Income which are Tax-free

The following are the list of income which are tax-free and their limits :-

  1. Petrol card, petrol allowance or travel allowance between the home and work place (until Year Assessment 2010 only) (Limit RM2,400 a year)
  2. Petrol card, petrol allowance or travel allowance and toll card for official duties (Limit RM6,000 a year)
  3. Allowance or fees for parking (No limit)
  4. Meal allowance (No limit)
  5. Allowance or subsidies for childcare (Limit RM2,400 a year)
  6. Medical benefits (including maternity expenses and traditional medicines such as ayurvedic and acupuncture) or dental.(No Limit). What traditional medicines are accepted by the IRD ?
  7. Employers’ own goods provided free or at a discounted value (Limit RM1,000 a year)
  8. Employers’ own services provided free or at a discount provided such benefits are not transferable (No Limit)
  9. Telephone, mobile phone, pager and Personal Data Assistant (PDA) (No Limit)
  10. Bills for telephone, mobile phone, pager and PDA registered in the name of the employee or the employer (No limit)
  11. Gift of new personal computer (until Year Assessment 2010 only) (No Limit)
  12. Monthly broadband subscription fee (registered in the name of the employer) from the employer (until Year Assessment 2010 only) (No Limit)
  13. Perquisites (whether in money or otherwise) provided to the employee pursuant to his employment in respect of:
    (a) past achievement award;
    (b) service excellence award, innovation award or productivity award; and
    (c) long service award (provided that the employee has exercised an employment for more than 10 years with the same employer); (Limit RM2,000 a year)
  14. Leave passages (only applicable to employee and immediate family)
    (i) Within Malaysia (including food and accommodation) not exceeding 3 times in a year;
    (ii) Outside Malaysia (once a year – limited to RM3,000) (Limit RM3,000 a year)
  15. Compulsory insurance premium paid for foreign employees in lieu of SOCSO payment (No Limit)
  16. Group insurance premium to protect the employees in the event of accident (No limit)
  17. Interest subsidies for loans of up to RM300,000 in respect of housing, motor vehicle and education loans. Exemption is given on existing loans and new loans. (No limit)

Please note that those items with no limits does not mean that employers can give any amount it wishes, it must be 'reasonable'. What amount is reasonable depends on the nature of the employee's work.

For example, a reporter's travelling allowance is expected to be higher than that paid to a accounts clerk.



  1. Hi,

    based on above statement, unless company pay us such as amount of childcare/subsidies of loan to us, only them we can consider this as income tax free?
    If company didnt pay us for such allowance then we cant doing any claims on this?

  2. Hi Damien,

    Yes you are right. Only when companies pay you can these become your 'income'. Please refer to my other posts to see if you can claim anything else.

    Please note that interest on housing loan can be claimed under the mini-budget if you purchase a house on or after 10 Mar 2009 up to 31 Dec 2010.

  3. HI there,

    On any ite, here, do I declare into BE form?


  4. Dear Anonymous,

    If you are an employee, your employer would have group all the above in Item G in your Form EA. You do not have to report these income in your Borang BE since they are tax-exempt.

  5. Person to Contact on PCB Calculator:
    Mr. Chua Tian Siang Tel:03-62091000 Ext:34152 or 31797 Jbt Pungutan Hasil Unit Dasar & Operasi

  6. if I have foreign income & local income, is the foreign income exempted?
    Do I need to report my foreign income?

  7. Foreign income remitted into Malaysia are tax-exempt. As such, they need not be declared in the Form B or BE. However, if your foreign income is substantial, you should keep record of these income in case you are asked in future, how you can afford to buy properties, for example, with the taxable local income that you had declared.

  8. I was under the impression that we can claim tax relief for the house rent we pay in Malaysia.
    You cleared my misconception.
    Is there any other way under which tax relief can be obtained for
    a) House rent paid by me
    b) Maternity expenses for my wife paid by me

  9. I joined a company in Malaysia in the middle of november 2009.

    Will i be considered as a resident or non-resident for 2009?

    Will i be taxed at 27% or there will be no tax as it was less than 60 days of employment in 2009?

  10. Hi Anonymous (March 23),

    I presume you are a non-Malaysian working in Malaysia. It is best that you arrange with your employer to re-package your remunuration such that rent and maternity expenses are paid by your employer, perhaps in exchange for a reduction of basic salary.

    Rent paid by employers are assessed as Benefit-in-kind and is taken as THE LOWER OF actual rent paid for the accommodation (without furnitures and fittings) OR 30% of cash income for the year.

    Whereas maternity expenses paid by employers are tax-free.

  11. Hi Anonymous (March 26),

    Whether you are considered a tax resident depends on how long you remain in Malaysia in 2010 ans also whether your stay in 2009 continues to 2010.

    If you stay in Malaysia for more than 183 days and this period is continued from the period of stay in 2009, then you are a tax resident for both 2009 and 2010 and should be subject to scaled rate of tax for both years.

  12. I am currently under employ and on the company's payroll. My company decides to gift me a cash gift to honour my years of service and loyalty, is this cash gift taxable?

  13. Dear Sir,
    I am an expat and my company pays my rent to the landlord. This is paid directly to the landlord and not to me. Who then is responsible for the tax on the rent -me or the company?

  14. Dear Anonymous,

    You are enjoying benefits-in-kind provided by your employer and is thus liable to pay income tax based on rental paid by your employer. Assuming the accommodation is fully furnished, try to have the rental agreement drafted in such a way that it separates the rental of the empty premises and furnishings. For example, instead of paying RM3,500 for the whole unit, separate it into rental of premises, say RM2,000 and furnishings RM1,500 a month.

    The tax that you will be charged on for rental of the empty premises is the lower of actual rental paid or 30% of your Sec13(1) income (which is cash income which consist of salaries, allowances, etc. without benefits).

    The tax that you will be charged on for rental of the furnishings will be based on the pre-determined rate by the IRD, which is usually much less than the actual rental paid.

    It sounds more complicated than it actually is. You should ask your company's accountant to explain in detail to you.

  15. Hi,

    I am a non Malaysian and will be getting an employment from a MNC company based in Malaysia. I am married to a Malaysian and I will be applying for the Spouse Programme which will entitle me to live and work in Malaysia.My questions as following:

    Scenario: The employer has mentioned that they will just pay me a gross amount every month and will not be handling my tax payment.
    1) Is this legalfor the employer opting not to handle my tax payment?
    2) If yes, how do I proceed with paying for the income tax as an individual?
    3) Or is it possible for me to set up a private limited company as I have heard many tax reliefs can be made if you own a private limited company?
    4) Is it possible for a foreigner to set up a company (eg: sole proprietor or pvt ltd)on their own name? Will there be any complications from the setting up of the company.

    Looking forward to hear from you.

  16. I am a Malaysian working with a local firm. My employer paid me allowance named as "position allowance" and "Special allowance" in the pay slip. Could i assume them as other allowance such as childcare allowance since i have 2 kids below 12 years old. And can i also assume them as interest subdidies for my housing loan?

  17. Hi,

    Unfortunately the answer is 'no'. The tax-exempt allowances have to be specific in nature. The allowances mentioned by you are general and do not fall into those tax-exempt by the IRB. Try discussing with your employer to see if they can design a more tax-efficient remuneration package for you.

  18. Hi,

    For item # 9 Telephone, mobile phone, pager and Personal Data Assistant (PDA)- does it mean it is provided by the company only?

    What if I bought it personally under my own name, can it be tax exempted?

    Thank you in adv for your answer.

  19. Unfortunately the answer is "No". So try to persuade your company to provide you with one.