Leave Passage Tax Deductibility

for a Company & Individual

Definition of Leave Passage
Pursuant to Public Ruling 1/2003 & Addendum to Public Ruling
1/2003, "Leave Passage" means travelling during a period of
absence or vacation from duty or employment. If the cost incurred
by the employer to the employee includes cost of air fares, food,
accommodation, souvenirs and travel transportation, only amount
relating to cost of fares is treated as leave passage cost.

Non - Local Leave

Local Leave Passage
Leave passage incurred by an
employer to facilitate a yearly
event within Malaysia which
involves the employer, employee
and immediate family members
of that employee is categorised
as entertainment expense
specified under Proviso (viii) of
Paragraph 39(1)(l), ITA 1967. Thus,
it is wholly allowable. In
addition, cost of meals and
accommodation spent on
employees are also allowable
deduction under aforesaid
proviso.
Passage
Non-local leave passage given
by employers to employees
(including director of a
company) in relation to air
fares is not eligible for tax
deduction.
However, expenses incurred on
meals and accommodation
spent on employees are
allowed a deduction under
proviso (i) of subparagraph
39(1)(l), ITA 1967.

Note:
• Leave passage benefit provided to partners or
sole proprietors will not qualify for a tax
deduction.
 Determine if the Leave Passage
is tax deductible
Leave Passage for Company

Yearly event

Within Malaysia Outside Malaysia

• Air Fares • Air Fares • Food

• Food • Transportation • Accommodation
• Accommodation • Recreation
• Recreation Non Tax expenses
expenses Deductible
Tax
Tax Deductible
Deductible

Leave passage benefit not assessable as an employment

income (For Individual Employees)
Within Malaysia Leave passage of not exceeding 3 times a year is not
assessable as an employment income.
*The leave passage benefit, however, is confined only to the
employee and members of his immediate family.
Outside Malaysia One Leave Passage in a calendar year limited to a
maximum value of RM 3,000 is not assessable as an
employment income.