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Benefit In Kind - UBS PAYROLL 9.4.4
Author: Susan Lai Reference Number: AA-01145 Views: 4045 Created: 2014-05-12 07:52 Last Updated: 2014-05-12 07:52 0 Rating/ Voters

Benefit In Kind (BIK)

BIK are benefits/amenities not convertible into money. These benefits are provided by/on behalf of the employer for the personal enjoyment by the employee, wife, family, servants, dependents or guests of that employee.

Setting

Setting must be done in order for the system to pick up the figures in the correct parameter in the tax formula.

[Housekeeping > Setup > Table Maintenance > Benefit In Kind Table]


Note: Income Type have to be determine carefully as it will affect the calculation in the system. Fixed = Y1 Non-Fixed = Yt .

Maintenance

[Personnel > Add/Update Employees] => BIK Item.

You may check your entry at 2nd Half Payroll => BIK Item.


Personal Relief

In 2010 taxation, there are addition and increment in personal relief item as listed below.

i) Broadband subscription fees up to RM500 per year.

ii) Annuity scheme premium from insurance companies commencing payment from 1st January 2010 up to RM1,000 per year.
Annuity premium is categorized as optional deduction and claims through TP1 form. For the purpose of calculation, the capping amount is RM1,000 in TP1 form and any exceeding amount have to include on contribution to Employees Provident Fund (EPF) and life insurance premium as K1.


iii) Personal relief increase from 8,000 to 9,000 per year.


Below are some examples on how to determine the annuity.

Determination of annuity scheme without EPF and life insurance deduction.

Determination of annuity scheme premium with EPF and life insurance deduction.


Individual Tax Rate

Tax rate for chargeable income group exceeding RM100,000 reduced by 1% from 27% (year 2009) to 26% (year 2010).


Tax rate for non-resident individuals be reduced by 1% from 27% (year 2009) to 26% (year 2010).



Previous Year Income Paid In Current Year

Some employers might have accrued payment due to the employee (e.g. commission, overtime, back pay, etc). This may happen for cross year payment which affects the tax computation.

The system, now have solution to cater for this requirement.

Maintenance

[Personnel > Add/Update Employees] => Prev. Year.

** The system will base on last year total income to compute the previo us year PCB value.

** This will only apply from year 2011 onwards (2011 pay for 2010).

** System can only compute previous 1 year payment.


Previous Employment Income

Employer’s responsibilities under the Rules to inform every employee to submit TP3 form (Previous employment remuneration information) if employee commence employment with new employer and received remuneration from previous employer.

Employer shall include TP3 form information received from employee to input in their payroll system to deduct the Monthly Tax Deduction (MTD) from the remuneration of employee accordance to computerized calculation method.


Payroll Processing and Calculation

After the 2nd half payroll processing, you can view the calculation.

View PaySlip => View Calculation.


Sample Calculation

Employee 1 is married, spouse working with 3 children eligible for tax relief.


Step 1 – Determine MTD on net remuneration for a year (not including current month’s additional remuneration).

[A] Determine category of employee

Category 3 / KA3

[B] Determine chargeable income for a year [P]

Determine value of K2

K2 = Estimated balance of total contribution to EPF or other Approved scheme, life insurance premium and annuity scheme premium for the balance of qualifying month
= [RM6000 - (K + K1 + Kt )] / n or K1 whichever is lower
= [RM6000 – (RM0 + RM1,933 + RM0) / 11] or RM1,133
= RM369.72 or RM1,933
= RM369.72

P = [∑(Y – K*) + (Y1 – K1*) + [(Y2 – K2*) x n] + (Yt – Kt*)] – [D + S + 1000(C) + (∑ LP + LP1)]
= [(RM0 - RM0) + (RM10,750 - RM1,933) + [(RM10,750 - RM369.72) x 11] + (RM0 - RM0 )] – [RM9000+RM0+RM1000(3) + (RM0+ RM4,150)]
= RM123,000.08 – (RM12,000 + RM4,150)
= RM106,850.05

[C] Determine monthly MTD for net normal remuneration. Once value of P in step [B] is determined, value of M, R and B are determined based on Schedule 1.

MTD = [(P – M) x R + B] – (Z + X)
                         n +1
[(RM106,850.05 – RM100,000) x 26% + RM14,325] – (RM0 + RM0)]
                                                          11 + 1
= RM1,342.16

Net MTD = MTD for current month – Zakat and Fee/Levy for current month
= RM1,342.16 – RM0
= RM1,342.16

[D] Determine total MTD for a year

Total MTD for a year = Accumulated MTD paid + [MTD for current month at Step[C] x remaining month in a year include current month]
= X + [(MTD for current month at Step [C]) x (n + 1)]
= RM0 + (RM1,342.16 x 12)
= RM16,105.92

Step 2 – Determine chargeable income for a year [P] including additional remuneration which has been paid.

[A] Determine category of employee

Category 3 / KA3

[B] Determine chargeable income for a year [P]

Determine value of K2

K2 = Estimated balance of total contribution to EPF or other Approved scheme, life insurance premium and annuity scheme premium for the balance of qualifying month
= [RM6000 - (K + K1 + Kt)] / n or K1 whichever is lower
= [RM6000 – (RM0 + RM 1,933 + RM0) / 11] or RM 1,133
= RM 369.72 or RM 1,933
= RM 369.72

P = [∑(Y – K*) + (Y1 – K1*) + [(Y2 – K2*) x n] + (Yt – Kt*)] – [D + S + 1000(C) + (∑ LP + LP1)]
= [(RM0 - RM0) + (RM10,750 - RM1,933 ) + [(RM10,750 - RM369.72) x 11] + (RM50 - RM0)] – [RM9000+RM0+RM1000(3) + (RM0+RM4,150)]
= RM123,050.08 – (RM12,000 + RM4,150)
= RM106,900.08

Step 3 – Determine total tax for a year based on value of P in Step 2 [B], M, R and B are based on value as per Schedule below.

Total tax for a year = (P – M) x R + B
= (RM106,900.08 – RM100,000) x 26% + RM14,325
= RM16,119.02

Step 4 – Determine MTD for current month on additional remuneration where total tax for a year (Step 3) less total MTD for a year (Step 1[D]), Zakat and Fee / Levy which have been paid.

MTD for additional remuneration = Step 3 – Step 1[D] + Zakat and Fee / Levy which have been paid
= RM16,119.02 – [RM16,105.92 + RM0]
= RM13.10

Step 5 – MTD for current month which shall be paid.

MTD for current month = MTD for current month + MTD for current month on additional remuneration
= Step 1[C] + Step 4
= RM1,342.16 + RM13.10
= RM1,355.26 => RM1,355.30


Appendix

MTD for current month = [(P – M ) R + B] – (Z + X)]
                                                      n + 1
Net MTD = MTD for current month – Zakat and Fee/Levy for current month

Where

P = [∑(Y – K*) + (Y1 – K1*) + [(Y2 – K2*) x n] + (Yt – Kt*)] – [D + S + 1000(C) + (∑ LP + LP1)]

P = Total chargeable income for a year

∑(Y – K*) = Total accumulated net remuneration including net additional remuneration which has been paid to an employee until before current month including net remuneration which has been paid by previous employer (if any)

Y = Total monthly gross remuneration and additional remuneration which has been paid including monthly gross remuneration paid by previous employer (if any)

K* = Total contribution to EPF or other Approved Scheme made on all remuneration (monthly remuneration, additional remuneration and remuneration from previous employer), life insurance premium and annuity scheme premium paid (including premium claimed under previous employment, if any) not exceeding RM6,000.00 per year

Y1 = Current month’s normal remuneration

K1* = Contribution to EPF or other Approved Scheme, life insurance premium and annuity scheme premium paid for current month’s remuneration subject to total qualifying amount not exceeding RM6,000.00 per year

Y2 = Estimated remuneration as per Y1for the following month

K2* = Estimated balance of total contribution to EPF or other Approved Scheme, life insurance premium and annuity scheme premium for the qualifying monthly balance [RM6,000 (Limited) – (K + K+ Kt)/ n] or K1, whichever is lower

Yt – Kt* = Net additional remuneration for current month

Yt = Gross additional remuneration for current month

Kt* = Contribution to EPF or other Approved Scheme for current month’s additional remuneration subject to total qualifying amount not exceeding RM6,000.00 per year

n = Remaining working month in a year

n + 1 = Remaining working month in a year including current month

D = Deduction for individual of RM9,000.00

S = Deduction for spouse of RM3,000.00

C = Number of children

∑LP = Other accumulated allowable deductions including from previous employment (if any)

LP1 = Other allowable deductions for current month

*K + K1+ K2+ Kt not exceeding RM6,000.00 per year

M = Amount of first chargeable income for every range of chargeable income a year

R = Percentage of tax rates

B = Amount of tax on M less tax rebate for individual and spouse (if qualified)

Z = Accumulated fee / Zakat paid other than fee / Zakat for current month

X = Accumulated MTD paid for previous month including from previous employment (including MTD on additional remuneration)


Value of P, M, R and B are from the below schedule:


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