What are Benefits in Kind (BIK)?
These refer to non-monetary benefits provided by employers to their employees. BIKs cannot be cashed out, exchanged or sold despite the fact that they do possess monetary value.
Some examples of benefits in kind are:
- Housing or accommodation – furnished, semi-furnished and service charges.
- Vehicles
- Mobile phones
- Drivers, domestic servants, gardeners
- Club memberships
- Leave passages
- Maternity/traditional services
- Employer’s goods that are provided free of charge or at a discount
- Dental, medical, and child-care benefits
- Free transportation
How are BIKs calculated in Malaysia?
1. Formula Method
These are calculated with the formula method which is the cost of the asset provided divided by the average life span of the asset. This results in the annual value of the benefit. (The cost refers to the cost incurred by the employer)
2. The Prescribed Value Method
This is an alternative way of valuing the benefits, and it is in the form of prescribed values provided by the employer to the employee in a table. The value of the BIK can be abated if it is provided for less than a year and/or it is shared with another employee.
Which benefits in kind are tax-exempt?
Not all BIKs are taxed in Malaysia. Please see the list below for the benefits in kind that are tax-exempt:
- Dental, medical and child-care benefits
- Free food and beverages (non-alcoholic)
- Free transportation to and from work
- Insurance premiums for foreign workers and to cover workers in the event of an accident
- Other free or discounted goods and services provided by the employer to employees
- Telephone, internet and mobile bills
- Petrol benefits
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Disclaimer: The information in this article is current as at 21-Oct-2022, and has been prepared by Employment Hero Pty Ltd (ABN 11 160 047 709) and its related corporate bodies (Employment Hero). The views expressed in this article are general information only, are provided in good faith to assist employers and their employees, and should not be relied on as professional advice. The Information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified, and no warranties are given that it is complete, accurate, up-to-date or fit for the purpose for which it is required. Employment Hero does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising directly or indirectly as a result of reliance on, use of or inability to use any information provided in this article. You should undertake your own research and seek professional advice before making any decisions or relying on the information in this article.
