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Learning Objectives

Types of employment income

Exempted employment income
Allowable deductions from employment
income

Tax computation for Sole Proprietorship &

Partnership Business

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 Learning Outcomes

Identify the types of employment income

Identify exempted employment income
Identify allowable deductions from employment
income
Determine the statutory income from employment

Determine how to perform tax computation for Sole

Proprietorship & Partnership Business

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 Not taxable

No
Derived Is it Yes
Pay from
Not
exempted?
remuneration M’sia?
Yes taxable

Sec (1) Non resident, & No

13(2)(a)to (2) employed ≤60
(e) days

Types of
employment
income

Sec
13(1)(a)to
(e)
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 Tax Computation of Individuals

GM of Sun Bhd Sole Trader of X Enterprise Rent out bungalow in KL

Employment Income Business Income Rental Income

Gross Income Gross Income Gross Income
Less: Less: Less:
Deductible Expenses Deductible Expenses Deductible Expenses
---------------------------------- Special Deduction ----------------------------------
Statutory Income
-----------------------------------
+ Double Deduction
----------------------------------
+ Statutory Income
-----------------------------------
Statutory Income
-----------------------------------
Aggregate Income
Less: Business loss
Total Income Approved donation
Less: Personal Relief
Chargeable Income
x Tax Rate = Tax Liability Less: Personal Rebate
 Statutory Income From
Employment
Gross employment income:
S13(1)(a) income xx
S13(1)(b) income xx
S13(1)(c) income xx
S13(1)(d) income xx
S13(1)(e) income xx
Gross Income xxx
Revenue
expenses Less: Deductible expenses (XX)
in relation
to job
-------------
Statutory income XXX Slide 46

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 TYPES OF EMPLOYMENT INCOME

S13(1)(b) S13(1)(c) S13(1)(d) S13(1)(e)

S13(1)(a)

MONETARY OR BENEFITS IN VALUE OF REFUND FROM

NEAR MONETARY KIND (BIK) UNFURNISHED UNAPPROVED FUND
BENEFITS ACCOMODATION
COMPENSATION FOR
LOSS OF OFFICE AND
ENTERING INTO
Wages, Company car, RESTRICTIVE
Salary, Bonus, furniture, and CONVENANT
Allowances, etc.
and etc.

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13(1)(a): Any wages, salary, remuneration, leave pay,
fee, commission, bonus, perquisite or allowance
(whether in money or otherwise) in respect of having or
exercising the employment.

Generally, employment income is charged when it’s receivable except

for the following income, which is taxed when it’s received:

Bonus.
Director’s fees.

Refer to Appendix I for type of employment income exempted from tax

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 Section 13(1)(a)
•Gifts/Rewards
for services &
etc.

Settlement of the
Benefits Convertible Employee’s
To Cash Pecuniary
Liabilities

•Wages, Salary,
•Home Electricity
Bonus, Commission,
Gratuity, Allowances, Monetary
and etc. Benefits •Bill, Income Tax
Payable, Reimbursement
of Servant’s Salary and
etc. ‘10
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 BIK
Car and Fuel
Categories

Furniture
•Not convertible into money.
•Resources owned by the
employer for use by the
employee for personal benefit Others (Driver, Gardener, Servant &
•Income assessed depends on etc.)
cost to employer providing it
or refer to BIK value
prescribed by IRB.

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 Prescribed Value BIK Table

Annual
Value of
Car

Formula [Cost/8] x 80%

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Cost Of Car When New Annual Value Of BIK Fuel Per Annum
(RM) (RM) (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

Table shows the value of the private use of car and fuel provided. 1
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 - Types Of BIK Annual Value Of BIK

(a) Semi-furnished with furniture in the lounge, RM 840

dining room or bedrooms. (RM 70 per month)

(b) Semi-furnished with furniture as above and RM 1,680

one or more of the following:- air- (RM 140 per month)
conditioners, curtains and carpets.

Fully-furnished with benefits as above plus RM 3,360

(c)
one or more of the following:- kitchen (RM 280 per month)
equipment, crockery, utensils and
appliances.

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Type of BIK Annual Value

Unspecified Benefits

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Example : Car with fuel
Ahmad Tarmizi is a director of a company which provides
him with a company car costing RM150,000. What is his
gross income under section 13(1)(b)?

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Exempted Employment Income
[under Sec 13(1)(a) & (b)]

Refer to Appendix I

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2
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 Tax payer is a non
Y
service director in
controlled company
N

13(1)(c) = Defined Value

Type of
Accommodation

Hotel, Hostel, Others

Accommodation in
Plantation or Forest or
Other Rateable Area
(Not rated)
13(1)(c) = Lower of
Defined Value or
13(1)(c) =
30% of 13(1)(a)
3% of 13(1)(a) 2
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Discussion:
Salary RM60,000
Acting allowance RM6,000
Section 13(1)(a) gross income RM66,000
Rental of furniture (13(1)(b)) RM3,360
Value of accommodation benefit RM19,800
(Lower of RM36,000 or 30% of RM66,000=RM19,800)

RM39,600-RM3,600

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 Contribution made by
employer to an unapproved Any income earned
pension or provident fund, by such unapproved
scheme or society. fund

Assessed in Year of Withdrawal

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Note: Employee Provident Fund (EPF) is an approved fund.
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 Compensation for loss of office
Consideration for entering into restrictive
covenant.

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 Exemption for 13(1)(e) Income

Non-Service
N
Loss of Office Due To Director of
Controlled
Company
Y
Ill-Health Others
NIL
Exemption
100%
RM10,000 per year
Exemption
of completed
service 2
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Answer??

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3. Deductions Against Gross
Employment Income

Slide 19

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The general rule is that all revenue
expenditure incurred for the
appropriate performance of duties of
the office or employment would
qualify for deduction against gross
income from employment.

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Travelling expenses -- incurred on discharging the
employee’s duties.
Entertainment expenses – entertainment of
customers (restricted to the amount of
entertainment allowance chargeable to tax)
Stationeries expenses -- required by someone in
service profession.

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Personal expenses - travelling expenses – from
home to workplace (vice versa), living expenses.
Initial expenses – payment to employment agency

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 4. Business Source:
Sole Proprietorship &
Partnership Business

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 Tax Computation of Resident Individuals

Mr. Y

Sole Trader of Y Enterprise GM of Sun Bhd Rent out bungalow in KL

Business Income Employment Income Rental Income

Gross Income Gross Income Gross Income
Less: Less:
Revenue Expenses Less:
Special Deduction Revenue Expenses Revenue Expenses
Double Deduction ---------------------------------- ----------------------------------
------------------------------- Statutory Income
Adjusted Income
Less: Capital Allowance (capex)
+ ----------------------------------- + Statutory Income
-----------------------------------
----------------------------------
Statutory Income
-------------------------------- Aggregate Income
Less: Business loss
Total Income Approved donation

Chargeable Income Less: Personal Relief 37

x Tax Rate = Tax Liability

Net tax payable Less: Personal Rebate

 STATUTORY INCOME FROM BUSINESS FOR
A YEAR OF ASSESSMENT

RM RM
Gross Income 350,000
Less:
Allowable expenses (S33) (150,000)
Special (CSR) Deduction (50,000)
Double Deduction (70,000) (270,000)
Adjusted Income 80,000
Add: Balancing Charge 20,000
Less:
allowance

Current year capital allowance (10,000)

Capital

Capital allowance b/f (2,000)

Balancing Allowance (15,000) (7,000)
Statutory Income from business 73,000

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 WHEN?

Basis Period &

Year of
Assessment

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 Basis period of a SP & PS business is based on
the calendar year basis.
 For a year of assessment 2019, the basis
period is from 1 Jan 2019 – 31 Dec 2019

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 Badges of
Trade/Guidelines
for determination
of the existence of
business source

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 BADGES OF TRADE

Profession
Vocation Profit-seeking motive
Manufacturing Method of financing
Period of ownership
Business Trade Frequency of transaction
Adventure or Concern in Development or processing of
the Nature of Trade asset
Nature of the subject matter
Organization and special skill

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Every morning Bud wakes up at 7 a.m., has his bath, changes
into tattered clothes and ambles to the overhead bridge in
Puduraya (Kuala Lumpur). He then lays down a worn out
clothings, sits “cross-legged” on it, and places a dish in front of
him. Therefrom, he requests every passer by to help him and
his family by making a monetary contribution into the dish.
This he does until above 7 in the night, after which he returns
to his home for a good rest. Discuss any tax implication on
Bud.

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