Malaysian Taxation

Lecture 3 Employment Income 2

S.13(1)(c)
Summary of accommodation benefits assessment methods

Types of staff Service Director and Non-Service director

other employees
Types of
residential
properties
Houses, Lower of Defined Value
Condominiums and 1) Defined Value
Apartments. And
2) 30% of S.13(1)(a)

Hotel and Hostel 3% of S.13(1)(a) Defined value

Controlled company
- A private company owned by 5 or less shareholders.

Service Director refers to

1) An individual owned less than 5% of the private company.
2) An individual involved actively in the business operations.

If an individual is not a service director, such individual must be a

non-service director.
Defined value is determined based on the following situations

Residential property

Employer rented the Employer owned the

property for employee property and assigned
to employee
The defined value is
measured based on The defined value is
the rental of the empty computed based on
property the market rental
value
Example 4 (a)
Henry commenced his employment as an engineer in T Bhd on 1 March
2012. He earned S.13(1)(a) income with a total of RM120,000 in 2012.
Note: No employee’s share option benefits in S.13(1)(a).
The employer rented a fully furnished house for Henry on 1 April 2012.
The monthly rental is RM5,000 including RM300 for renting the furniture.
Suggested answer guide for Example 4 (a)
Henry
Tax computation for the year of assessment 2012 (extracted)
RM
S.13(1)(a) 120,000

S.13(1)(b)
Furnishing benefits (RM280 x 9months) 2,520
S.13(1)(c)
Accommodation benefits
Lower of
i) Defined value (RM5,000-RM300)x10mths=RM47,000
And
ii) 30% x S.13(1)(a) = 30% x RM120,000=RM36,000
Therefore, Accommodation benefits
= RM36,000 x 9mths/10mths 32,400
Example 4 (b)
Henry commenced his employment as an engineer in T Bhd on 1 March
2012. He earned S.13(1)(a) income with a total of RM120,000 in 2012.
Note: No employee’s share option benefits in S.13(1)(a). The employer
rented a fully furnished house for Henry on 1 February 2012. The monthly
rental is RM5,000 including RM300 for renting the furniture.
Suggested answer guide for Example 4 (b)
Henry
Tax computation for the year of assessment 2012 (extracted)
RM
S.13(1)(a) 120,000

S.13(1)(b)
Furnishing benefits (RM280 x 11months) 3,080
S.13(1)(c)
Accommodation benefits
Lower of
i) Defined value (RM5,000-RM300)x10mths=RM47,000
And
ii) 30% x S.13(1)(a) = 30% x RM120,000=RM36,000
Therefore, Accommodation benefits
= RM36,000 x 11mths/10mths 39,600
Example 4 (C)
Henry commenced his employment as an engineer in T Bhd on 1 March
2012. He earned S.13(1)(a) income with a total of RM120,000 in 2012.
Note: S.13(1)(a) consists of RM15,000 employee’s share option benefits.
The employer rented a fully furnished house for Henry on 1 April 2012.
The monthly rental is RM5,000 including RM300 for renting the furniture.
Suggested answer guide for Example 4 (c)
Henry
Tax computation for the year of assessment 2012 (extracted)
RM
S.13(1)(a) 120,000

S.13(1)(b)
Furnishing benefits (RM280 x 9months) 2,520
S.13(1)(c)
Accommodation benefits
Lower of
i) Defined value (RM5,000-RM300)x10mths=RM47,000
And
ii) 30% x S.13(1)(a) = 30% x (RM120,000-RM15,000)=RM31,500
Therefore, Accommodation benefits
= RM31,500 x 9mths/10mths 28,350
Example 4 (d)
Henry commenced his employment as an engineer in T Bhd on 1 March
2012. He earned S.13(1)(a) income with a total of RM120,000 in 2012.
Note: S.13(1)(a) consists of RM15,000 employee’s share option benefits.
The employer rented a fully furnished house for Henry on 1 April 2012.
The monthly rental is RM5,000 including RM300 for renting the furniture.
Two accountants were assigned to stay with Henry from 1 September
2012.
Suggested answer guide for Example 4 (d)
Henry
Tax computation for the year of assessment 2012 (extracted)
RM
S.13(1)(a) 120,000
S.13(1)(b)
Furnishing benefits (RM280 x 5mths)+(RM280/3 x 4mths) 1,773
S.13(1)(c)
Accommodation benefits (1/4/2012-31/8/2012)
Lower of
i) Defined value (RM5,000-RM300)x10mths=RM47,000
And
ii) 30% x S.13(1)(a) = 30% x (RM120,000-RM15,000)=RM31,500
Therefore, Accommodation benefits
= RM31,500 x 5mths/10mths 15,750
Accommodation benefits (1/9/2012-31/12/2012)
Lower of
i) Defined value (RM5,000-RM300)x10mths/3=RM15,667
And
ii) 30% x S.13(1)(a) = 30% x (RM120,000-RM15,000)=RM31,500
Therefore, Accommodation benefits
= RM15,667 x 4mths/10mths 6,267
Example 4 (e)
Henry commenced his employment as an engineer in T Bhd on 1 March
2012. He earned S.13(1)(a) income with a total of RM120,000 in 2012.
Note: S.13(1)(a) consists of RM15,000 employee’s share option benefits.
The employer rented a fully house for Henry on 1 April 2012. The monthly
rental is RM5,000 including RM300 for renting the furniture. Two
accountants were assigned to stay with Henry from 1 September 2012.
The employer reserved 10% of the property for business purposes on1
December 2012.
Suggested answer guide for Example 4 (e)
Henry
Tax computation for the year of assessment 2012 (extracted)
RM
S.13(1)(a) 120,000
S.13(1)(b)
Furnishing benefits (RM280 x 5mths)+(RM280/3 x 3mths)
+ (RM280/3 x 90% x1mth) 1,764
S.13(1)(c)
Accommodation benefits (1/4/2012-31/8/2012)
Lower of
i) Defined value (RM5,000-RM300)x10mths=RM47,000
And
ii) 30% x S.13(1)(a) = 30% x (RM120,000-RM15,000)=RM31,500
Therefore, Accommodation benefits
= RM31,500 x 5mths/10mths 15,750
Accommodation benefits (1/9/2012-30/11/2012)
Lower of
i) Defined value (RM5,000-RM300)x10mths/3=RM15,667;And
ii) 30% x S.13(1)(a) = 30% x (RM120,000-RM15,000)=RM31,500
Therefore, Accommodation benefits
= RM15,667 x 3mths/10mths 4,700
Continue…
Accommodation benefits (1/12/2012-31/12/2012)
Lower of
i) Defined value (RM5,000-RM300)x10mths/3x90%=RM14,100
And
ii) 30% x S.13(1)(a) = 30% x (RM120,000-RM15,000)=RM31,500
Therefore, Accommodation benefits
= RM14,100 x 1mth/10mths 1,410
Example 4 (f)
Henry commenced his employment as a non-service director in T Bhd
on 1 March 2012. He earned S.13(1)(a) income with a total of
RM120,000 in 2012. Note: S.13(1)(a) consists of RM15,000 employee’s
share option benefits.
The employer rented a fully house for Henry on 1 April 2012. The monthly
rental is RM5,000 including RM300 for renting the furniture. Two
accountants were assigned to stay with Henry from 1 September 2012.
The employer reserved 10% of the property for business purposes on1
December 2012.
Suggested answer guide for Example 4 (f)
Henry
Tax computation for the year of assessment 2012 (extracted)
RM
S.13(1)(a) 120,000
S.13(1)(b)
Furnishing benefits (RM280 x 5mths)+(RM280/3 x 3mths)
+ (RM280/3 x 90% x1mth) 1,764
S.13(1)(c)
Accommodation benefits (1/4/2012-31/8/2012)
Defined value (RM5,000-RM300)x 5mths= 23,500

Accommodation benefits (1/9/2012-30/11/2012)

Defined value (RM5,000-RM300)x3mths/3= 4,700

Accommodation benefits (1/12/2012-31/12/2012)

Defined value (RM5,000-RM300)x1mths/3x90%= 14,100
Example 4 (g)
Henry commenced his employment as an engineer in T Bhd on 1 March
2012. He earned S.13(1)(a) income with a total of RM120,000 in 2012.
Note: No employee’s share option benefits in S.13(1)(a).
The employer rented a room in a hotel at cost RM1,500 per month for
Henry in March 2012. The employer rented a bungalow for Henry on 1
April 2012. The monthly rental is RM6,000.
Suggested answer guide for Example 4 (g)
Henry
Tax computation for the year of assessment 2012 (extracted)
RM
S.13(1)(a) 120,000

S.13(1)(c)
Hotel benefit
3% x S.13(1)(a) = 3% xRM120,000/10months 360
Accommodation benefit
Lower of
i) Defined value RM6,000x10mths=RM60,000
And
ii) 30% x S.13(1)(a) = 30% x RM120,000=RM36,000
Therefore, Accommodation benefits
= RM36,000 x 9mths/10mths 32,400
Example 4 (h)
Henry commenced his employment as a non-service Director in T Bhd
on 1 March 2012. He earned S.13(1)(a) income with a total of
RM120,000 in 2012. Note: No employee’s share option benefits in
S.13(1)(a).
The employer rented a room in a hotel at cost RM1,500 per month for
Henry in March 2012. The employer rented a bungalow for Henry on 1
April 2012. The monthly rental is RM6,000.
Suggested answer guide for Example 4 (h)
Henry
Tax computation for the year of assessment 2012 (extracted)
RM
S.13(1)(a) 120,000

S.13(1)(c)
Hotel benefit
Defined value = RM1,500 x 1 month 1,500
Accommodation benefit
Defined value RM6,000x9mths 54,000
Example 4 (i)
Henry commenced his employment as a non-service Director in T Bhd
on 1 March 2012. He earned S.13(1)(a) income with a total of
RM120,000 in 2012. Note: No employee’s share option benefits in
S.13(1)(a).
The employer rented a room in a hotel at cost RM1,500 per month for
Henry in March 2012. The employer rented a bungalow for Henry on 1
April 2012. The monthly rental is RM6,000.
Henry shared all the accommodation benefits with a young
accountant.
Suggested answer guide for Example 4 (i)
Henry
Tax computation for the year of assessment 2012 (extracted)
RM
S.13(1)(a) 120,000

S.13(1)(c)
Hotel benefit
Defined value = RM1,500 x 1 month /2 750
Accommodation benefit
Defined value RM6,000x9mths /2 27,000
S,13(1)(d) unapproved scheme

Example 5
John retired on 1 March 2013. Upon retirement, he received a lump
sum payment from the employer’s unapproved retirement fund with
the detailed breakdown as below:
RM
Total contribution from employer 200,000
Total contribution from employee 60,000
Total interest earned 140,000
400,000

John
Tax computation for the year of assessment 2013 (extracted)
Employment income
S.13(1)(d) RM
Unapproved retirement fund 340,000
S.13(1)(e) Compensation for loss of employment
Example 6 (a)
Tony was appointed as a marketing manager on 1 June 2007. Upon
retrenchment on 31 March 2013, he received a lump sum of
compensation for RM200,000.
Number of completed year of service from 1 June 2007 to 31 March
2013 is 5 years.
Tony
Tax computation for the year of assessment 2013 (extracted)
Employment income
S.13(1)(e) RM
Compensation for loss of employment
(RM200,000 – RM10,000 x 5 completed years of service) 150,000
S.13(1)(e) Compensation for loss of employment
Example 6 (b)
Tony was appointed as a Non-service Director on 1 June 2007. Upon
retrenchment on 31 March 2013, he received a lump sum of
compensation for RM200,000.
Tony
Tax computation for the year of assessment 2013 (extracted)
Employment income
S.13(1)(e) RM
Compensation for loss of employment 200,000
Example 7
Henry commenced his employment on 1 March 2012 in H Bhd and
earned the following incomes:
1) Monthly salary for RM3,000.
2) One month bonus.
3) 5% commission on RM200,000 sales.
4) RM20,000 allowance in employing driver, gardener and maid.

Henry also entitled for the following monthly allowances in 2012:

1) Entertainment allowance for RM1,000 from 1/6/2012 onwards.
2) Travelling allowances from 1/7/2012 onwards as stated below:
– Official travelling allowance RM600
- Non-official travelling allowance RM100
H Bhd has loan financing from Q bank at 12% annual interest rate.
H Bhd provided the following loans to Henry from 1 April 2012
onwards:
RM
Housing loan 250,000
Car loan 80,000
Education loan for Phd program 70,000
Q Bhd charges 3% interest on loan to Henry.
Henry went for the following trips provided by the employer:
Destination Date RM
Kota Kinabalu 5 March 2012 5,000
Kuantan 7 June 2012 800
Johore Baru 2 August 2012 2,000
Langkawi 18 November 2012 4,000

The employer purchased a new Toyota Vios at cost RM85,000 and

assigned it Henry on 1 July 2012.

The employer had rented an unfurnished house at cost RM5,000 per

month for Henry since 1 April 2012.

He spent the following business expenses:

1) Entertainment expenses for business clients at a total of RM8,000.
2) Official travelling expense for RM4,800 (from July 2012 to December
2012).
3) Non-official travelling expense for RM2,400 (from July 2012 to
December 2012).
Suggested answer guide for Example 7
Henry
Tax computation for the year of assessment 2012 (extracted)
Employment income
S.13(1)(a) RM
Salary (RM3,000 x 10 months) 30,000
Bonus 3,000
Sales commission (RM200,000 x 5%) 10,000
Allowances in employing workers 20,000
Entertainment Allowance (RM1,000 x 7 months) 7,000
Travelling allowance
Official travelling allowance (RM600 x 6 months) 3,600
Less exemption (RM500 x 6 months) (3,000)
600
Non-official travelling allowance
(RM100 x 6 months) 600
Loan interest subsidy benefits
Total loan interest
RM400,000 x (12%-3%) x 9mths/12mths) 27,000
Less exemption RM27,000 x RM300K/RM400K 20,250
6,750
 RM RM
Local leave passage 800
78,750
S.13(1)(b)
Car benefits (RM3,600 x 6mths/12mths) 1,800
Car fuel benefits (RM1,200 x 6mths/12mths) 600 2,400

S.13(1)(c)
Accommodation benefits
Lower of
(i) Defined value RM5,000X10months=RM50,000;and
(ii) 30%xS.13(1)(a)= 30%XRM78,750=RM23,625
Therefore the accommodation benefit
=RM23,625 x 9mths/10mths 21,263
Gross income 102,413
Less Deductible expenses
Related to business entertainment expenses
(restricted) 7,000
Official travelling expenses 4,800 11,800
Adjusted/Statutory income 90,613