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Most employers make the mistake of not declaring the value of benefits-in-kind given to employees.  The failure to disclose the value of benefits in kind given to employees can render an employer to liabilities and penalties as provided for in the Act.  Essentially benefits in kind falls under two categories: benefits-in-kind convertible into money; and benefits-in-kind not convertible into money.  Benefits-in-kind if properly planned and structured can greatly increase the standard of living of the employee at the same time reducing his incidence of tax.

Benefit convertible to money

Benefits-in-kind convertible to money fall under sec 13(1)(a), Income Tax Act 1967, while benefits not convertible into money fall under sec 13(1)(b). This distinction has an impact, for example, on the calculation of the value for income tax purposes of free accommodation provided by an employer to his employee.

Benefit not convertible into money

Gross income from employment includes benefits or amenities not convertible into money and which are provided for the employee by or on behalf of his employer.

Examples of benefits-in-kind are given in the Borang E which all employers are required to fill and submit to the IRB.  So please take special care when completing the Borang E.