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Which Benefits
are Tax Exempt
for Employees in
Malaysia (YA
2021)?

Blog · March 1, 2022 · By Nicholas K

Disclaimer: This article should not be considered to be

legal advice, and altHR is not liable for any actions
taken based on this article.

Tax season is just around the corner, and as usual,

employers should have already issued EA forms for the
Year of Assessment (YA) 2021 to their employees by
the end of February 2022 — just yesterday.

If you’ve switched jobs midway through the previous

year of assessment, it’s also important to reach out to
your former employers to send EA forms to their
present/former employees by 28 February 2022, as
confirmed by the LHDN here in Malaysia.

Many employees in Malaysia will also be busy filing

their tax returns in the coming months, with those who
receive their income wholly from employment salaries
having a deadline of 30 April 2022 submit their Form
BE — or until the 15th of May 2022 for e-filing.

As you go through the arduous process of filing your

taxes, it’s important to understand which part of your
monthly remuneration is actually exempt from tax; this
gets slightly more complicated if your package
includes more than just a basic salary. Here’s a quick
breakdown on tax exemptions when it comes to
benefits in YA 2021, when filing your taxes in 2022.

Tax Exempt Employee

Benefits in Malaysia
Many taxpayers are entitled to tax exemptions on
certain allowances, perquisites, gifts, and benefits —
as provided for under Part F of the EA form. Of course,
this is of particular interest for many employees, with
exemptions on tax returns allowing you to reduce the
overall amount of tax you need to pay across the
year.

Pay attention to the following types of benefits, and

exemptions available:

1. Benefits-in-Kind

Benefits-in-Kind are benefits that are provided to

employees on top of their basic salary which are not
convertible into money. For example, think of cars,
productivity tools, or even personal drivers — benefits
which have monetary value, but cannot be sold or
exchanged for cash due to the terms of the contract, or
simply the nature of the benefit.

All Benefits-in-Kind are technically taxable, but

Paragraph 8 of the LHDN’s Public Ruling No.
11/2019 provides for the following exemptions:

Dental benefit
Child-care benefit; Child-care centres provided
by employers
Food & drink provided free of charge
Free transportation between pick-up
points/home and work
Obligatory insurance premiums for foreign
workers in replacement of SOCSO
Group insurance premium covering workers in
event of accidents
Leave passage
Benefits used by employer to perform
employment duties
Discounted price for consumable business
products/services of employer
Benefits and monthly bills for fixed line
telephones, mobile phones, broadband
subscriptions
Medicine and maternity
Benefit on free petrol (petrol cards, petrol bills)
up to RM6,000

It’s important to note that the exemptions here do not

apply if the employee in question is a director, or an
employee who has “control over his employer” via
holding of shares or other powers.

Full details on Benefits-in-Kind available from the

LHDN here.

2. Perquisites from employment

Perquisites, meanwhile, are benefits that are either

given in cash, or are convertible into money by the
employee. This mainly covers the variety of
allowances that you may receive as part of your
employment, as well as subsidies on loans and more.

The LHDN provides for perquisites from employment

under Public Ruling No. 5/2019. Just like Benefits-in-
Kind, Perquisites are taxable from employment
income. However, there are exemptions:

Travelling allowance, petrol allowance, toll rate

up to RM6,000 annually
Parking allowance
Meal allowance
Child care allowance of up to RM2,400
annually
Subsidies on interest for housing, education, car
loans
Full exemption if up to RM300,000 loan
Allowance for monthly bills for fixed line
telephone, mobile phone, tablet, broadband
subscription (only one line for each category)
Obligatory insurance premiums for foreign
workers (in lieu of SOCSO)
Group insurance premiums to protect workers in
event of accident
Aviation travel insurance (travelling on official
duty)
Medical treatment paid by employers to
healthcare facilities
AWARDS given to employees for excellent
service, long service, past achievement,
innovation, productivity of up to RM2,000

Just like Benefits-in-Kind, these exemptions do not

apply if the employee has “control over his
employer”.

Full details on Perquisites available from the LHDN

here.

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