely for having the employment or
for holding an office or appointment without being actively involved in the
performance of any duties.
Example 3
Alex is a director (not a service director) of a controlled company. On

1.7.2011, at the Annual General Meeting of the company, the shareholders
of the company passed a resolution to pay of the entrance fees in respect of
individual membership in a recreational club for members of the Board of
Directors of the company. This is in addition to their ordinary fees to be paid.
The amount paid for each membership is RM16,000 and the payment was
made by the company on 30.9.2011. Alex is one of the members of the
Board of Directors who received this benefit.
The tax treatment on Alex in respect of the benefit received is as follows:
The payment of RM16,000 is a perquisite since it is -
(a) A benefit, in addition to the ordinary fee
(b) Paid to a recreational club for part settlement in respect of the

individual membership entrance fees for Alex, and
(c) Related to an appointment resulting in an employment.
The perquisite is Alex’s gross income from employment to be taxed for the
year of assessment 2011, even though Alex is not actively involved in the
performance of any duties.
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6.5. The phrase exercising an employment means there are duties to be

performed by an employee, where a part of the duties may be performed
outside Malaysia but should be for the organisation situated in Malaysia
(paragraph 13(2)(c) of the ITA 1967).
6.6. In the determination of whether an amount received (whether in cash or in

kind) can be chargeable to tax, it is the substance of the amount received
that is of importance and not the label that is attached to it. In other words,
even though an amount received is labelled as a gift, but if it can be proved
that the amount is received in respect of having an employment or
exercising an employment, such amount received is a perquisite and is
chargeable to tax as part of the gross income from employment under
paragraph 13(1)(a) of the ITA 1967.
Example 4
Norman is a sales manager with a trading company. On 27.12.2010, at the

company's Annual Dinner, he received the following:
(a) A watch costing RM5,000 for serving the company for 20 years, and
(b) Letter of appreciation and cash gift of RM10,000 for successfully

securing an important contract for the company in April 2010. This
award was made voluntarily by his employer.
The tax treatment on Norman in respect of the above is as follows:
(a) The watch, valued at RM5,000, is a perquisite to Norman. The amount

of RM5,000 is chargeable to tax when received i.e. for the year of
assessment 2010 as the watch has a cash value, can be sold,
assigned or convertible into cash and is received in appreciation for
past services performed.
(b) The certificate of appreciation is not chargeable to tax as it has no

monetary value and is not convertible into money even though it is
related to exercising an employment.
(c) The cash of RM10,000 is a perquisite and is Norman’s gross income

from employment for the year of assessment 2010. The cash of
RM10,000 is in appreciation of the excellent service rendered even
though it is given by the employer voluntarily.
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6.7. 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. Examples of pure gifts or testimonials include –
(a) Wedding gifts whether in the form of cash, jewellery or other items
given to an employee by the employer
(b) Cash given to an employee by the employer for passing the

professional examination with excellent results
(c) Cash, other items or certificate of appreciation given to a bank

employee by the employer or third parties for successfully foiling an
attempted bank robbery
(d) Cash, other items and certificate of appreciation given to an employee

for having achieved some extraordinary feats –
(i) Swimming across the English Channel
(ii) Sailing around the world within a specified period of time
(iii) Climbed the highest mountain in the world
(iv) Other similar feats.
7. Types Of Perquisites And The Tax Treatment
7.1. Among the types of perquisites commonly given to an employee by the

employer are:
(a) Pecuniary liability of employees paid by the employer, such as income

tax payment, electricity bills, water and telephone bills
(b) Credit card facilities
(c) Loan interest
(d) Recreational club membership
(e) Tuition or school fees of child
(f) Life insurance premium
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(g) Gardener, driver, domestic help or guard
(h) Waiver of loan or advance
(i) Scholarship
(j) Assets given free of charge or sold at a discount
(k) Gift vouchers
(l) Gift of personal computer to the employee by the employer
(m) Excellent public service award
(n) Professional subscriptions
7.2. The value of a perquisite received by the employee is his gross income from
employment under paragraph 13(1)(a) of the ITA 1967. For perquisites
having a market value, the value of the perquisite is ascertained as follows:
RM
Market value of the perquisite XX
Less:
Amount paid for the perquisite received (if any) XX
Value of the perquisite chargeable to tax on the employee XX
For perquisites not having any market value, the value of the perquisite is
ascertained as follows:
RM
Amount of the perquisite XX
Less:
Amount paid for the perquisite received (if any) XX
Value of the perquisite chargeable to tax on the employee XX
7.3. Employee’s pecuniary liabilities
All pecuniary liabilities of an employee which are paid by his employer

whether voluntarily or under the terms of an employment contract are
perquisites to the employee and is his gross income from the employment,
irrespective whether the payment –
(a) Is made direct to the person who should receive the amount owing
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(b) Given to the employee so that the employee can settle his pecuniary
liability, or
(c) Given to the employee as a reimbursement.
Among the pecuniary liabilities of the employee paid by the employer are
income tax, water bill, electricity bill, telephone bill, road tax, car insurance
premiums, car parking fees and car maintenance charges.
The amount chargeable to tax in respect of pecuniary liabilities paid by the

employer can be reduced if the employee makes use of such amenities in
the performance of his official duties, on the condition that such official duties
can be substantiated with a confirmation by the employer.
7.3.1. Income tax borne by the employer
The income tax of an employee borne by his employer for a basis

year for a year of assessment is treated as a perquisite of that
employee when the actual amount of tax for that year of assessment
can be ascertained, that is in the following basis year. The
computation of perquisite relating to the income tax liability of the
employee borne by the employer and the computation of tax
payable by the employee benefiting from such perquisites is
explained in detail in the Public Ruling No. 2/2006: Tax Borne By
Employers issued on 17 January 2006.
7.3.2. Utility bills
Where electricity, water and telephone bills are under an employee's

name and if the employer –
(a) Gives an amount of money to the employee for the employee

to settle the amounts owing as shown in those bills, or
(b) Pays the amounts owing as shown in such bills direct to the
authorities concerned,
the amount paid by the employer is perquisite to the employee. The

amount is assessed on the employee for the basis year for the year
of assessment in which the perquisite is received (subsection 25(1)
of the ITA 1967). However, where –
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(a) The employer subscribes these utilities
(b) The bills for these utilities are under the name of the employer
and not that of the employee, and
(c) The employee only enjoys the benefits when provided by the
employer who subscribes for them.
The amount of such benefits is BIK which is gross income from an

employment of the employee under paragraph 13(1)(b) of the ITA
1967, as these benefits are not convertible into money although they
have monetary value.
7.3.3. Car insurance premium, road tax, parking fees and car
maintenance charges
The amount to be taken as perquisite for the above items is the

amount of car insurance premium, road tax, parking fees and car
maintenance charges (personal liability of the employee) paid by the
employer.
7.4. Credit card facilities
Where an employee is provided by his employer with a credit card used

exclusively for performing his duties including entertaining the employer's
customers, the annual membership fee of the credit card is not considered as
perquisites to the employee. However, where the credit card is also used by
the employee for private purchases and payments, any amounts paid by the
employer to settle these private purchases and payments, including the annual
membership fee, are perquisites under paragraph 13(1)(a) of the ITA 1967.
7.5. Loan interest
7.5.1. The charge to tax on the employee in respect of the receipt of this
benefit is based on the facts of each case. In general, this benefit is a
perquisite based on the cost borne by the employer when the
employer provides the loan to the employee whether for -
(a) Interest free loan
(b) Loan where only part of the interest is borne by the employer,
or
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(c) Interest charged is below market rate.
In other words, the source of fund for the loan is the primary factor
which determines whether the receipt of such benefit is taxable on the
employee.
7.5.2. Internal funds
Where the loan given to the employee arises from the internal funds
of the company, no benefit is taxed on the employee even though the
employee actually derives monetary benefit from the loan given to him
since the employer did not bear any cost when the loan was given to
the employee. Such a tax treatment would be given in the case where
an interest free loan is given to an employee from the excess
business funds of the employer or without any loan taken from any
other persons.
7.5.3. Funds from bank loan or loan from related companies
Where an employer obtains a loan from a third party to provide the

interest free loan to the employee, the amount of perquisite is the cost
borne by the employer to the third party for provision of the loan
facility. This treatment is also applicable in the case where the
employer receives a preferential rate from the loan provider due to
good credit standing. The preferential rate is regarded as the market
rate for that employer.
Where an employer obtains a loan from a third party to provide the

loan to the employee and the employee is required to pay only the
nominal interest on the loan while the balance of the interest is borne
by the employer, the amount of perquisite is the difference between
the interest charged on the employer by the loan provider and the
nominal interest paid by the employee.
The method of calculation of the perquisite arising from the benefit is

as follows:
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RM
Amount of interest charged on the employer by the XX
loan provider
Less:
Amount of nominal interest paid by the employee XX
Value of perquisite chargeable to tax on the employee XX
Example 5
Wahid, a Chief Executive in a listed company, has obtained a housing

loan in 2009 where he is being charged with interest at the rate of 4%
per annum. The funds for the housing loan are obtained from a loan
taken by the employer from a bank which charges interest at the
preferential rate of 8% per annum. The market rate of interest for a
similar loan is 10% per annum. In 2009 the employer paid interest to
the bank amounting to RM6,000 while Wahid paid interest to the
employer amounting to RM3,200.
The amount of perquisite taxable on Wahid for the year of

assessment 2009 is computed as follows:
RM
Amount of interest charged by the bank on the
employer for the loan taken 6,000
Less:
Amount of interest charged on Wahid 3,200
Value of perquisite chargeable to tax on Wahid 2,800
7.5.4. If the loan to the employee is given at the rate which is the same as
the cost paid by the employer, there is no perquisite to be taxed on
the employee.
7.5.5. In summary, perquisites related to this benefit would arise only where–
(a) The funds for providing the loan facility originate from external
funds, and
(b) The rate of interest charged on the employee for the loan
provided by the employer is lower than the rate of interest
borne by the employer.
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7.6. Recreational club membership
The tax treatment for this benefit is based on the facts of each case.
7.6.1. Individual membership
In this situation, the membership is owned by the individual. The

entrance, monthly or annual membership subscription or term
membership fees and other related reimbursements are the pecuniary
liabilities of the employee. Such fees paid by the employer to a
recreational club for the benefit of an employee are perquisites to the
employee.
7.6.2. Corporate membership
In contrast to an individual membership, a corporate membership is

owned by the employer. When the employer pays the entrance fee
and the monthly or annual subscriptions of a corporate membership to
a recreational club for the benefit of the employee, the entrance fee is
not a perquisite to the employee as the membership is owned by the
employer. The monthly or annual subscription is a BIK under
paragraph 13(1)(b) of the ITA 1967 and is not a perquisite under
paragraph 13(1)(a) of the ITA 1967 as this benefit is not convertible
into money even though there is monetary value.
7.7. Tuition or school fees of child
7.7.1. Payment or reimbursement to an employee by the employer in

respect of tuition or school fees for the employee's children studying in
or outside Malaysia is a perquisite to the employee and is his gross
income from employment.
7.7.2. However, where the employee receives reimbursement from an

education refund plan, this reimbursement is not treated as a benefit
to the employee. An education refund plan is a fund established by
the employer to enable an employee of the company, upon the
successful completion of a part-time course or study at the certificate,
diploma or degree level, to claim reimbursements for the expenses on
registration fees, course or tuition fees and examination fees incurred
by him to acquire that qualification. The course or study undertaken
must be for the purpose of enhancing the education and skills of the
employee and is directly related to the performance of the employee’s
duties.
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7.8. Insurance premiums
7.8.1. Where the employer pays the annual insurance premium for an
insurance scheme in which the employee, members of his family or
his nominee is appointed as the beneficiary to the policy, the amount
of annual premium is a perquisite to the employee.
7.8.2. However, certain insurance premiums or contributions paid by the

employer are not considered as perquisites to the employee and
therefore are not taxable on him. Such insurance premiums are –
(a) Insurance premiums which are obligatory for foreign workers

as a replacement to SOCSO contributions.
(b) Group insurance premiums to cover workers in the event of

an injury or accident.
(c) Insurance premiums on insurance policies under the Aviation

Travel Insurance for employees for coverage of employees
for travelling on official duty.
(d) Contributions by employer to the health care management

organisation for payment of the medical and treatment costs
of employees.
7.9. Gardener, driver, domestic help or guard
7.9.1. Where the gardener, driver, domestic help or guard is hired by the
employee or the employer allows the employee to make claims for
reimbursement of the salaries of the gardener, driver, domestic help
or guard, the amount of salary or the reimbursement paid by the
employer is a perquisite to the employee.
Example 6
Chong Hin, is a partner in an accounting firm. He accepted an offer

to become a managing director of Bina Teguh Sdn Bhd after the
company has agreed to pay his house rent, his driver's and domestic
help's salaries.
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The amount of the house rent, the driver's and domestic help's
salaries paid by the employer are perquisites to Chong Hin and are
taxable on him.
7.9.2. However, where the gardener, driver, domestic help or guard is

employed by the employer and the employee is entitled to the
benefit of that gardener, driver, domestic help or guard provided by
the employer to him, the benefit is a BIK to the employee.
Example 7
Using the facts in Example 6, if the company agrees to provide the

house, driver and domestic help to Chong Hin free of charge in
fulfilling the condition for his acceptance of the appointment, the tax
treatment on Chong Hin is as follows:
Item Provision In Amount To Be Taxed

The ITA 1967
House Paragraph 30% X paragraph 13(1)(a) of the
13(1)(c) ITA 1967
Or
Defined value of the living
accommodation,
whichever is the lower
Driver's Paragraph Amount expended by the employer
salary 13(1)(b) Or
Prescribed value i.e. RM600 per
month per person (concession)
Domestic Paragraph Amount expended by the employer
help's salary 13(1)(b) Or
Prescribed value i.e. RM400 per
month per person (concession)
7.9.3. However, in the case where a driver is not specifically provided to

any employee but the driver comes from a pool of drivers provided
by the employer for the use of other employees solely for business
purposes, no benefit will be taxable on the employee.
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7.10. Scholarship
Paragraph 24, Schedule 6 of the ITA 1967 provides that 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
is exempted from income tax. 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.
7.11. Waiver of loan or advance
Where an employer provides a loan or advance to his employee and

subsequently waived the amount of the loan or advance, the amount of loan
or advance waived is a perquisite to the employee as it is payment for
services performed. Such a perquisite will arise in cases where the employer
provides a loan to an employee to enable the employee to attend courses or
undergo training and subsequently waives the loan or advance after the
employee has served the required time with the employer. This perquisite is
his gross income from employment and is taxable for the basis period for the
year of assessment in which the loan or advance is waived.
Example 8
Gwen works with a legal firm. In February 2008, her employer gave her a
loan of RM20,000 to enable her to attend a one-year course in law. The loan
contract provides that if Gwen works with the employer for a period of 24
months after the completion of the course, the loan need not be repaid.
Gwen successfully fulfilled this condition under the contract in January 2011
and the loan was subsequently waived.
The tax treatment on the loan is as follows:
The amount of loan waived by the employer amounting to RM20,000 is a

perquisite to Gwen and is her gross income from employment as it is
payment for services performed. The perquisite is taxable for the year of
assessment 2011 i.e. in the year in which the loan is waived [subsection
25(2) of the ITA 1967].
Pages 17 of 35
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7.12. Assets provided free of charge or sold at discounted prices
7.12.1. Where assets such as houses, cars or other items are provided free
of charge or sold at discounted prices by the employer to his
employee, the difference between the market price of such assets
and the amount paid by the employee (if any) is a perquisite to the
employee. The amount is gross income from employment under
paragraph 13(1)(a) of the ITA 1967.
Example 9
AMV is a company selling imported luxury cars. The company has a

Staff Purchase Discount Plan for its employees at the managerial
level. According to the Staff Purchase Discount Plan, the
employees at the managerial level can purchase the cars sold by the
company at discounted prices as follows:
Type Of Asset Market Price Per Discount Given

Unit (%)
Car Model AMV
RM1,100,000 10
Superclass
The discount of 10% on the price of the car received by the

employee is a perquisite as –
(a) The car has money's worth and can be convertible into
money, and
(b) The employee upon purchasing the car, has ownership rights
over the car and is subsequently able to sell the car to a third
party.
Thus, the amount of the discount is gross income from employment

under paragraph 13(1)(a) of the ITA 1967.
7.13. Gift vouchers
7.13.1. Normally, gift vouchers are not taxable in the hands of the employee
unless they are of a recurring nature and are provided in the
circumstances where the employee expects such gifts as part of his
remuneration.
7.13.2. Where it is the practice of the employer to give gift vouchers to the
employees on festive occasions such as Christmas, Chinese New
Year, Deepavali, Hari Raya Aidil Fitri or Gawai Day, based on the
Pages 18 of 35
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length of service of the employee and such vouchers can be used to

buy goods from a particular shop, the value of the gift vouchers is a
perquisite to the employee.
7.14. Gift of personal computers
Where an employee receives a gift of a personal computer from his

employer, the market value of the personal computer is a perquisite to the
employee in the year the benefit is received [subsection 25(2) of the ITA
1967 1967].
7.15. Excellent public service award

The excellent service award given to officers and staff of the public sector by
the Government for excellent service rendered in the performance of their
duties must be treated as gross income from employment under paragraph
13(1)(a) of the ITA 1967 and is subject to tax.
7.16. Professional subscriptions
Subscriptions to a professional body paid by an employer on behalf of his

employee will not be considered as a perquisite if 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. However, where it cannot be proved that the membership is
relevant to the business of the employer, then the professional subscription
paid on behalf of the employee is a perquisite.
8. Tax Exemption On Perquisites Received By An Employee
Tax exemption is given on perquisites received by an employee whether in cash or in

kind pursuant to his employment in respect of the following :
8.1. Innovation or productivity award - Paragraph 25C, Schedule 6 of the ITA

1967
8.1.1. Paragraph 25C, Schedule 6 of the ITA 1967 was introduced in year
of assessment 2007 to provide tax exemption on perquisite received
by an employee limited to RM1,000 pursuant to his employment in
respect of –
(a) Past achievement,
(b) Service excellence award, or
Pages 19 of 35
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(c) Long service on condition that the employee has served with
the same employer or with companies within the same group
of companies for more than 10 years.
Example 10
Andrew is a manager with Gemilang Sdn. Bhd. At the company's

Annual Dinner held on 30.12.2007, he received the following :
(a) A watch costing RM3,000 for serving the company for 15

years, and
(b) Letter of appreciation and cash gift of RM5,000 for excellent

service.
Tax treatment on Andrew in respect of the above is as follows-
(a) The total value of perquisite received by Andrew in the year of

assessment 2007, in respect of long service and excellent
service amounts to RM8,000. Out of this amount, RM1,000
will be tax exempt by virtue of paragraph 25C, Schedule 6,
ITA 1967. The balance of RM7,000 is to be included as part
of Andrew’s gross income as perquisite.
(b) The certificate of appreciation is not chargeable to tax as it

has no money's worth and is not convertible into money even
though it is related to exercising an employment.
Example 11
Sarafina commenced employment with Daya Maju Holding Sdn.

Bhd. on 01.01.2004. During her first three years of service, she did
not take any sick leave. In appreciation of this, she was given a
cash award of RM1,000 by her employer on 31.03.2007.
The total value of perquisites received by Sarafina in the year of

assessment 2007 amounts to RM1,000. Since the perquisite
received is in respect of past achievement, the whole amount is tax
exempt in the year of assessment 2007 by virtue of paragraph 25C,
Schedule 6, ITA 1967.
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8.1.2. From year of assessment 2008, tax exemption on perquisites in the

form of awards received by an employee is extended to include
innovation award or productivity award received by an employee from
his employer, whether in cash or in kind, pursuant to his employment.
The amount of perquisites exempted from tax is increased from
RM1,000 to RM2,000. If the total amount or value of awards exceeds
RM2,000, the balance will be subject to tax.
Example 12
Aliff is an executive employed by CAB Bhd in Kuala Lumpur. He

started his service in 1992. He was seconded to DEN Ltd in China, a
wholly owned subsidiary company of CAB Bhd, for the years 2001
until 2005. He returned to Malaysia in 2006 and continued his service
with CAB Bhd. Aliff received a long service award from his employer
in conjunction with the company’s anniversary held on 31.12.2008. He
received a watch worth RM5,000 and a certificate of appreciation for
having served the company for 15 years.
The total value of perquisites received by Aliff in year 2008, in respect

of long service amounts to RM5,000. Out of this amount, RM2,000
will be exempt from tax by virtue of paragraph 25C, Schedule 6 of the
ITA 1967. The balance of RM3,000 is to be included as part of Aliff’s
gross income as perquisite.
Example 13
Alicia is an engineer employed by Synthetic Holding Bhd. She had

successfully invented a new method to increase the company’s
production. Due to her success, she received an innovation award
from the company in the form of cash amounting to RM10,000 on
30.06.2011.
The total value of perquisites received by Alicia in year 2011 amounts

to RM10,000. Out of this amount, RM2,000 will be exempt from tax
by virtue of paragraph 25C, Schedule 6 of the ITA 1967. The balance
of RM8,000 is to be included as part of Alicia’s gross income from
employment as perquisite.
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Example 14
Ramesh is a human resource manager employed by Mesra Berhad.

He had introduced ideas to promote better staff relationship in the
company. As a recognition for his ideas he received an innovation
award from the company in the form of cash amounting to RM3,000
on 31.12.2010.
The total value of perquisites received by Ramesh in year 2010

amounts to RM3,000. Out of this amount, RM2,000 will be exempt
from tax by virtue of paragraph 25C, Schedule 6 of the ITA 1967. The
balance of RM1,000 is to be included as part of Ramesh’s gross
income as perquisite.
8.1.3. For purposes of paragraph 8.1.1.(c) above, a holding company and all
its subsidiaries are regarded as companies within the same group
regardless of whether the companies are in Malaysia or outside
Malaysia.
Example 15
X Germany Ltd has undertaken a restructuring exercise of its

companies worldwide in 2008. Due to the restructuring, employees
from the holding company X Germany Ltd and a subsidiary company
X Thailand Ltd were transferred to another subsidiary company X
Malaysia Sdn Bhd.
The employees are regarded to have served within the same group of
companies for the purposes of paragraph 25C, Schedule 6 of the ITA
1967.
8.2. Allowances
8.2.1. Travelling allowance, petrol allowance or toll rate
(a) Travelling allowance or petrol allowance received by an

employee for travelling from home to place of work and from
place of work to home is exempted up to an amount of
RM2,400 per year. The exemption is effective from year of
assessment 2008 to year of assessment 2010.
(b) Travelling allowance, petrol allowance or toll rate received by

an employee for travelling in exercising an employment is
exempted up to an amount of RM6,000 per year.
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(c) However, if an employee receives travelling allowance, petrol

allowance or toll rate exceeding RM6,000 for travelling in
exercising his employment, the employee can make a further
deduction in computing his employment income on the amount
spent for official duties. Records pertaining to the further
deduction and the exempted amount should be kept for a
period of 7 years for audit purposes .
(d) In order to qualify for the above mentioned exemptions, the

employer has to identify the amount of travelling allowance,
petrol allowance or toll rate provided to the employee for travel
between home and place of work and/or the amount of
travelling allowance, petrol allowance or toll rate provided to the
employee for travel in exercising employment.
(e) If the employer is unable to identify the amount of travelling

allowance, petrol allowance or toll rate provided to the
employee for travel between home and place of work and/or
the amount of travelling allowance, petrol allowance or toll rate
provided to the employee for travel in exercising employment,
the amount of travelling allowance, petrol allowance or toll rate
exempted is up to a maximum of RM6,000.
Example 16
Syazril is an auditor employed by a petroleum company. In addition to

monthly salary paid for year 2009, his employer pays him travelling
allowance and toll rate as follows:
Allowance Amount (RM)
Travelling from home to place of work and from 2,880

place of work to home
Travelling in exercising employment 7,200
Toll rate 3,600
The amount of perquisite exempted and taxable in the year of

assessment 2009 is as follows:
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Allowance Amount Exempted Taxable

Amount Amount
(RM) (RM) (RM)
Travelling from home to
place of work and from place 2,880 2,400 480
of work to home
Travelling in exercising 7,200
employment 6,000* 4,800
Toll rate 3,600
* Exempted amount of RM6,000 comprises travelling allowance and
toll rate.
However if Syazril keeps proper record in relation to travelling in

exercising his employment, then he is entitled to claim the actual
amount expended as a deduction in computing his employment
income.
8.2.2. Parking rate or parking allowance
(a) Parking rate or parking allowance received by an employee is

exempted from tax. This exemption includes parking rate paid
by the employer directly to the parking operator.
(b) The amount of parking rate or parking allowance provided by

the employer to his employee has to be reasonable and not
excessive.
Example 17
Cynthia is an executive employed by a communication

company in Kuala Lumpur. Her employer does not provide
parking bay facility and thus, she is paid parking allowance of
RM180 per month.
Parking allowance of RM180 per month received by Cynthia is

exempted from tax from year of assessment 2008.
Pages 24 of 35
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8.2.3. Meal allowance
(a) Meal allowance received by an employee on a regular basis,

for example on a daily or monthly basis, given at the same rate
to all employees is exempted from tax.
(b) The amount of meal allowance provided by the employer to his

employee has to be reasonable and not excessive.
Example 18
Hairi is a technician employed by a company which sells

electrical goods. He receives meal allowance amounting to
RM250 per month.
Meal allowance amounting to RM250 per month received by

Hairi is exempted from tax from year of assessment 2008.
(c) Meal allowance provided to an employee for purposes such as

overtime or outstation/overseas trips and other similar purposes
in exercising his employment is meant to cover meal expenses
of the employee. Such meal allowance is paid according to the
employee’s position, duties or place where the employment is
exercised. Any allowance pertaining to such meal expenses
falls under this exemption. Similarly, a per diem allowance
which is meant to cover meal expenses for an employee in
exercising his employment is also included in this exemption.
However, the meal allowance and per diem allowance are only
exempted if they are given based on the rate fixed in the
internal circular or written instruction of the employer.
Example 19
Kuey is an accountant employed by an IT company in Kuala

Lumpur. In March 2008 he was assigned to Johor Bahru for
five days to audit the records of a branch of the IT company.
He was paid by his employer an outstation allowance to cover
his meal expenses amounting to RM60 per day while carrying
out his duties in Johor Bahru as provided in the internal circular
of the IT company.
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Kuey is entitled for the exemption on the amount of outstation

allowance paid by his employer amounting to RM300 (RM60 x
5 days).
8.2.4. Child care allowance
(a) Child care allowance received by an employee or paid directly

by the employer to the child care center is exempted from tax
up to an amount of RM2,400 a year.
(b) For the purposes of this exemption, child means a child of the
age of 12 years and below and who is a legitimate child or step-
child of an individual or his wife/husband or a child proved to
the satisfaction of the Director General to have been adopted
by the individual or his wife/husband in accordance with any
law.
Example 20
Rozita is a financial manager employed by a bank and has two

children ages 4 and 13 years old. She sends her children to a
child care centre and pays RM400 per month to the centre. She
receives child care allowance of RM250 per month from her
employer (RM3,000 a year).
Child care allowance amounting to RM2,400 received by Rozita

is exempted from tax. The balance of the allowance amounting
to RM600 is included as part of Rozita’s gross income from
employment.
Example 21
Ahmad is a supervisor at an electronics factory and has two

children ages 3 and 5 years old. He sends his children to a
child care center at a cost of RM500 per month. Payment for
child care is paid directly by the employer to the child care
center. Total costs per year to the child care center by an
employer is RM6,000.
Child care allowance amounting to RM2,400 paid to the child

care center is exempted from tax. The balance of the allowance
amounting RM3,600 is included as part of Ahmad’s gross
income from employment.
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Example 22
Roxane is an accountant employed by a finance company and

has three children ages 13 to 16 years old. She hires a helper
and receives child care allowance of RM250 per month from
her employer (RM3,000 a year).
Child care allowance amounting to RM3,000 received by

Roxane is to be included as perquisite.
Example 23
Ziad and his wife are employed by separate direct selling

companies. Both Ziad and his wife receive child care
allowance from their employer amounting to RM250 per month
in year 2008. They have a daughter age 5 years old and
employs a domestic maid for the household.
Both Ziad and his wife are each entitled for an exemption on
child care allowance up to an amount of RM2,400 for year of
assessment 2008. In the case where Ziad and his wife elect
for a combined assessment, the total amount to be exempted
is RM4,800.
8.3. Subsidies on interest
8.3.1. Subsidy on interest for housing, education or car loan

(a) Subsidised interest for housing, education or car loan received
by an employee is fully exempted from tax if the total amount of
loan taken does not exceed RM300,000.
Example 24
Mary Anne is an executive employed by a listed company. She

takes up a loan provided by her employer to finance the
purchase of her house and car. Her employer took up a loan
from a commercial bank to fund the housing and car loan
provided to its employees. The interest amounting to RM15,000
paid by her employer to the commercial bank in relation to Mary
Anne’s housing and car loan is the amount of interest to be
borne by Mary Anne if she takes up the loan directly from the
commercial bank.
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However Mary Anne has to pay her employer only two-third of

the interest, whereas one-third of the interest is borne by her
employer as shown below :
Type Of Principal Interest To Interest Interest

Loan Amount Be Borne Payable By Subsidised
Of Loan By Employee By The
Employee Employer
(Perquisite)
(a) (b) (c = a – b)
(RM) (RM) (RM) (RM)
Housing 200,000 12,000 8,000 4,000
Car 75,000 3,000 2,000 1,000
Total 275,000 15,000 10,000 5,000
The amount of perquisite amounting to RM5,000 is fully

exempted from tax for the year of assessment 2008 since the
total amount of loan does not exceed RM300,000.
(b) If the total amount of loan taken by an employee exceeds

RM300,000, the amount of subsidised interest to be exempted
from tax is limited in accordance with the following formula:
A x B
C
Where,
A - is the difference between the amount of interest to be

borne by the employee and the amount of interest
payable by the employee in a basis period for a year of
assessment,
B - is the aggregate of balance of principal amount of

housing, education or car loan taken by the employee in
a basis period for a year of assessment or RM300,000
whichever is lower,
C - is the total aggregate of principal amount of housing,

education or car loan taken by the employee.
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Example 25
Pang is a senior executive employed by a listed company. He

takes up a bank loan in November 2007 to finance the
purchase of his house and car. The bank charges interest at
the rate of 6% on the housing loan but Pang has to pay 4%
interest and the balance is borne by his employer. The interest
charged on the car loan 3% and Pang has to pay only 2 %
interest and the balance is borne by his employer. The amount
of loan taken and payment of interest by Pang and his
employer for the year 2008 are as follows:
Type Of Loan Housing Car Total

(RM) (RM) (RM)
Principal amount
240,000 120,000 360,000
of loan
Balance of principal
220,000 105,000 325,000
loan on 31/12/2008
Interest to be borne by
14,400 3,600 18,000
employee (a)
Interest paid by
4,800 1,200 6,000
employer
Interest payable by
9,600 2,400 12,000
employee (b)
Interest subsidised by
the employer 4,800 1,200 6,000
(Perquisite) (c = a – b)
The amount of perquisite exempted from tax is computed as

follows:
RM6,000 x 300,000* = RM5,000

360,000
Taxable perquisite: RM6,000 – RM5,000 = RM1,000
* Since the aggregate of balance of principal loan exceeds

RM300,000 it has to be restricted in accordance with the
formula in this paragraph.
The amount of loan and payment of interest in the year 2009

are as follows:
Pages 29 of 35
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Type Of Loan Housing Car Total

(RM) (RM) (RM)
Principal amount
240,000 120,000 360,000
of loan
Balance of principal
200,000 90,000 290,000
loan on 31/12/2009
Interest to be borne by
14,400 3,600 18,000
employee (a)
Interest paid by
4,800 1,200 6,000
employer
Interest payable by
9,600 2,400 12,000
employee (b)
Interest subsidised by
the employer 4,800 1,200 6,000
(Perquisite) (c = a – b)

follows:
RM6,000 x 290,000 = RM4,833

360,000
On 01.01.2011, Pang pursues further education on a part time

basis with a private university in Kuala Lumpur. To fund his
studies, he took an education loan provided by his employer
amounting to RM90,000. The amount of loan taken and
payment of interest in the year 2011 are as follows:
Type Of Loan Housing Car Education Total

(RM) (RM) (RM) (RM)
Principal amount
240,000 120,000 90,000 450,000
of loan
Balance of
principal loan on 100,000 40,000 81,000 221,000
31/12/2011
Interest to be
borne by 14,400 3,600 3,150 21,150
employee (a)
Interest paid by
4,800 1,200 788 6,788
employer
Pages 30 of 35
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Interest payable
9,600 2,400 2,362 14,362
by employee (b)
Interest subsidised
by the employer
4,800 1,200 788 6,788
Perquisite)
(c = a – b)
follows:
RM6,788 x 221,000 = RM3,333

450,000
(c) The exemption of subsidised interest on housing loan is

applicable to any type of residential property and regardless
whether the employee already owns another residential
property.
(d) The exemption of subsidised interest on education loan is only

in relation to education loan which is utilised for the employee’s
own education.
(e) For the purposes of exemption on subsidised interest for car

loan, car means a motor vehicle other than a motor vehicle
licensed by the appropriate authority for commercial
transportation of goods or passengers
8.4. Gifts and monthly bills for fixed line telephone, mobile phone, pager,
personal digital assistant (PDA) and subscription of broadband
8.4.1. Gifts
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 one unit for each asset.
Pages 31 of 35
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8.4.2. Monthly bills for fixed line telephone, mobile phone, pager or
PDA
Monthly bills paid by the employer for the fixed line telephone, mobile
phone, pager or PDA 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.
8.4.3. Monthly bills for subscription of broadband
Monthly broadband subscription bills paid by the employer for

broadband 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.
Example 26
Vendrajah is a marketing executive employed by Device Service Bhd.

In year 2008 he receives a fixed line telephone and PDA from his
employer. He also receives broadband facility which is registered
under his name. All the telephone and broadband subscription bills
are paid by the employer.
(a) The gifts received by Vendrajah from his employer in the form
of fixed line telephone and PDA which are registered under his
name are exempted from tax in the year of assessment 2008.
(b) The monthly bills and the cost of registration and installation
paid by the employer for the fixed line telephone, PDA and
broadband which are registered under his name are exempted
from tax in the year of assessment 2008.
8.4.4. Where an employee receives a fixed allowance for telephone, the full
amount of that telephone allowance is taxable as part of his gross
income from employment under paragraph 13(1)(a) of the ITA 1967.
8.5. Gift of a new personal computer
An amount equal to the value of the benefit of one new personal computer
received as a gift by an employee from his employer is exempted from tax.
Personal computer means a desk top computer, laptop computer or handheld
computer but does not include computer accessories. The exemption was
effective from –
Pages 32 of 35
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(a) The year of assessment 2001 to the year of assessment 2003 inclusive
[P.U.(A) 503, Income Tax (Exemption) Order (No. 56) Order 2000 dated
22 December 2000], and
(b) The year of assessment 2008 to the year of assessment 2010 [Income
Tax (Exemption)(No. 4) Order 2008].
8.6. Non-application
8.6.1. The above tax exemption does not apply if the employee who was given
an allowances, subsidised interest or gifts by the employer who has
control over his employer. Thus, allowances, subsidised interest or gifts
received by that employee is perquisite to the employee.
8.6.2. For the purposes of this Ruling, control over his employer means:
(a) For a company, the power of an employee to control is through
the holding of shares or the possession of voting power in or in
relation to that or any other company, or by virtue of powers
conferred by the articles of association or other document
regulating that or any other company, that the affairs of the first
mentioned company are conducted in accordance with the wish
of the employee
(b) For a partnership, the employee is a partner of the employer, or
(c) For a sole proprietor, the employee and the employer is the
same person.
9. Employer’s Responsibilities
9.1. Where an employee is provided with a composition of several allowances,

the employer is required to identify the actual value of each allowance in
order to qualify for the relevant exemption.
9.2. An employer is responsible to prepare a detailed list of all the exempted

allowances received by each employee in the respective Employee’s Salary
Statement for each year of assessment.
9.3. In accordance with subsection 83(1) of the ITA 1967, the employer is
required to report in the employee's statement of remuneration (Form EA
and EC) and Form E for the employer, all payments in respect of services
provided by the employee including all types of perquisites. This includes the
benefits provided for the spouse, family, servants, dependent or guest of the
employee. The failure by the employer to comply with this subsection will
Pages 33 of 35
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render the employer liable to prosecution under subsection 120(1) of the ITA
1967.
9.4. In accordance with section 82 of the ITA 1967, the employer is also required
to keep records and receipts pertaining to all claims on expenses incurred on
the employees. These records and receipts must be kept for a period of
seven (7) years from the end of the year of assessment in which the ITRF is
furnished for the purposes of verification during a tax audit. The failure by the
employer to comply with this section will render the employer liable to
prosecution under section 119A of the ITA 1967.
10. Employee’s Responsibilities
10.1. In accordance with subsection 77(1) of the ITA 1967, the employee is
required to report in the ITRF BE or B (whichever is applicable) all payments
received in respect of having or exercising the employment including all types
of perquisites received from the employer or third parties. This includes
benefits received for the spouse, family, servants, dependent or guest of the
employee. The failure by the employee to comply with this section will render
the employee liable to prosecution or penalty under section 112 of the ITA
1967. Where the employee under declares his income, he is liable to
prosecution or penalty under section 113 of the ITA 1967.
10.2. In accordance with section 82A of the ITA 1967, the employee is required to
keep records and documents pertaining to all receipts from the employer or
third parties in respect of having or exercising an employment including the
receipts of perquisites. Such records or documents must be kept for a period
of seven (7) years from the end of the year of assessment in which the ITRF
is furnished for purposes of verification during a tax audit.
11. Monthly Tax Deduction (MTD)
Where an employee receives a perquisite from his employment, the employer must
ensure that the tax to be charged on the perquisite is deducted from the employee’s
remuneration based on the Schedule (Rule 3) of the monthly Income Tax Deductions
under the Income Tax (Deduction From Remuneration) Rules in the month in which
the perquisite is paid. In the case where the salary of the employee is not sufficient to
absorb the monthly income tax deduction on the perquisite, the employer is required
to obtain the approval of the LHDNM for payment on the perquisite by instalments
with the issuance of the Directive of Tax Deduction (CP 38).
Pages 34 of 35
PERQUISITES FROM
EMPLOYMENT

12. Deduction Claim By Employers
Employers are eligible to claim deduction for expenses in respect of employment of

its employees, including all types of perquisites paid to the employees as provided
under subsection 33(1) of the ITA 1967 and Income Tax (Deduction for Benefit and
Gift From Employer to Employee) Rules 2009 [P.U.(A) 153/2009].
Director General Of Inland Revenue,

Inland Revenue Board Of Malaysia
Pages 35 of 35

Inland Revenue Board of Malaysia: Perquisites From Employment

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INLAND REVENUE BOARD OF MALAYSIA

PERQUISITES FROM EMPLOYMENT

PUBLIC RULING NO. 2/2013

Translation from the original Bahasa Malaysia text

DATE OF ISSUE: 28 FEBRUARY 2013

Public Ruling No. 2/2013

Published on 28 February 2013

First edition on 28 February 2013

(This Ruling replaces the Public Ruling No. 1/2006