I just receive an offer letter from a company. In the letter, it is stated that my basic salary would be RM2XXX with an allowance of RM200.

What is the difference in between basic and allowance? They did not specifically state that it is food, petrol or traveling allowance, just a single word "allowance".

Also, they mention that both basic and allowance would be credited into my bank account, doesn't that make both of them essentially the same? Or perhaps allowance is something I will only receive if I perform exceptionally well during the month?

some companies offer very low basic salary with higher allowances so that they don't need to pay more SOCSO and EPF for you.

basic means every month u got the same amount
while allowance, let say petrol allowance, u only got that amount even if ur petrol claim more than that
like telephone allowance, if ur phone bill exceed the amount then they will deduct from ur basic or u pay cash for it
like attendance allowance, if u attend full working days in a month, u will get that amount, if not they will deduct according to ur absences
if performance allowance, if u perform u will get if not u wont^^

Problem is they did not state what allowance it is, just "allowance".

Just ask the company what this 'allowance' is all about?

is allowances taxable?

allowance can be revoked anytime at company's discretion, eg when the company is losing money, among the first thing they will think is to reduce the allowances

while base pay is something which is unique to you, coz everyone's base pay can be different despite same job position, higher base pay with lower allowance is always better than higher allowance but lower base pay, as you can use your base pay as the bargaining chip for your next job

Basic pay: Your base salary.
Allowance(s): Extra moolah to cover your cost of living.

Regards, Joey

Does it make a difference when applying bank loan if basic is low but high allowance and if basic high but low allowance?

Salary attracts EPF, is subject to annual increment, forms the base for any promotions and benefit calculations. Allowances are fixed with no automatic trigger or expectation of review, unlike salary. In most cases, allowances aren't even contractual. Luckily yours seems to be.

This post has been edited by seantang: Mar 10 2012, 09:10 AM

Do u ask what the allowance for?

If it kills you out of curiousity.

Regards, Joey

Higher basic means higher increment. Because increments calculation is based on you basic.

Your allowance seems to be fixed from the way it's being stated.

hi guys, just curious ya, i know this thread is long dead, but i just want to know whether allowance is included in the base salary, or allowance has its own category in the offer letter? because the company i work for is a customer care, and i would like to claim a language allowance since they are asking me to speak in chinese language. But the HR department states that allowance is included in my base salary, please help me out in clarifying this matter. Thank you.

Normally allowance will be separated from base salary because base salary would be fixed and allowance is varies, it will be clearly stated on your pay slip (Salary & Allowance).

In this case, probably they are adding your "allowance" to your base salary. Hence, your base salary (inclusive of your allowance) will only appear in your pay slip.

yes, taxable.

don't think of this from your point of view, this from the employer's perspective.

1. cost cutting, rightly pointed out by some here, more basic means more EPF contribution from employer to your EPF account and etc.

2. tax planning purpose, certain company classify staff cost and allowance differently from the operating expenses hence may have tax implications.

3. accounting treatment - as a result from the above, it will also have an impact on the P&L and the cash flow of the co.

4. dan lain-lain.

This post has been edited by tehoice: Feb 23 2018, 04:36 PM