What is BIK in Malaysia? | How to calculate BIK? | What is Benefit in Kind? (2024)

What is BIK in Malaysia? | How to calculate BIK? | What is Benefit in Kind? (1)

BIK are non-cash benefits provided by employers to their employees and are treated as income of the employees


KWSP

PCBCP22CP38CP39CP58BIKEA FormForm EForm E / CP8D Online SubmissionForm TP

SOCSOEISSOCSO + EIS Combine Contribution

HRDF

Rental IncomeResubmit of KWSP, SOCSO, PCBAll Articles

BIK are benefits not convertible into money, even though they havemonetary value. The phrase not convertible into money means that whenthe benefit is provided to the employee, that benefit cannot be sold, assignedor exchanged for cash either because of the employment contract or due tothe nature of the benefit itself.

What is BIK in Malaysia? | How to calculate BIK? | What is Benefit in Kind? (4)

How to determine value of BIK?

The Formula Method

Annual Value of the benefit

=

Cost of the asset that is provided as benefit / amenity

Prescribed average life span of the asset

Here, cost means the actual cost incurred by the employerThe Prescribed Value MethodThe 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 –

  • Provided for less than a year
  • Shared with another employee
  • 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:
  • Air-conditioners
  • Curtains and alike
  • Carpets
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
  1. Hardware: RM300 per telephone

  2. Bills:
    1. Telephone is subscribed and paid by the employer:
      • The benefit is taxed under paragraph 13(1)(b) of the ITA 1967
      • The prescribed value is RM300 per telephone
      • Where the formula method is used, the value of hte benefit is the amount of the actual cost of the private bills paid by the employer

    2. Telephone is subscribed by the employee and by employer
      • The benefit is taxed under paragraph 13(1)(a) of the ITA 1967
      • The benefit to be taxed is the amount of the actual bills paid by the employer
b) From the year of assessment 2008
  1. Hardware - fully exempt

  2. Bills - fully exempt
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:
  1. Entrance fee for club membership - taxed under paragraph 13(1)(a) of the ITA 1967
  2. Monthly/annual membership subscription fees for club membership - taxed under paragraph 13(1)(a) of the ITA 1967
  3. Term membership - is taxed on the amount of payment made under paragraph 13(1)(a) of the ITA 1967
b) Corporate membership - Membership subscription paid by employer Tax treatment on the benefit received on the employee as follows:
  1. Entrance fee - not taxable
  2. Monthly/annual membership subscription fees for club membership - taxed on the prescribed value under paragraph 13(1)(a) of the ITA 1967

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 BIK in Malaysia? | How to calculate BIK? | What is Benefit in Kind? (5)

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.

What is BIK in Malaysia? | How to calculate BIK? | What is Benefit in Kind? (6)

Category 1: Living accommodation provided for employee or service director

  • Service Director represents director who is employed in the service of thecompany in a managerial or technical capacity and does not hold morethan 5% of the ordinary share capital of the company.

  • The computation for VOLA is either the below whichever lesser:
  1. Defined value of VOLA; or
  2. 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:
  1. A manager of the company
  2. Remunerated out of the funds of that business
  3. 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.
  • What is BIK in Malaysia? | How to calculate BIK? | What is Benefit in Kind? (7)

    What is BIK in Malaysia? | How to calculate BIK? | What is Benefit in Kind? (8)

    Category 3 : Hostel living accommodation for employee or service director

    • Where the living accommodation provided for employee or service director, is:
    1. in a hotel, hostel or similar premises
    2. any premises in plantation or in a forest
    3. 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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    I am an expert and enthusiast assistant. I have access to a wide range of information and can provide assistance on various topics. I can help answer questions, provide insights, and engage in detailed discussions.

    Regarding the concepts mentioned in the article you provided, here are some search results that can help us understand them better:

    1. BIK (Benefits in Kind):

      • BIK refers to non-cash benefits provided by employers to their employees.
      • These benefits are treated as income for the employees.
      • BIK can include various items such as motorcars, furniture, kitchen equipment, entertainment and recreation items, and more.
      • BIK are benefits that cannot be converted into cash and are not sold, assigned, or exchanged for cash.
      • The value of BIK can be determined using the Formula Method or the Prescribed Value Method [[1]].
    2. Formula Method for determining the value of BIK:

      • The Formula Method calculates the annual value of the benefit based on the cost of the asset provided as a benefit divided by the prescribed average lifespan of the asset.
      • The cost refers to the actual cost incurred by the employer.
      • The prescribed average lifespan is determined based on the type of asset [[1]].
    3. Prescribed Value Method for determining the value of BIK:

      • The Prescribed Value Method provides schedules for the prescribed values of benefits commonly provided to employees.
      • The value of BIK based on the prescribed value method can be abated (reduced) under certain conditions, such as when the benefit is provided for less than a year or shared with another employee.
      • The prescribed values vary based on the type of asset or benefit [[1]].
    4. Examples of prescribed values for specific assets:

      • Motorcar: The prescribed value of the benefit is determined based on the cost of the motorcar. Different cost ranges have different prescribed values for the annual benefit and petrol [[1]].
      • Furniture and Fittings: The prescribed value of the benefit depends on the category and type of benefit provided, such as semi-furnished or fully furnished with additional kitchen equipment [[1]].
      • Other benefits: The article also mentions prescribed values for benefits like telephone, gardener, household servant, and recreational club membership [[1]].
    5. Exemptions and non-taxable benefits:

      • The article mentions certain benefits-in-kind that are either exempted from tax or not regarded as taxable.
      • Examples include dental benefits, child-care benefits, free food and drink provided by the employer, free transportation between pick-up points and home/work, insurance premiums for foreign workers, discounted prices for business products and services, and living accommodation provided by the employer [[1]].

    Please note that the information provided above is based on search results and should be verified with official sources or professional advice for specific cases or legal requirements.

    What is BIK in Malaysia? | How to calculate BIK? | What is Benefit in Kind? (2024)
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