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BENEFITS IN KIND
Most employers make the mistake of
not declaring the value of benefits-in-kind given to
employees. The failure to disclose the value of benefits in
kind given to employees can render an employer to liabilities and
penalties as provided for in the Act. Essentially benefits in
kind falls under two categories: benefits-in-kind convertible into
money; and benefits-in-kind not convertible into money.
Benefits-in-kind if properly planned and structured can greatly
increase the standard of living of the employee at the same time
reducing his incidence of tax.
Benefit convertible to money
convertible to money fall under sec 13(1)(a), Income Tax
Act 1967, while benefits
not convertible into money fall under sec 13(1)(b). This distinction
has an impact, for example, on the calculation of the value for
income tax purposes of free accommodation provided by an employer to
Benefit not convertible into money
Gross income from employment includes benefits or amenities not convertible into money and which are provided for the employee by or on behalf of his employer.
Examples of benefits-in-kind are given in the Borang E which all employers are required to fill and submit to the IRB. So please take special care when completing the Borang E.
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