1.
2.
3.
4.
EMPLOYMENT
INCOME
[S4(b), ITA 1967]
Definition of employment
Employment vs profession
Derivation of EI S13(2) and S13(3)
Basis period for EI S20 and S25, ITA
1967
5. Gross income from employment S13(1)
(a) (e), ITA 1967
6. Allowable expenses and exemption
7. Adjusted and statutory income
Definition of Employment
S2 (a) the relationship of master (employer) and
servant (employee) subsists;
- (b) any appointment or holding of an office
whether public or not and whether or not that
relationship subsists (no master-servant
relationship such as directors, trustee, treasurer of
a club or secretary of a club) for which
remuneration is payable.
[PR 1/2003, 3.4, 3.5, 3.6]
Employment vs
Profession
S4(b) vs S4(a)
Derivation of EI
EI would be subjected to IT if:
(i) EI is deemed derived from Malaysia by
virtue of S13(2) and S13(3)
cont
cont
(ii) EI is deemed derived from Malaysia
by virtue of S13(3)
income of an employee (Malaysian
citizen) employed in the public service or
a statutory authority even if the
employment is exercised outside Malaysia
or the leave pay is attributable to the
exercise of employment outside Malaysia.
7
Exemption of EI
Basis Period of EI
Adjusted Employment
Income
11
S13(1)(a)
Wages, Salary,
Remuneration
Commission
Bonus
Allowances
15
cont
Clothing allowance
16
Gratuity
Treatment of gratuity
Examples
Ex3: Mr Sam received a gratuity amounting to
RM60,000 on 30.9.08. He had been
employed by Semat Sdn Bhd since 1.5.1995.
Mr Sam was 52 years-old on 30.9.08. How
would the gratuity be treated?
Ex4: How would the gratuity be treated if Mr
Sam
commenced employment with the
company
on 1.6.05?
19
Examples
Ex3: 13 years 5 months
60, 000/6=10,000 per year
Ex4: 2 years 4 months
28 months
YA 2008 : 9/28x60,000= RM19,285.7
Refer example 7.11 to 7.14,pg 142-143, CKF (2010)
20
Leave pay
cont
Example (Ex5)
Ray (a New Zealand citizen) ceased employment with
KBU Sdn Bhd on 30.9.07. He left Malaysia for NZ on
1.12.07. There will be no pension or other employment
income earned by him after he left Malaysia.
In 2007, Ray received a gross salary of RM120,000 and
leave pay of RM12,000 per month starting from
October 2007 to April 2008.
Required:
(i) Compute Rays gross income from employment for YA 2007
under
S25(6).
(ii) Show the gross income of Ray if he made an election to
prorate
the leave pay.
23
Example (Ex5)
(i) Compute Rays gross income from employment for YA
2007 under
S25(6).
Sec 13 (1)(a):
Salary
120,000
leave pay
84,000
204,000
(ii) Show the gross income of Ray if he made an election to
prorate
the leave pay.
Salary
120,000
leave pay
36,000
156,000
the remaining balancing of leave pay (RM48,000) will be
assessed in YA 2008 at 27% (non resident)
24
25
Cont
26
Cont
Loan interest
Cont
School/tuition fees
Cont
Insurance premiums
Cont
30
Cont
Cont
Cont