Travel Allowance Tax Rules In Malaysia: What You Need To Know

In Malaysia, there are many allowances and benefits that are tax-exempt for employees. These include travelling allowances, petrol allowance, and toll payments, which are granted a tax exemption of up to RM6,000 per year if the vehicle used is not owned by the company. This refers to claims made by employees who use their personal vehicles for work-related duties. It is important to note that these exemptions do not apply if the employee in question is a director or has control over their employer.

Petrol, travel, and toll allowances are tax-exempt up to RM6,000 per year

In Malaysia, there are certain allowances that are tax-exempt for employees, and these vary depending on the type of allowance and the employee's role in the company. Petrol, travel, and toll allowances are tax-exempt up to RM6,000 per year if the vehicle used is not owned by the company. This refers to claims made by employees who use their personal vehicles for official duties.

Petrol, travel, and toll allowances are considered perquisites, which are benefits given to employees by their employer, such as travel and medical allowances. Perquisites are usually given in cash or are convertible into money by the employee. Petrol, travel, and toll allowances are tax-exempt as long as the amount is not unreasonable and is provided to the employee on a regular basis.

Additionally, if the amount exceeds RM6,000, further deductions can be made with respect to the amount spent on official duties, as long as records are kept for seven years. It is important to note that these exemptions do not apply if the employee is a director or has control over their employer through shareholding or other powers.

Travel allowances are tax-exempt if the vehicle is not owned by the company

In Malaysia, travel allowances of up to RM6,000 for petrol and tolls are granted a tax exemption if the vehicle used is not owned by the company. This refers to claims made by employees who use their personal vehicles for official duties.

In addition to travel allowances, there are several other types of allowances that are tax-exempt in Malaysia. These include:

• Childcare allowance of up to RM2,400 annually for children up to 12 years old.
• Parking allowance, including parking rates paid directly by the employer.
• Medical benefits, including traditional medicine and maternity expenses, with no limit.
• Subsidies on interest for housing, education, or car loans, with full exemption if the total loan amount does not exceed RM300,000.
• Allowance for monthly bills for fixed-line telephone, mobile phone, tablet, and broadband subscription (limited to one line for each category).
• Obligatory insurance premiums for foreign workers.
• Group insurance premiums to protect workers in the event of accidents.
• Aviation travel insurance for employees travelling on official duty.
• Awards for employees for excellent service, long service, past achievements, innovation, or productivity of up to RM2,000.

It is important to note that these exemptions do not apply if the employee is a director or has control over their employer through shareholdings or other powers.

Travel allowances are tax-exempt if used for official duties

In Malaysia, travel allowances are taxable, but there are certain conditions under which they are tax-exempt. According to the Inland Revenue Board of Malaysia (LHDN), travelling allowances of up to RM6,000 for petrol and tolls are tax-exempt if the vehicle used is not owned by the company. This refers to claims made by employees who use their personal vehicles for official duties.

The LHDN further clarifies that perquisites, such as travel allowances, are taxable as employment income. However, there is an exemption for travelling allowances, petrol allowances, and toll rates up to RM6,000 annually. If the amount exceeds RM6,000, further deductions can be made for expenses incurred during official duties.

Therefore, it is important to understand that travel allowances are tax-exempt in Malaysia if they are used for official duties and fall within the specified limit. This information is particularly relevant for employees with travel allowances as part of their remuneration package, helping them reduce their overall tax liability.

Additionally, it is worth noting that tax exemptions may vary depending on the employee's position within the company. For instance, exemptions on travel allowances do not apply if the employee is a director or has "control over his employer" through shareholdings or other powers.

Travel allowances exceeding RM6,000 may be claimed with records kept for 7 years

In Malaysia, travelling allowances of up to RM6,000 for petrol and tolls are granted a tax exemption if the vehicle used is not owned by the company. This refers to claims made by employees who use their personal vehicles for official duties. If the amount exceeds RM6,000, further deductions can be made with respect to the amount spent on official duties, and these claims may be made if records are kept for seven years.

This tax exemption also applies to petrol allowance, petrol cards, and toll payments, which are exempt from tax up to RM6,000 per year if used for official duties.

It is important to note that these exemptions do not apply if the employee in question is a director or has "control over his employer" via holding shares or other powers.

Travel allowance is taxable if it is a recurring gift expected by the employee

In Malaysia, employers are required to issue EA forms to their employees by the end of February each year, ahead of the tax season. This is to help employees understand which parts of their monthly remuneration are exempt from tax.

In Malaysia, travel allowances are taxable if they are a recurring gift expected by the employee as part of their remuneration. This is because pure gifts or testimonials received by an employee from their employer are not taxable if they are not related to having or exercising employment. Examples of non-taxable gifts include wedding gifts, prizes for foiling bank robberies, and prizes for extraordinary feats such as climbing Mount Everest.

However, if the travel allowance is provided for official duties, it is tax-exempt up to RM6,000 per year. This includes petrol allowance, petrol cards, toll payments, or any combination of these benefits. If the amount exceeds RM6,000, further deductions can be made for amounts spent on official duties, provided that records are kept for seven years.

It is important to note that these exemptions do not apply if the employee has "control over his employer" through shareholdings or other powers.

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