Major Teoh’s Blog

January 27, 2007

IRB Imposes Tax on Allowances

Filed under: General — Major (Rtd) Teoh @ 12:47 pm

IRB Imposes Tax on Allowances

Read today’s STAR – IRB Imposes Tax on Allowances.

What IRB is doing is trying to cast its net far and wide. It is trying to rope in the big. the tall, the short, and the midgets. They are using the tunda harimau. It is a desperate attempt to fill the government coffers to the brim.

In the Income Tax Act, one of the classes of income on which tax is chargeable, is income in respect of “gains or profits from an employment”.

I do not see how allowances paid to defray or reimburse expenses incurred by the employees for relocation, displacement and tranportation purposes could attract income tax. It is not earned income and as such it should not be taxed.

These reimbursements too are not paid to the employees arising out of their employment. Another feature to note is that it is not a regular monthly payment and should not be construed as earned income.

If all these are allowed to be computed as “gains or profits from an employment”, not only is it going to be unfair, but also, going to push up the the percentage of the tax chargeable.

Just wondering.


Major (Rtd) Teoh


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