Benefit in Kinds vs. Perquisites: Demystifying Perks and Benefits You Can Actually Use

Beyond Salary: Demystifying Perks and Benefits You Can Actually Use

Ever wondered about the extra goodies your employer throws in besides your paycheck? This post dives into the world of “benefits in kind” (BIK) and “perquisites,” helping you understand the perks you can enjoy and how they might affect your taxes.

BIKs: The Non-Cash Goodies

Imagine getting a company car, free gym membership, or even on-site meals – that’s the world of BIKs. These are benefits provided by your employer that can’t be directly converted to cash. Think of them as bonuses that enhance your work life without adding a bulge to your wallet (at least initially). Remember, though, BIKs are still considered taxable income.

Here’s the key takeaway about BIKs:

Not convertible to cash: You can’t sell your company car or trade your free gym membership for cold, hard cash.

Taxable income: While you don’t get the cash directly, BIKs are added to your taxable income.

Perquisites: Cash or Kind with Conversion Power

Perquisites are a broader category encompassing both cash and non-cash benefits that can be converted to cash. The key difference with perquisites? Read our blog on perquisite to know what perquisite is all about at https://mywave.biz/perquisites-in-malaysia-a-tax-guide-for-employees-2024-update/!

Key takeaway on perquisites:

Convertible into money: When the items are provided to the employee, they can be sold, assigned, transferred or convertible into cash.

Having an employment: When the items are provided to the employee, they can be sold, assigned, transferred or convertible into cash.

Exercising an employment: Including duties to be performed by an employee, where a part of the duties may be performed outside Malaysia but should be for the organization situated in Malaysia (paragraph 13(2)(c) of the ITA).

All perquisites are gross income under paragraph 13(1)(a) of the ITA and are chargeable to tax under paragraph 4(b) of the ITA.

Remember:

This post is for informational purposes only and doesn’t constitute tax advice. Always consult with a tax professional for personalized guidance. So, the next time you consider a job offer, look beyond the salary and explore the BIKs and perquisites offered. These perks can make a real difference in your overall compensation package!