Tutorial 5

Topic 5: Employment Income (Part 2: Types of Employment Income)

Question 1

Explain, with relevant details, whether the benefits described in the following cases be
assessable as income to employee for tax purposes.

a. A bank manager voluntarily pays an annual subscription to a golf club and claims the
amount from his employer. He uses the club only for the purpose of meeting the
bank’s high-profile clients.

b. A general workman is provided with protective clothing and tools to perform his
works.

c. A legal firm fully sponsors the tuition fees of one of its clerks to attend jurisprudence
classes. The class is conducted every evening by a reputable college in the city.

d. A senior accountant working with OKS Finance Bhd. gets reimbursed for his
payment of annual subscription to the Malaysian Institute of Accountant (MIA).

Question 2

Being a sales agent, Kenny Wong is required to travel frequently around the southern
regions of Malaysia. In order to facilitate his works, his employer provides him with a
Perodua Bezza 1.3 Advance with a price tag of RM47,790. His employer also provides
fuel for the car.

In addition, Kenny Wong is provided with Touch n’ Go card for toll payments. His
employer reloads the card with RM350 every month.

Kenny Wong has been driving the car since for both his official duties as well as private
matters.

Required: Calculate Kenny Wong’s benefit under Section 13(1)(b) according to the
following circumstances.

a. Using the prescribed method for motor vehicle:

i. Kenny uses the car for the whole year.

ii. Kenny uses the car for seven months.

iii. His employer does not provide the car with fuel.

1
 iv. The car has been used for eight years.
b. Using the formula method for car benefit, what is the annual value of car benefit?

c. How will the Inland Revenue Board of Malaysia treat the provision of Touch n’ Go
card for toll payments by Kenny Wong’s employer?

Question 3

Katie McGrant is a certified ethical hacker working for a digital security firm (S4B) in
Cyberjaya. She received the following remuneration for the year ended 31st December
2019.

Salary 13(1)A RM120,000

Bonus (Note 1) 13(1)A RM36,000
Childcare allowance(Note 2) 13(1)A RM4,800
(EXEMPTED UP TP 2,400)
(4,800-2,400= 2,400)
Subsidy for housing loan interest(Note 3)13(1)A RM7,200 (EXEMPTED)

Besides the above remuneration, Katie also enjoyed the following benefits in the year
2019:

 A 2017 Toyota Vios which cost RM75,980 when purchased by the firm. The fuel
was provided by the firm as well.
S13(1)B
CAR BENEFIT = 3,600
FUEL BENEFIT = 1,200

 A fully-furnished accommodation that includes 40” flat screen television set, DVD
player and stereo set. The costs of the television, DVD player and stereo set are
RM4,760, RM770, and RM1,057 respectively.
S13(1)B
Fully-furnished accommodation= RM 3360

 Medical expenses totalling RM1,750 for Katie and her daughter, which was fully
borne by the firm.
S13(1)B
Medical expenses= EXEMPTED

 One-week holiday package specifically for Katie to Jeju Island, South Korea. The air
fare cost RM4,400 while the meal and accommodation cost RM3,600.
S13(1)B
The air fare cost RM4,400 EXEMPTED 3,000 PER PERSON (4,400-3000=
1,400)
meal and accommodation cost RM3,600

2
Notes

1. The bonus was received in March 2019 for her work performance in the year 2017.

2. Her only daughter was 5 years old in 2019 (<12YEARS OLD) and was enrolled in a
registered childcare centre not far from her office.

3. Her housing loan of RM295,750 (NOT UP TP 300,000) was for a semi-detached

house she purchased in 2014 in Ipoh.

Required: Calculate the gross employment income of Katie McGrant for the year ended
31st December 2019.

RM RM
Section 4b: Employment income
Section 13(1)a: Monetary benefits
Salary 120,000
Bonus 36,000
Childcare allowance (4,800-2,400) 2,400
Subsidy for housing loan interest Exempted
158,400
Section 13(1)b: BIKs
Car benefit 3,600
Fuel benefit 1,200
Fully furnished accommodation 3,360
Medical expense Exempted
Air fare cost (4,400-3,000) 1,400
Meal and accommodation 3,600
13,160
Gross income from employment 171,560