The Long Service Award is given to employees as a way of appreciation from the company. The award can be in the form of a gift, cash, or an appreciation letter.
The total tax-exempted amount of the Long Service Award is RM2000 per annum and the balance amount will be treated as a part of the employee's gross income by virtue of paragraph 25C, Schedule 6, ITA.
Example :
(adapted from PUBLIC RULING NO. 5/2019: PERQUISITES FROM EMPLOYMENT)
Ali received a long service award from his employer. He received a watch worth RM5,000 and a certificate of appreciation for having served the company for 15 years. The total value of perquisites received by Ali in the year 2023, in respect of long service is RM5,000.
Tax Treatment :
Total Amount of Long Service Award: RM 5000
Tax Exempted Amount per annum: RM 2000
Taxable Amount: RM 3000
Out of this amount, RM2,000 will be exempt from tax. The balance of RM3,000 will be included as part of Aliff’s gross income as perquisite.
Settings in Worksy :
Choose Tax Category: Service / Achievement Award ; EA Form Category: Section B1c when creating payroll item for Long Service Award.
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