The Inland Revenue Board has on February 4, 1998, issued Guidelines on Criteria for an Education Policy and a Medical Policy which serve to explain the various criteria applied with regard to claims for a further tax deduction of up to RM2,000 for an individual on premiums paid for any insurance on education or medical benefits.

The said guideline is reproduced in Annexure A for your reference.
Tax deduction on bonus paid to an individual after October 17, 1997 is restricted to a sum not exceeding 2/12th of his salaries or wages in accordance with Section 39(1)(h) of the Income Tax Act, 1967. For the purpose of calculating bonus restriction, the Inland Revenue Board has clarified that salaries or wages are defined as fixed salaries or wages without taking into consideration variable allowances.

The Inland Revenue Board has clarified the taxability of Benefits-in-Kind (BIK) on an individual relating to the following items :

a. Mobile Telephone

  1. If the mobile telephone is provided by the employer for business purposes, the employer is required to report the mobile telephone as a BIK with a notation, for official use (untuk kegunaan rasmi sahaja).

  2. If the employee can prove that the mobile telephone is used only for official purposes and that personal gain does not arise as reimbursements are made to the employer for all personal calls, the BIK value of RM600 will be reduced in accordance with the facts of each case.

  3. If the mobile telephone belongs to the employee but the employer pays for the telephone rental and all business calls, the employee will be subject to tax on the value of RM600.


This report is reproduced with permission from Kassim Chan Tax Services Sdn Bhd (36421-T) and Deloitte Touche Tohmatsu Tax Services Sdn Bhd (151497-P). 7th Floor, 3 Cangkat Raja Chulan 50200 Kuala Lumpur, Malaysia or P.O.Box 11151, 50736 Kuala Lumpur, Malaysia.
Telephone: (603) 232 0711, Facsimile: (603) 2304746, (603) 230 0585

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