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<\/figure><\/div>\n\n\n| <\/th> | Perquisite<\/th> | Benefit-in-Kind (BIK)<\/th><\/tr><\/thead> | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
What it is<\/strong><\/td>| A benefit that is cash or can be converted to cash<\/td> | A benefit that cannot be converted to cash<\/td><\/tr> | Common examples<\/strong><\/td> | Petrol or travel allowance, phone allowance, cash housing allowance, club membership<\/td> | Company car, employer-provided accommodation, a driver, free medical care<\/td><\/tr> | Governed by<\/strong><\/td> | LHDN Public Ruling 5\/2019<\/td> | LHDN Public Ruling 11\/2019<\/td><\/tr> | Tax treatment<\/strong><\/td> | Taxable as employment income unless specifically exempted<\/td> | Taxable as employment income under Section 13(1)(b) unless exempted<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n | The default for both is the same: unless a specific exemption applies, the benefit is added to the employee’s employment income and taxed. A company car carries an annual taxable value, accommodation is valued on its rental worth, and a cash allowance is simply added to income.<\/p>\n\n\n\n The Exemptions That Catch Companies Out<\/h2>\n\n\n\nIt is not true that everything is taxed, and this is exactly where payroll goes wrong in the other direction. Several allowances are exempt, but only up to a limit.<\/p>\n\n\n\n Petrol, travel, and toll allowances are exempt up to RM6,000 a year, and childcare up to RM2,400. Meal and parking allowances can be exempt within reason. The mistake is treating these as either fully taxable or fully exempt, when the rule is a threshold: the portion within the limit is free, and anything above it is taxable. A company that applies the exemption without the ceiling under-taxes; one that ignores the exemption over-taxes.<\/p>\n\n\n\n The Cost of Getting It Wrong<\/h2>\n\n\n\n\n When a taxable perk is added to pay but left out of the tax calculation, the monthly PCB is under-deducted for the whole year. The shortfall does not disappear. It surfaces when the employee files and discovers they owe money on income they did not know was taxed.<\/p>\n<\/div> Take a simple case. An employee is given a RM600 monthly cash housing allowance, and payroll records it as a tax-free line. Over a year that is RM7,200 of income the monthly tax calculation never touched. When the employee files their return, the RM7,200 is added to their taxable income, and depending on their bracket the bill can run into several hundred ringgit or more, due in one lump, on money they had already spent and never knew was taxable. The company, meanwhile, has quietly under-deducted PCB for twelve months across every employee on that same allowance.<\/p>\n\n\n\n From the employee’s side, a perk that created a tax debt does not feel like a benefit. From the company’s side, systematically under-deducting PCB is a compliance exposure with LHDN. A benefit meant to build goodwill ends up doing the opposite, on both sides of the payslip.<\/p>\n\n\n\n The fix is to decide the tax treatment of every pay component at the point it is set up, not at year-end. TimeTec Payroll<\/a> lets each salary component be defined with its own tax treatment, so a taxable allowance is carried into the PCB calculation and an exempt one is applied against its limit, rather than every perk being lumped together and guessed at. As the argument in Y<\/a>our Allowance Does Not Count Toward Minimum Wage<\/a> showed, how a component is classified, not just its amount, is what determines whether the payroll is correct. Tax treatment works the same way.<\/p>\n<\/div><\/div>\n\n\n\n Handled at setup, the tax on a perk is calculated correctly every month. Handled at year-end, it is a surprise for the employee and a gap for the company.<\/p>\n\n\n\n The value of a benefit is not what it costs the company to give. It is what the employee keeps after tax, and a perk that lands them an unexpected bill is not the gift it was meant to be.<\/p>\n\n\n\n Give the benefit, and account for the tax that comes with it. Doing one without the other just moves the cost onto the person you were trying to reward.<\/p>\n\n\n\n |
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