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Employee Benefits That are Tax Deductible (Employers) & Tax Exempted (Employees)

Posted LnCoadmin

What are the employee benefits that are tax deductible for employers and tax exempted for employees? Let’s check it out!

Employee Benefits That are Tax Deductible (Employers) & Tax Exempted (Employees)

· Official Travelling Allowance

– It must be related to business, including petrol subsidies and highway tolls

– Up to RM6000 per annum

 

· Childcare Allowance

– For children under 12 years old only

– Up to RM3000 per annum

 

· Mobile Phones provided by Employer to Employee

– Limited to 1 unit

 

· Monthly Bills for Telephone

– Limited to 1 phone line

 

· Employee Rewards

* Up to RM2K per annum (cash acceptable)

– Past Achievement Award

– Excellence Service Award

– Creativity and Productivity Award

– Long Service Award (for service period more than 10 years)

 

· Parking Fee / Allowance

– Limit to a reasonable amount

 

· Meal Allowance

– Limit to a reasonable amount

 

· Interest on Loan Subsidies

– Interest subsidy for housing or vehicles loans

– Limited to loan amounts less than RM300k

 

· Education Allowance

– PTPTN education loan paid by the employer on behalf of the employee

– The full-time employee must be a Malaysian citizen

 

· Employer’s Goods as Gift

– Product price must be less than RM1,000

 

· Medical Benefits

– Malay Traditional Medicine, Chinese Traditional Medicine and Indian Traditional Medicine certified by government agencies

– Maternity expenses

 

· Professional Subscription Fee

– Must be related to the company’s business

 

· Leave Passage Allowance

– Domestic: Not more than 3 times per year

– Overseas: Limited to once per year, exemption up to RM3,000

 

· Obligatory Insurance Premium

– Insurance for foreign employees, group insurance, etc

 

· Discounted Price for Services provided by Employer

– Eligible for full tax exemption

 

Take this for example:

These are the benefit that company provide for Staff A within a year:

  • Travelling allowance RM6,000
  • Meal allowance RM3,600
  • Dental benefits RM800
  • Childcare allowance RM2,400
  • Professional subscription RM1,000
  • Long services award RM2,000
  • Free gift of handphone RM6,000
  • Domestic travel RM1,000
  • Gift or own product RM1,000

These benefit worth RM23,800 in a year. All the benefit Staff A enjoyed is tax deductible for the company and tax exempted for him!

In this case, he can enjoy a total tax exemption up to RM6,700.

While the company can enjoy tax deduction on this benefit!

*Kindly take note that this rule is not applicable for those employees who have controlling power of the company. (Having controlling power: Holding more than 50% of the company shares)

⇒Did your accountant or tax agent advise you on this rule? Without it, your company expenses may get higher! Hence, having a tax agent that always give you advise is mandatory for your company!

If you are looking for accountant, contact us now!