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.
How to determine value of BIK?
The Formula Method
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 –
|
Annual Value of the benefit |
= |
Cost of the asset that is provided as benefit / amenity
Prescribed average life span of the asset
|
- 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 Benefit of Motorcar (RM) |
Annual Prescribed Benefit 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 | 1,800 |
| 200,001 - 250,000 | 9,000 | 2,100 |
| 250,001 - 350,000 | 15,000 | 2,400 |
| 350,001 - 500,000 | 21,250 | 2,700 |
| 500,001 and above | 25,000 | 3,000 |
- 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:
|
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 and 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 |
|
| b) From the year of assessment 2008 |
|
||
| 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:
|
| b) Corporate membership - Membership subscription paid by employer | Tax treatment on the benefit received on the employee as follows:
|
||
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
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.
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:
- Defined value of VOLA; or
- 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:
- A manager of the company
- Remunerated out of the funds of that business
- 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.
Category 3 : Hostel living accommodation for employee or service director
- Where the living accommodation provided for employee or service director, is:
- in a hotel, hostel or similar premises
- any premises in plantation or in a forest
- 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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