Editor’s Note: This article was published in Jan 2020 and updated in Jan 2022.
It’s tax filing season and time to file for tax exemptions in Part F of Form EA. After all, you do not want to overpay your taxes!
What is Form EA?
According to the Inland Revenue Board of Malaysia, an EA form is a Yearly Remuneration Statement that includes your salary for the past year. Part F of Form EA is where you can file for tax exemptions on certain perquisites and benefits-in-kind, thereby reducing your overall chargeable income.
It’s important to know how these perquisites are defined and whether the tax exemptions for these apply to you. You can also learn more about the different benefits-in-kind that you could file for tax exemption in this article here! After all, this can reduce or entirely eliminate your obligation to pay tax.
Check out more details on the infographic below!
Here are some of the values of the Perquisites prescribed (value per year).
1) Free Petrol
When the employer provides a motorcar to the employee as a benefit-in-kind, the petrol provided is considered a perquisite in Part F of Form EA. Moreover, this can come in the form of a petrol card provided by the employer or a petrol bill that the employer paid for the employee.
If the amount received exceeds RM6,000 a year, the excess will be chargeable to tax.
2) Childcare Benefits
However, this is limited to child care centres provided by employers to their employees’ children.
3) Parking Fees/Allowances
This includes parking rate paid by the employer directly to the parking operator.
4) Meal Allowances
Employers can provide meal allowances to employees on a regular basis! They are provided for work purposes when an employee works overtime or works while outstation or on overseas business trips. These can only be exempted if it is given to the employee based on the employer’s written instruction or the rate fixed in the internal circular.
5) Income tax borne by the employer
This is the Income Tax treatment of goods and services tax (GST) involving BIK, perquisites and value of living accommodation that the employer provides the employee. If not filed for exemption in Part F, the GSTs will be borne by employees because they receive benefits in the form of goods; however, they should be borne by employers as part of those benefits.
6) Interest on loan subsidies
Can full tax exemption apply to subsidised interest for housing/education/motor cars? Yes, if the total amount of loan taken in an aggregate does not exceed RM300,000.
What if the total amount of loan exceeds RM300,000? While this does not entirely eliminate your obligation to pay tax, it does reduce the amount!
In fact, here’s how you calculate the amount of subsidised interest exempted from tax:
(A – B) X (C / D)
- A is the amount of interest to be borne by the employee in the basis period for a year of assessment;
- B is the amount of interest payable by the employee in the basis period for a year of assessment;
- C is the aggregate of the balance of the principal amount of housing, education or car loan taken by the employee in the basis period for a year of assessment or RM300, 000, whichever is lower;
- D is the total aggregate of the principal amount of housing, education or car loan taken by the employee.
The employer provides this perquisite, whether in money or otherwise, to the employee who is pursuant to his or her employment. These are the different types of awards that are perquisites:
- past achievement award;
- service excellence award, innovation award or productivity award; and
- long service award (provided that the employee has exercised an employment for more than 10 years with the same employer.
8) PTPTN Loan Repayment Borne by Employer
Employers who help to pay their workers’ outstanding loans from the National Higher Education Fund Corporation (PTPTN) out of their own initiative will enjoy a tax exemption for YA 2021. However, employers cannot place their workers on an employment bond nor deduct from employees’ wages as a condition for paying off their loan.
Also, in a bid to avoid manipulation with the tax exemptions, employers cannot pay for the loans of employees who happen to be his siblings, spouse, children or grandchildren.
Overwhelmed by the work ahead this Tax Filing Season? Automate your filing.
It is taxing to manually sum up 12 months’ worth of payroll details and worry over-reporting any information incorrectly on the form. So, what if I told you could compile the relevant income for the year to automatically fill Form EA along with Form E for employees?
Talenox is an LHDN-approved software that helps employers ease through the annual Employee Income Tax Filing submission process. Because Talenox prepares country-specific employment regulations and pre-set calculations for the Malaysian market.
But don’t take our word for it.
Filing Borang EA is easy when you have an LHDN-approved software like Talenox. See how simple the process is when you use Talenox in this video:
How to fill the tax exempt allowances in the form BE
Hi Emily, here’s a step-by-step article guide on how to fill in e-BE in the LHDN portal: https://help.talenox.com/en/articles/3780650-guide-to-filing-taxes-in-malaysia-e-filing
Hope this helps!
my company have pay fixed transport allowance, can this allowance exempted as petrol allowance?
Petrol allowance, travelling allowance, and toll payments in the line of official duties can be exempted, at a limit of RM6,000 per year. This may include the fixed transport allowance you mentioned.
Where do i fill in the Section F of EA form in e-filing?
Hello Kimberly, one of the ways you can fill in Form EA (along with its Section F details) is through the Talenox Free Plan. Here is a step-by-step guide on how you can do just that. 🙂
Hello, if my Jumlah for Section B – pendapatan and Section C – Pencen dan lain-lain is RM 10,000; Section F – Jumlah Elaun/Pemberian/Manfaat Yang Dikecualikan Cukai is RM 1,000; in order to fill in BE form Section Pendapatan berkanun penggajian, do I fill in RM10,000 or RM 9,000 (Section B+C-F)?
Hi Kenny, as we’re not quite privy to the exact employee income details, we are unable to accurately advice on a calculation and number.
However, if you’re a Talenox user and would like to clarify the automated calculations our system has done for your generated employee income tax forms, feel free to reach out to our Customer Success team for further clarification here: firstname.lastname@example.org. You can also click the Intercom button at the bottom right of your Talenox account page to submit a query to any of our Customer Success agents!
What is different between of B1C & F allowance in EA Form?
B.1 (c) is where you fill in the following details: Gross tips, perquisites, awards/rewards or other allowances.
F is where you indicate allowances / perquisites / gifts / benefits that are applicable for tax exemptions.
If you are a Talenox user, you can untick the ‘Tax’ checkbox for the allowance and it’ll be pulled into the exemption under Section F in Form EA.
Hi, my company pays me a fixed monthly car allowance and it is termed ‘car allowance’ in my payslip. My company also provides a separate petrol card for petrol purposes, tolls are claimed separately as well. In that case, can the car allowance be considered travel allowance and exempted for up to RM6K?