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BENEFIT-IN-KINDS (BIK)

 

The value of BIK provided by your employer.

 

  1. Generally the annual value of a given BIK provided by your employer is computer by reference to the following formula: –

 

Cost of the asset providing benefit / amenity            =          Annual value of benefit

Prescribed average life span of asset

 

Cost means the actual cost incurred by your employer or the market value of the asset. The current prescribed life span of the various assets are as follows:

 

Asset

  Prescribed Average

Life Span

a) Motor car   8 years
b) Furniture and fittings:    
  Curtains, carpets,   5 years
  Furniture, sewing machine,   15 years
  Air conditioner,   8 years
  Refrigerator   10 years
c) Kitchen equipment   6 years
d) Entertainment and recreation    
  Piano   20 years
  Organ   10 years
  Colour television, video player, stereo set   7 years
  Swimming pool (detachable), sauna   15 years
e) Miscellaneous    
  Mobile telephone   5 years
  1. Motor cars and related benefit

In the case where motor cars are provided, the benefits to be assessed will be the private use of the car and fuel. The following table provides the value of such benefits to be assessed.

 

Cost of Car

(When New)

RM

  Annual value of

private use(RM)

  Fuel

(p.a.)

RM

    Up to 50,000   1,200   600
 50,001 to 75,000   2,400   900
 75,001 to 100,000   3,600   1,200
100,001 to 150,000   5,000   1,500
150,001 to 200,000   7,000   1,800
200,001 to 250,000   9,000   2,100
250,001 to 350,000   15,000   2,400
350,001 to 500,000   21,250   2,700
500,000 and the above   25,000   3,000

When the car is more than five(5) years old the value of the car benefit to be assessed will be equivalent to half the above value but the value of fuel remains unchanged.

If you dispute the above value, you should take up the matters with the assessment branch concerned when submitting your return. To substantiate your claim for business use, detailed and adequate records must be available.

Where the driver is not provided solely for the use of a particular employee but comes from a pool of drivers provided by employer only for purposes of the business the value of BIK will not be assessed on the employee concerned.

  1. Household Furnishing, Appliance, etc

To avoid detailed calculations, employer may instead of using the formula, determine the values of household furnishings, appliances etc as follows: –

a)        Semi-furnished with furniture in lounge,                  RM 70 per month

dining room or bedroom.                                          (RM 840 per annum)

b)        Semi-furnished with furniture as in (a)

above & furnished with one or more of                   RM 140 per month

the following:  Air conditioners                                (RM 1,680 per annum)

Curtains

Carpets

c)        Fully furnished as in (a) & (b) above and                RM 280 per month

equipped with kitchen equipment, crockery,          (RM 3,360 per annum)

utensils and appliances.

 

Fans and water heaters are treated as part of the residential premises and no values need therefore be computed.

4.         Other Household Amenities

 

Service charges and bills for utilities such as for water, electricity and telephone paid by your employer are benefit assessable to tax. The amounts so paid should be reported. Similarly, payment for domestic staff provided should also be reported by you. However, you may claim a certain deduction for official use, but this must be taken up with the IRB.

 

5.         Other Benefits

Type of BIK   Annual value of BIK

RM

Mobile telephone (rental & charges)   600
Gardeners   3,600
Domestic servants   4,800
     

a) Interest free loan                                       a) value of interest paid by employer

b) Subsidised loan / interest below the      b) Subsidised loan interest paid by

market value rate                                          employer

 

Insurance premium                                           Annual insurance premium paid

by employer

 

School / tuition fees                                         Actual school / tuition fees paid by

employer

 

Membership in recreation clubs                    Membership fees paid by employer

Tax exempt Benefit

1.         Goods and services offered at a lower price or at a discount: –

  • Food and drinks provided / subsidised
  • Free transport
  • Child care facilities / benefits
  • Medical / dental benefits
  • New computer & broadband subscription (wef. YA 2008)
  1. Leave passages: –
  • Within Malaysia not exceeding three times in any calendar year (up to YA 2006)
  • Within Malaysia no limit (wef. YA 2007)
  • Outside Malaysia not exceeding one passage in any calendar year subject to a maximum of RM3,000.

With reference to paragraph the premiums excluded are as follows: –

  • Premium which are obligatory for foreign workers in lieu of contribution to SOCSO.
  • Group Policy Insurance premium for workers in case of accident/injury.

 

Value of Living Accommodation

  1. Where accommodation is provided by your employer either rent free or otherwise, the value of such accommodation is regarded as an income chargeable to tax. Various values have been prescribed by the ITA 1967 and they are as follows:

i) The value shall be the lesser of

a)     the defined value, or

b)     30% of your gross income from employment which is received or receivable in cash.

 

The above formula applies to all employees other than directors of controlled companies in which case the value to be assessed is the defined value only.

 

The defined value means the arm’s length rent payable for an unfurnished accommodation where the accommodation is not affected by rent control or in any other case, the rateable value the economic rent ignoring rent control restrictions.

 

ii) Where the living accommodation is provide in

a)     a hotel, hostel or similar premises

b)     any premises on a plantation or in a forest, or

c)      any premises which although in a rateable area, are not subject to public rates (eg. Government Quarters) the value to be assessed is 3% of the gross income from employment which is received or receivable in cash.

 

  1. Where accommodation is provided for any part of the year, the value is to be reduced accordingly. Also, if the accommodation is shared with other employees or used by you to advance your employer’s interest (other than a director of a controlled company) the defined value of such accommodation can be reduced accordingly as is fair and reasonable. Please obtain IRB’s agreement on the reduced defined value. The reduced defined value can be compared to 30% of the gross income from employment. The lesser value is the value to be added to your employment income.

 

  1. Certain deductions are allowable if these are borne by you, eg; public rates, insurance or rental contribution.

Address

#7-2, Jalan 4/93,
Taman Miharja, 55200 Kuala Lumpur.
Phone: 603-9281 1588
Fax: 603-9281 6885
Website: http://www.fswongco.com
Email: tan@fswongco.com

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