4 Myths of BIK and Perquisite In Form E Part 2 of 2 

eKTP 109

eKTP_108-109.png

Myth 3

Car benefits enjoyed by the directors/employees of the company

The company has acquired a few cars for the business use of the company. Car expenses like petrol, road tax and maintenance has been charged as business expenses in the company’s accounts. However, the cars are also used as follows: 

(a) Travelling between the office and the employee’s home, and

(b) It is kept at the employee’s home where the motorcar can be used by the employee or his family at any time.

Hence, benefit-in-kind has been reported as part of the taxable benefits for both the employees and the directors pursuant to Public Ruling 3/2013 which was issued on 13th March 2013. 

In recent tax audit cases, tax auditors have been allowing the car expenses as mentioned using a formula of 8/24 on the basis that the car is normally only used 8 working hours in the day for official purposes.  We are of the opinion that there should be no restriction of the expenses since the vehicles are part of the staff amenities for the employees and that full benefits-in-kind has already be reported EA of the respective employees.  Kindly confirm whether this opinion is in order. 

If the benefits in kind have been include in the Form EA as taxable income, all related expenses incurred by the employer (company) are allowed without restriction.

With regards to the audit issue raised in which the Branch has imposed restriction on the basis of the formula, maybe the Branch has its own reason to do so.

Hence, you do not furnish the full facts then you are advised to obtain the appropriate confirmation by contact to the Branch.


Myth 4

Foreign levy expenses

As from 1st January 2018, all employers must bear the cost of levy payments for new foreign workers as well as foreign workers who have renewed their Temporary Employment Visit Pass (PLKS).

Enquires have been made to LHDNM branches and we have received different answers on this issue. Some LHDNM branches has informed as that since this is a compulsory deduction by the employers, this is a deductible expense under section 33(1) ITA 1967 and this payment is not considered as a taxable perquisite on the foreign workers.

However, in other branches, we were informed that these expenses are allowable only for renewal of the temporary employment visit pass of the foreign workers and is nondeductible for new foreign workers.

Kindly advise on the following:

(a) Is the foreign levy tax deductible by the company for both new and existing foreign workers who renewed their employment pass?
Levy payments made by employers are allowed for deductions under subsection 33 (1) Income Tax Act except it done before the date of business commencement or if the levy (fee) is claimed by the employer from his employee through salary deduction.

(b) Is the foreign levy expenses considered as a taxable perquisite on the foreign workers?
No.

 
Darren Yap