What Are Perquisites?
Did you know that many of the benefits you receive from your employer are completely tax-free? When it comes to employment benefits, not everything you receive is automatically taxable. These are known as perquisites.
Certain perquisites — whether given in cash or in kind — may qualify for tax exemption. Understanding how they work can help you save significantly during tax season.
Here is the breakdown of the key tax-exempt categories for employees:
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Travelling allowance, petrol allowance or toll rate
- Exemption Limit: Up to RM6,000 per year is tax-exempt.
- Excess Claims: If you receive more than RM6,000, you can deduct the extra amount if it was spent for official duties.
- Record Keeping: You must keep your proof and records for 7 years for audit purposes.
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Child Care
- Exemption Limit: Exempt up to RM3,000 per year (Effective 2024).
- Allowance: Applies for children aged 6 years and below.
- Eligibility: Must be to a registered child care center or kindergarten.
- Definition: Covers legitimate children, step-children, or legally adopted children.
- For more information, visit https://www.hasil.gov.my/en/individual/individual-life-cycle/how-to-declare-income/tax-reliefs/.
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Gifts (Phone & Bills)
- Devices: One unit of a fixed line phone, mobile phone, pager, or PDA is fully exempt.
- Monthly Bills: Registration, installation, and monthly bills (including broadband) are fully exempt.
- Registration: Must be registered in the name of the employee or employer.
- Important Note: A fixed cash allowance for a telephone is fully taxable.
-
Awards
- Types: Covers past achievement, service excellence, innovation, or productivity awards.
- Long Service: Includes awards for employees with more than 10 years of service with the same employer.
- Limit: The exemption share limit is RM2,000 per year.
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Parking
- Exemption: Parking rates and allowances are fully exempted.
- Direct Payment: Includes rates paid by the employer directly to the operator.
- Condition: The amount provided must be reasonable and not excessive.
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Meal
- Regular Allowance: Fully exempt if given at the same rate to all employees.
- Specific Purposes: Covers overtime, outstation, or overseas trips (per diem).
- Condition: Must be based on rates fixed in internal circulars or written employer instructions.
Why This Matters
Understanding employee perquisites and tax treatment is just one part of staying compliant and informed as an HR professional or business owner. For employers, understanding tax-exempt perquisites ensures proper payroll reporting and compliance. For employees, it provides clarity on what benefits may not be subject to taxation.
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For references
Public Ruling: 05/2019
https://www.hasil.gov.my/perundangan/ketetapan-umum/
https://www.hasil.gov.my/en/legislation/public-rulings/
Ready to optimize your taxes?
Check your next payslip to see if you are utilizing these exemptions! For professional guidance on managing your employment income, reach out to us at enquiry@mywave.biz.
