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AMENDMENT TO

EXPLANATORY NOTES

2008

INCOME TAX OF AN INDIVIDUAL


(RESIDENT WHO DOES NOT CARRY ON BUSINESS)
AMENDMENT TO FORM BE 2008 EXPLANATORY NOTES

Compensation (page 4 of Form BE 2008 Explanatory Notes)


This is payment made by an employer to his employee as compensation for loss of employment.
Refer to Working Sheet HK-2.7 and Appendix B5 on computation. Compensation is exempted from
tax as follows:
(i) Compensation for loss of employment due to ill-health
(ii) Compensation received due to reasons other than the above:
• Cessation of employment before 1st July 2008
Exemption of RM6,000 is granted for each completed year of service with the same
employer or companies in the same group
• Cessation of employment on or after 1st July 2008
Exemption of RM10,000 is granted for each completed year of service with the same
employer or companies in the same group

Budget 2009 - Tax exempt allowances / perquisites / gifts / benefits received by


employee from employer (page 3 of Form B 2008 Explanatory Notes)
Reference: Second Addendum To Public Ruling No. 1/2006 (Perquisites From Employment), Third
Addendum To Public Ruling No. 2/2004 (Benefits-In-Kind) and Income Tax (Exemption) Order 2009
[P.U. (A) 152/2009]
RESTRICTION YEAR OF
NO. TYPES OF ALLOWANCES / PERQUISITES / GIFTS / BENEFITS
LIMIT ASSESSMENT
(i) Perquisite (whether in money or otherwise) provided to the Restricted With effect
employee pursuant to his employment in respect of:- to from 2008
(a) past achievement award; RM2,000 in
(b) service excellence award, innovation award or amount or
productivity award; or value for a
(c) long service award (provided that the employee has year of
exercised an employment for more than 10 years with assessment
the same employer). (Y/A)

(Paragraph 25C Schedule 6 of ITA 1967)

(ii) Gift of new personal computer. Restricted 2008 to 2010


to
‘Personal computer’ means desktop computer, laptop 1 unit only
computer and handheld computer but does not include a
hand phone with computer facilities.
Income Tax (Exemption) (No. 4) Order 2008 [P.U.(A)
191/2008]

(iii) Petrol card, petrol allowance or travel allowance between the Restricted 2008 to 2010
home and work place. to
RM2,400
per Y/A

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(iv) Petrol card, petrol allowance or travel allowance and toll card Restricted With effect
for official duties. If the amount received exceeds RM6,000 to from 2008
per year, the employee can make a further deduction on the RM6,000
amount spent for official duties. Records pertaining to the per Y/A
further deduction and the exempted amount should be kept
for a period of 7 years for audit purpose.

(v) Allowance or fees for parking including parking rate paid by - With effect
the employer directly to the parking operator. from 2008

(vi) Meal allowance received on a regular basis, for example on - With effect
a daily or monthly basis, given at the same rate to all from 2008
employees.
Meal allowance provided to an employee for purposes such
as overtime or outstation / overseas trips and other similar
purposes in exercising his employment is chargeable to tax.

(vii) Child care allowance in respect of children up to 12 years of Restricted With effect
age and below. to from 2008
RM2,400
per Y/A
(viii) Gift of fixed line telephone, mobile phone, pager or personal Restricted With effect
digital assistant (PDA) including the cost of registration and to from 2008
installation which is registered under the name of the 1 unit for
employee or employer. each asset

(ix) Monthly bills paid by the employer for fixed line telephone, - With effect
mobile phone, pager, PDA or broadband subscription from 2008
including the cost of registration and installation which is
registered under the name of the employee or employer.

(x) Goods which are consumable business products of the Restricted With effect
employer given free (fully discounted) or at a partly to from 2008
discounted price. The value of the goods is based on the RM1,000
sales price. per Y/A
Benefits received from a company within the same group of
companies as his employer are not exempted from tax.

(xi) Services provided free or at a discounted price by own - With effect


employer. from 2008

Benefits received from a company within the same group of


companies as his employer are not exempted from tax.

(xii) The medical treatment benefit exempted from tax is extended - With effect
to traditional medicine and maternity. Traditional medicine from 2008
means Malay Traditional Medicine, Chinese Traditional
Medicine and Indian Traditional Medicine given by a medical
practitioner registered with bodies which are certified or
registered in accordance with the rules governing traditional
medicine as laid down by the Ministry of Health.

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Examples of traditional medical treatment are the Malay
traditional massage, ayurvedic and acupunture.
Complimentary medicine and homeopathy are not included
in this exemption.

(xiii) Subsidised interest for housing, education or car loan is fully - With effect
exempted from tax if the total amount of loan taken does not from 2008
exceed RM300,000.
If the total amount of loan taken 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 the 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 the principal amount of housing,
education or car loan taken by the employee.

THE ABOVE EXEMPTIONS ARE NOT APPLICABLE TO AN EMPLOYEE HAVING CONTROL


OVER HIS EMPLOYER
Where an employee has control over his employer, the allowances / perquisites / gifts / benefits
received by that employee is taxable and has to be taken into account as part of his gross income
from employment.
‘Control over his employer’ means:
(a) for a company, the power of an employee to secure, by means of 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 are the same person.

Other Tax Exempt Benefits-In-Kind:


Please refer to the list of tax exempt benefits-in-kind in Appendix B3 of the Form BE 2008
Guidebook.

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