What is the tax treatment for income tax borne by the employer?

Perquisite

Perquisite, in relation to employment, means benefits in cash or in kind that are convertible into money received by an employee from the employer or third parties in respect of having or exercising the employment.

What does tax borne by employer mean?

Do employers pay income tax for employees?

No, employers do not pay income taxes for their employees. Employees are solely responsible for income tax payments, which employers must withhold.

What if? There is good employer who pays employee tax?

The agreement by the employer to pay the income tax of the employee does not relieve the employee from tax liability on the amount of income tax borne by the employer.

'Income Tax is borne by employer' is a form of income and is chargeable based on Section 13(1)(a) of the ITA 1967.

In short, tax borne by the employer is a taxable perquisite to the employee.

Source :

IRB Public Ruling 11/2016 - Tax Borne by Employer
http://phl.hasil.gov.my/pdf/pdfam/PR_11_2016.pdf

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