Example provided – for Motorcar
Where a motorcar is provided, the benefit to be assessed is the private usage of that motorcar and the petrol provided.
A motorcar which is provided to the employee is regarded to be used privately if:
• It is used for travelling between the office and the employee’s home, and • It is kept at the employee’s home where the motorcar can be used by the employee or his family at any time.
If consider as private use, that will be a taxable benefit to the employee and the value of the BIK should be calculated and included in the payroll for PCB calculation purposes.
Scenario Provided as Below:
Employee A is provided with a new Toyota Hilux. The benefit is provided to him throughout the year 2019. The cost of the motorcar is RM95,000.
The annual value of BIK (motorcar) which is taxable as part of Employee A’s gross income for the year of assessment 2019 is as follows:
a) If Using Formula Method
Under this method an abatement of 20% is given to calculate the motorcar, which is deemed to be the value of the motorcar at the time when it is returned to the employer by the employee.
Hence, the formula to be applied in respect of BIK on a motorcar is as follows:
Annual value of BIK ⇒ Cost of the motorcar / 8 years (prescribed average life span) x 80% ⇒ RM95,000 / 8 x 80% ⇒ RM9,500
b) The Prescribed Value Method
The prescribed value for a motorcar is given as in Appendix 2 – (a) The Prescribed Value of Motorcar and Its Related Benefits. []
The valuation of the benefit will be based on the cost of the motorcar at the time when it was new
This treatment is also applicable to a second-hand motorcar and a leased or rented motorcar.
As motorcar cost is RM95,000, thus the annual value of BIK is RM3,600
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