Tax benefits for employees

IT’S tax season again! Employees are required to submit their tax return Form BE for year of assessment (YA) 2008 on or before April 30, where the income assessed is in relation to the basis period of Jan 1 to Dec 31, 2008.

Additional goodies for YA2008:

Compensation for loss of employment
Employees who are retrenched on or after July 1, 2008 will be granted an income tax exemption of RM10,000 for each completed year of service with the employer or companies in the same group. If the retrenchment was before July 1, 2008, then the amount exempted for each year of service will be RM6,000.

Tax-exempt employee benefits — allowances
(a) Petrol card/petrol allowance/travel allowance
(b) Meal allowance for working overtime, travelling outstation.
(c) Parking allowance.
(d) Medical treatment for employees, spouses and children to include traditional medicine such as ayurvedic treatment and acupuncture.
(e) Interest subsidies on housing, car and education. The total loan amount is restricted to RM300,000.
(f) Childcare allowance up to RM2,400 a year.
(g) Employers’ products or services which can be provided free or at a discount which must not exceed RM1,000 a year.
These allowances need to be disclosed in the Form EA as tax-exempt benefits although they are not taxable on employees. These benefits are also available for YA2009.

Official duties – travelling allowance
In the Budget 2009 announcement, the Government said petrol cards, petrol allowance, travelling allowance and toll cards for official duties up to RM6,000 a year will be tax-exempt.

This means that the employer will exclude RM6,000 a year from the taxable income of employees as reported in the EA Form. However, the employer needs to disclose this RM6,000 as a tax-exempt benefit in the EA Form.

Details: Tips for filling your income tax returns