Monday, 20 April 2009

Why you are paying tax for meal allowance

It’s the tax-filing season for individuals and just like any other year; I get calls, e-mails, chat messages, etc. asking for free tax consultation. I am sure some of you know why such queries are directed to me. If not, you should be able to deduce the reason.

Anyway, of the many things they asked me; one thing stood out like sore thumb. Almost everyone asked me…

“Eh Zewt, meal allowance is disclosed in my EA Form? I tot the gomen already announced meal allowance not taxable already. No meh?”

Yes, it was proposed in the national budget last year that meal allowance will be exempt from tax in the hands of individual commencing year 2008 and the law has been gazetted. Yes, that is correct… BUT! There’s always a ‘but’, and this is a big ‘BUT’!

Following this new law on meal allowance exemption by the govt, the income tax dept (which also happened to be govt by the way) issued a new ruling regarding it. In that ruling, it states that…

“Meal allowance provided to an employee for purposes such as overtime or outstation/overseas trips and other similar purposes in exercising his employment… … … …… is chargeable to tax and does not fall within this exemption………”

Source: Second Addendum to Public Ruling No. 1/2006 [Point 3.2.3 (iii)]

Yes, meal allowance is not taxable BUT meal allowance for your overtime and travels are taxable. Please also note that meal allowance for “other similar purposes in exercising your employment” is also taxable. That is a big-ass wide coverage if you ask me.

So what kind of meal allowance is really not taxable? Errr… beats me…

This is what I call… give right pocket, take left pocket.

Ridiculous? Stupid? Brainless? Aiya… this is the land of the best nasi-lemak, best char-kuey-teow and best bak-kut-teh; don’t complain so much lah?


2 years go…
What keeps me going

17 comments:

Terra Shield said...

Oh my goodness... that's like so bodoh!

foongpc said...

So it's like meal allowance that is not taxable does not exist. What crap!

Superman said...

The government wants us to eat less. Cause our average body weight is increasing. lol just kidding :)

Fi-sha said...

Shoooot...aint that creative accounting Zewt? Damn IRB is so bloody 'smart'.

p.s. pardon my vulgarities this early morning :P

jam said...

It is the government that is ridiculous, and we people who are stupid and brainless. How can we still trust and vote for this government?

Huei said...

hahaahha

well has it gotten annoying yet that people r constantly asking u on and on again? =P i know i have about car prices! ask only..but never buy from me -.- dun wan give free consultation edi!

pinknpurplelizard said...

Stupidity reigns supreme in this country where the land is beautiful but the government and by-laws resonate with high levels of idiocity and incompetence.

That's as best as I can put it in the briefest phrase. Btw, how's ur own domain 'project' coming about? Some months ago u mentioned it. :)

mistipurple said...

nasi lemak one packet please.
ya, couldn't think of something intelligent to say. so used to all this silly 'one pocket in', 'two pockets out' thingy going on.

HappySurfer said...

I'd say it's a nightmare for Payroll to track what's taxable and what's not. What to do, like you said ..this is the land of the best nasi-lemak, best char-kuey-teow and best bak-kut-teh; . Sigh..

joshua wong said...

Zewt

"Aiya… this is the land of the best nasi-lemak, best char-kuey-teow and best bak-kut-teh; don’t complain so much lah?"

Well, one important lesson in economics: there's no free lunch-mah. And since we get the best, we should feel happy to pay (tax) for it.

Not complaining!

teis said...

dun pay la, as if u havent paid enuf already. claim as max as u can!

SuLee said...

Hi Zewt! how are you doing!?

hope ur well

zewt said...

terra shield - today the govt announced the relaxation of the 30% equity condition, and i am really interested to know the details.

foongpc - something like that mate... something like that.

superman - and if we eat less, we will use the hospital less... save money :P

fi-sha - oh well, you have not really met the real creative accountants yet... they are all in the US :)

jam - it's us who are brainless and stupid. how apt.

huei - u sell car meh?

zewt said...

pinkandpurplelizard - that plan has been abandoned since i cant really find a domain that suits me. sigh... my beloved zewt.com...

mistipurple - hahaha... well, it's like ... at least we have something right?

happysurfer - HR has nightmare becos everyone is going after them... and HR cant give a good explanation, thanks to the land of...

joshua wong - hahahaha... well, in a way, that is true.

teis - also must have basis to claim right? and no matter how much we claim... still have to pay, the restriction on EPF deduction is just so damn stupid.

SuLee - hello, i am well... say hello to baby.

neno said...

lol..n they tax u for all the good food u eat..

zewt said...

neno - hahahaha... soon, it will be worse.

muebles zamora said...

This can't really have effect, I think like this.