To encourage employers to provide more benefits to their employees and
to assist in reducing cost of living, it is proposed that employees be given tax
exemption on allowances, benefits in kind and perquisites received from
employers as follows:
i. petrol card or petrol allowance or travel allowance between the
home and work place up to RM2,400 a year;
ii. petrol card or petrol allowance or travel allowance and toll card for
official duties up to RM6,000 a year;
iii. allowance or fees for parking;
iv. meal allowance;
v. allowance or subsidies for childcare of up to RM2,400 a year;
vi. telephone and mobile phone, telephone bills, pager, personal data
assistant (PDA) and internet subscription;
vii. employers’ own goods provided free of charge or at discounted
value where the value of the discount does not exceed RM1,000 a
year;
viii. employers’ own services provided free or at a discount provided
such benefits are not transferable;
ix. subsidies on interest on loans totaling up to RM300,000 for
housing, passenger motor vehicles and education. The exemption
be given to existing and new loans;
x. medical benefits exempted from tax be extended to include
expenses on maternity and traditional medicines such as ayurvedic
and acupuncture; and
xi. existing perquisites be extended to awards related to innovation,
productivity and efficiency such as the Six Sigma Award and the
exemption be increased from RM1,000 to RM2,000 a year.
The above exemptions are not extended to directors of controlled
companies, sole proprietors and partnerships.
Expenses on allowance, benefits in kind and perquisites provided by
employers be given full deduction even though such benefits are not stipulated in
the service contract of the employee.
All the above proposals are effective from year of assessment 2008
except for proposal (i) which is effective from year of assessment 2008 to year of
assessment 2010.