sql payroll benefit in kind bik

What is Benefits In Kind (BIK)?

BIK are non-cash benefits provided by employers to their employees and are treated as income of the employees


What is BIK ?

BIK are benefits not convertible into money, even though they have monetary value. The phrase not convertible into money means that when the benefit is provided to the employee, that benefit cannot be sold, assigned or exchanged for cash either because of the employment contract or due to the nature of the benefit itself.

Calculating

How to determine value of BIK?

The Formula Method
Annual Value of the benefit
=
Cost of the asset that is provided as benefit / amenity
Prescribed average life span of the asset
Here, cost means the actual cost incurred by the employer

The Prescribed Value Method
The schedules for the prescribed values of the benefits commonly provided to the employee are as the table provided below.

The value of BIK based on the prescribed value method provided to the employee by the employer can be abated if the BIK is –
  • Provided for less than a year
  • Shared with another employee

Prescribed Value of BIK

  • Prescribed Average Life Span (Years)
Asset Type of Assets Prescribed Average Life Span
(Years)
1. Motorcar 8
2. Furniture and Fittings
    a. Curtains and carpets 5
    b. Furniture, sewing machine 15
    c. Air conditioner 8
    d. Refrigerator 10
3. Kitchen equipment (i.e. crockery, rice cooker, electric kettle, toaster, coffee maker, gas cooker, cooker hood, oven, dish washer, washing machine, dryer, food processor etc.) 6
4. Entertainment and recreation:
    a. Piano 20
    b. Organ 10
    c. TV, video recorder, CD/DVD player, stereo set 7
    d. Swimming pool (detachable), sauna 15
5. Miscellaneous 5
  • Prescribed Value Of Motorcar And Its Related Benefits
Cost of Motorcar (New)
(RM)
Annual Prescribed Benifit of Motorcar
(RM)
Annual Prescribed Benifit of Petrol
(RM)
Up to 50,000 1,200 600
50,001 - 75,000 2,400 900
75,001 - 100,000 3,600 1,200
100,001 - 150,000 5,000 1,500
150,001 - 200,000 7,000 1800
200,001 - 250,000 9,000 2,100
250,001 - 7255,000 15,000 2,400
350,001 - 500,000 21,250 2,700
500,001 and above 25,000 ,3000
  • Prescribed Value Of Household Furnishing, Apparatus and Appliances
Category Type Of Benefit Annual Prescribed Value Of BIK Provided
(RM)
1 Semi-furnished with furniture in the lounge, dining room or bedroom 840
2 Semi-furnished with furniture as in Column 1 and one or two of the following:
  • Air-conditioners
  • Curtains and alike
  • Carpets
1,680
3 Fully furnished with benefits as in Column 1 and 2 as above plus one or more of kitchen equipment, crockery, utensils and appliances 3,360
4 Services charges asn other bills such as water and electricity Service charges and bills paid by the employer
  • Prescribed Value Of Other Benefits
Item Type Of Benefit Value of BIK Per Year
1. Telephone (including mobile phone) a) Before the year of assessment 2008
  1. Hardware: RM300 per telephone

  2. Bills:
    1. Telephone is subscribed and paid by the employer:
      • The benefit is taxed under paragraph 13(1)(b) of the ITA 1967
      • The prescribed value is RM300 per telephone
      • Where the formula method is used, the value of hte benefit is the amount of the actual cost of the private bills paid by the employer

    2. Telephone is subscribed by the employee and by employer
      • The benefit is taxed under paragraph 13(1)(a) of the ITA 1967
      • The benefit to be taxed is the amount of the actual bills paid by the employer
b) From the year of assessment 2008
  1. Hardware - fully exempt

  2. Bills - fully exempt
2. Gardener RM3,600 per gardener
3. Household servant RM4,800 per servant
4. Recreational club membership a) Individual membership - Membership subscription paid or reimbursed by employer Tax treatment on the benefit received on the employee as follows:
  1. Entrance fee for club membership - taxed under paragraph 13(1)(a) of the ITA 1967
  2. Monthly/annual membership subscription fees for club membership - taxed under paragraph 13(1)(a) of the ITA 1967
  3. Term membership - is taxed on the amount of payment made under paragraph 13(1)(a) of the ITA 1967
a) Corporate membership - Membership subscription paid by employer Tax treatment on the benefit received on the employee as follows:
  1. Entrance fee - not taxable
  2. Monthly/annual membership subscription fees for club membership - taxed on the prescribed value under paragraph 13(1)(a) of the ITA 1967

Tax Exemption On BIKs

There are certain benefits-in-kind which are either exempted from tax or are regarded as not taxable.

  • Dental benefit
  • Child-care benefit
  • Food & drink provided free of charge
  • Free transportation between pick-up points or home and place of work (to and from)
  • Insurance premiums which are obligatory for foreign workers as a replacement to SOCSO contributions
  • Group insurance premium to cover workers in the event of an accident
  • Discounted price for consumable business products of the employer and discounted price for services provided by the employer
cash-and-report

What is VOLA (Value of Living Accommodation) ?

Living accommodation provided for the employee by his employer is a benefit-in-kind which is not convertible into money. This benefit which arises in respect of having or exercising an employment is to be included as gross income of the employee from the employment.

The amount to be taken into account is the amount in respect of the use or enjoyment by the employee of living accommodation in Malaysia (including living accommodation in premises occupied by his employer) provided for the employee rent free.

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Category 1: Living accommodation provided for employee or service director

  • Service Director represents director who is employed in the service of the company in a managerial or technical capacity and does not hold more than 5% of the ordinary share capital of the company.

  • The computation for VOLA is either the below whichever lesser:
    1. Defined value of VOLA; or
    2. 30% of the gross income from employment under Para 13(1)(a) of the ITA (exclude ESOS)

Category 2 : Living accommodation provided for directors of controlled companies

  • Director includes:
    1. A manager of the company
    2. Remunerated out of the funds of that business
    3. A beneficial owner of 20% or more of the ordinary share capital of the company

  • The computation of VOLA will be the defined value of the living accommodation.
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Category 3 : Hostel living accommodation for employee or service director

  • Where the living accommodation provided for employee or service director, is:
    1. in a hotel, hostel or similar premises
    2. any premises in plantation or in a forest
    3. any premises which although in rateable area are not subject to rates

  • The amount to be taken into account as VOLA is :
    • An amount equal to 3% of the gross income under Para 13(1)(a) of the ITA (Exclude ESOS).

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